Are Annuities Protected From The Stock Market?

Life annuities are an investment product which provide a guarantee income stream for the life of the annuitant(s). In Canada, they are generally not directly affected by the fluctuations in the stock and bond markets. However, the underlying investments made by the insurance company issuing the annuity can be impacted by market volatility and this can indirectly impact the annuitant.

In Canada, life annuities are offered by insurance companies, and they are regulated by the Office of the Superintendent of Financial Institutions (OSFI). The OSFI ensures that the insurance companies meet certain financial requirements and that the annuitants are protected from undue risk.

When an individual purchases a life annuity, they pay a lump sum payment to an insurance company in exchange for a guaranteed income stream for the rest of their life (life annuity) or for a certain period of time (term certain annuity). The insurance company invests the funds received from the annuitant in various investments, including stocks, bonds, real estate and other securities. The returns on these investments may impact the financial strength of the insurance company, which in turn could affect their ability to pay the guaranteed income to the annuitant.

However, the OSFI requires insurance companies to hold a certain amount of capital to ensure that they are able to meet their obligations to annuitants. This means that even if the investments made by the insurance company experience losses due to market volatility, the annuitant’s income stream is protected by the insurance company’s capital reserves.

In addition to the protection provided by the OSFI, annuitants in Canada can also purchase annuities from insurance companies that are members of Assuris. Assuris is a not-for-profit organization that protects annuitants in the event that their insurance company becomes insolvent. If this were to happen, Assuris would step in and ensure that the annuitant’s guaranteed income stream is maintained.

Variable annuities which can be affected by market fluctuations are not available in Canada. Variable annuities are available in the United States and not in Canada. If you come across literature online regarding variable annuities, please note that they are not available in Canada currently.


Overall, life annuities in Canada are considered a very safe investment and are protected from fluctuations in the stock and bond markets, as the annuitant’s income stream is guaranteed by the insurance company’s capital reserves and by the regulatory oversight provided by the OSFI and Assuris.

It is highly recommended to research all of your options before purchasing and discuss with an experienced broker who can shop the entire annuity market in Canada for you.

Please reach out to us at Life to discuss your annuity options further. We can also run customized quotes from the top life insurance companies in Canada for you at no cost.

Contact us today to learn more.