Here are answers to questions a client asked me recently about life annuities.
Q. Please explain how the yearly guarantee works. Is it in addition to the life guarantee?
A. Yes, you always have the life guarantee for yourself and partner, if any. And you can choose to add a 10 or 20 year or similar guarantee that may outlive you.
Q. What about indexed annuities?
A. Click on the links comparing a life income indexed at 2% with a standard level annuity income. Now you can decide which one you want.
Q. Should I use RRSP funds or non registered funds to buy my life annuity?
A. RRSP funds can only be spent by yourself and your wife.If both deaths were to occur before the end of the 20 year period,an assessment of the present day value of the future payments would be made and that amount would be taxed. I will discuss this further with you.
Q. My RRIF payments keep going up. Will a life annuity payment increase?
A. Annuity income is constant and does not increase as with a RRIF.
Q. How much of my life annuity income is insured?
A. Income up to a monthly amount of $ 2000 is 100% covered by Assuris, which is a group of all the insurance companies; I can send you a link if you wish.It is more important to split the capital in the way you think best with the life annuity companies you favour.