Insurance Becomes an Annuity

From Ottawa, Metro: Consider annuities for a secure retirement income.

An interesting article from Sun Life explaining the virtue of a life annuity as guaranteed income.

But there should be no set arbitrary amount or percentage to invest. We live in very volatile times, politically and financially, and people are scared and worried about the future. The US which dominates our business landscape, is locked in an election where the majority of people hope that no one wins!

If you have sufficient guaranteed income from an employer and the government and feel you can handle it,jump into a RRIF with investment funds. But don’t put money in there that you will possibly need to top up your income down the road.

When money, and therefore income, is lost at the latter stages of your life, you don’t have the time to replace it.

Read full article from Ottawa Metro by Talbot Boggs – Consider annuities for a secure retirement income.

consider annuities for a retirement income

Use our Annuity Calculator to instantly calculate your annuity income online. To find out approximately how much Guaranteed Income For Life you can receive.

Insurance Becomes an Annuity

Don’t Forget About An Impaired Life Annuity

If you or your partner have a serious illness, don’t forget to ask for a health rating for your life annuity.
A life annuity,available where life expectancy is impaired, recently issued for a client on a joint basis, increased their income by 5%.
That may not sound much but when you consider that the healthy party was a female AND 12 years younger,you can realize that they were more than pleased.One company issued a rating of 5+ years and a second company rated the couple at 10+ years.The contract however was issued by the 5+ company as it had better standard rates to commence with.
Depending on the age(s) concerned and the illness involved, this approach should not be overlooked when doing retirement planning.
term-life-insurance-the-affordable-solution

Term Life Insurance – The Affordable Solution

For the young family, accumulating debt seems to be as normal as having children. It makes very good sense that as the family grows, so does the debt. Very few 25 to 35-year-olds are concerned about the amount of debt they carry until the time comes when they cannot possibly pay it. Usually, this happens when a family breadwinner becomes disabled or dies unexpectedly.

term-life-insurance-the-affordable-solutionThe spouses are typically concerned enough to insure their home against damage or destruction, and, of course, the family autos must be protected, but in most cases, there’s no choice in the matter since the home and vehicles are collateralized. Lenders certainly don’t care who you buy your insurance from, as long as you buy it to protect the collateralized property. The bottom line is quite simple; you have debt and a lot of it. What are your survivors going to do if you’re no longer in the picture?

How much insurance is enough?

This is that the $64,000 question that many consumers fail to get answered before making an insurance purchase. Yes, having insurance is important and yes, you need to make sure that your loved ones are not saddled with your debt when you’re gone. But buying insurance that “sounds about right” could easily leave your surviving loved ones wondering how the heck the family is going to stay in the house, pay the bills, go to college, and even pay for your funeral.

Life Insurance Needs Analysis

The most appropriate way to determine how much life insurance you need to protect your surviving loved ones is to conduct a needs analysis. You can do this on your own by using an online program that many of the insurers, such as Canada Life or Sun Life Financial offer on their websites. This needs analysis will take into consideration all of your financial data and establish the amount of insurance that would offer the best protection for you at that time in your life:

* Your savings and other assets

* Business assets

* Mortgage balance, vehicle loans, and personal loans

* Monthly living expenses (over a selected time period)

* Funds needed for education expenses

* Credit card debt

* Final expenses

* Financial gifts to your survivors

* Current Income

* Current insurance in force

After this data is entered into the program, the total amount of life insurance needed will be calculated and therefore used as a goal for protection. You will then know how much insurance you need to purchase at that time in your life.

Although your needs analysis can be determined on your own, it makes better sense to rely on the advice of an experienced and reputable agent or broker to work with you. Since the analysis is for the current position you and your family are in, it makes even more sense to rely on an insurance professional so that the two of you can revisit your needs analysis each year or so going forward. You need to accommodate for life change events and your agent will keep you on track.

The Affordable Solution

At this point, you probably already imagine that the final number delivered by your needs analysis is going to be quite large, and you may not be able to afford the insurance premium. The good news is that Term Life is more affordable today than ever before. Even if you cannot take care of the entire amount of insurance you need now, you can probably handle most of it and then add later as your financial position improves. Using a 10 or 20 year term policy makes a lot of sense because it is very affordable and in most cases, the company has a conversion privilege available so that you can convert some or all of the death benefit to a permanent policy before the 20 year period is concluded. Or you can decide to renew the term. This privilege is especially important because after 20 years or so you will have most likely reduced your debt and gotten the kids into college and may not need near as much life insurance as you did when you started. You can convert the temporary insurance to permanent insurance for a lower face amount and not have to prove you are healthy!

Available Options

The newer term products have even more great options that you want to consider:

Additional Insured rider – this allows you to add an additional insured to your policy (like your spouse) for the same or lower death benefit.

Child Term Rider – allow you to purchase a block of insurance (usually $5,000 to $25,000) to cover all of your children you have now or will have in the future.

Waiver of Premium – this is a very good option that allows the insurance company to pay your periodic premium if you become disabled and cannot work.

Accidental Death Benefit – this is a very inexpensive way to increase your death benefit if you die as a result of an accident. Typically the insurance company will double your death benefit for a very reasonable additional premium.

It’s important that everyone, whether single or in a family, purchase enough life insurance so that they do not pass along debt to their surviving loved ones. Someone has to pay for your funeral and other final expenses and that someone should be you. Term insurance is the most affordable way to accomplish this and there’s no time like the present to get started.

And a Bonus!

Due to the high costs of houses and general living expenses, people are buying large amounts of term life insurance as a pension loan! The idea is that if one spouse dies, the survivor will have the proceeds of a joint life policy to buy a life annuity or make a safe investment. Thus, until the 1st death occurs, they can spend their savings as they know the survivor will be financially secure.

Term Life Insurance – The Affordable Solution

Insurance Becomes an Annuity

Do You Want a Fixed Annuity or a Life Annuity?

This is the same type of annuity in Canada, although some people feel there are differences.

In Canada a life annuity is sometimes referred to as a fixed annuity as the payment is “fixed” or “settled”. The confusion arises when you think of annuities with a yearly time element.

For instance a 10 year term annuity is a “fixed annuity” but here the phrase refers to a time element; it is payable for a certain number of years only.

So the next time someone asks you about a fixed annuity, ask him or her if they are referring to the amount of the annuity payment or the number of years in a term annuity.

And you need to be aware of variations. Most life annuities carry two guarantees

1. a lifetime payout and

2. a guaranteed payout for a number of years. So here we have a life annuity with a “fixed” or guaranteed number of payments.

Insurance Becomes an Annuity

Save Taxes With A Life Annuity

The last week of October this year saw a large benefit for two or more million pensioners from the Conservative Government.

Keith MacIntyre, a tax partner with Grant Thorton in Halifax was quoted a saying that “it can save retirees a considerable amount of money” and  that “pension income splitting can be a gigantic benefit for people. ”

How to start your calculation

The higher income spouse or common law partner, should assume most or all of the  housing expenses, leaving the lower income partner with more money to invest.

And this action has run on effects. Reducing the income of the lower income partner could reduce or eliminate the clawback of the Old Age Security payments or the age credit for the higher income spouse.

Neither of these benefits should be overlooked. And there can be further tax savings if both partners can claim the pension income credit.

Life Annuity Retirement Benefits

Life annuities from a company pension plan can also be split, no matter the age.

And for those over 65, RRIF and life annuity payments from a RRSP can also be split by filing a joint election form.

So for pensioners it is the real income that is split as opposed to the family tax cut. So if, for example one receives $750 a month and the other $250, they can each receive $500 monthly if they are at least 60 years of age.

Calculation

If all this seems a bit much, we suggest you speak to an accountant; they are the experts.

Running out of money?

Running Out of Money? How Life Annuities Provide Income for Life

Retiring today is not as simple as it was for previous generations. Most new retirees and those about to retire are not counting on pensions with potentially unlimited numbers of payouts. Instead, most people in this situation are counting on limited funds available in RRSPS, Group Pensions and their savings to last them as long as necessary.  Continue reading “Running Out of Money? How Life Annuities Provide Income for Life

Running out of money?

Insurance Becomes an Annuity

Should your life expectancy be part of your financial planning?

My comments on  “Should your life expectancy be part of your financial planning?” by Garry Marr of the Financial Post.

Rick and Carol got it right!

It is all about your health, not your money. Rick saved for umpteen years and now he can’t spend it.And Carol is facing that question but from the still-healthy side.

Carol should buy the largest income she can get in an annuity and start the income now;otherwise she can end up like Rick.

Clients continually tell me that ” annuity rates will go up ” as they wait to act. Actually they’ve been telling me that for more than 10 years as the rates slowly drop and their lives ebb away.

If you get sick or lose your partner,it is all for naught. There are only 2 considerations in retirement planning; action and guarantees.

Insurance Becomes an Annuity

Brief Overview of Life Annuities

Here are the 3 types of Single Premium Immediate Annuities available in Canada.

1. Single Life Annuities

Provides a series of income payments (monthly or annually) for your lifetime. You cannot outlive your payments.

2. Joint Life Annuities

Provides a series of income payments (monthly or annually) for your lifetime and your spouse’s lifetime. Neither of you can outlive the income payments.

3. Term Certain Annuities

Provides a series of income payments for a chosen period.

Registered and Non-Registered Annuities

Your funds can be from a registered plan such as an RRSP or non-registered funds such as in a GIC.

Will Your Retirement Income Last as Long as Your Retirement?

The bad news is the many Canadians aren’t adequately prepared financially for longer lives. Longevity in Canada continues to increase. Most men are expected to live to age 85 and women to age 88.

So Why Purchase A Single Premium Annuity?

It’s Guaranteed! Annuities provide a lifetime income source with no fluctuations of the stock market or interest rates. You cannot outlive your income payments.

Its Simple! No worry and stress about managing your investments. No fear of stock market crashes.

Peace of Mind! Why have the risk, worry and stress of investing and watching over your nest egg during the years you want things simpler.

Where to begin?

You can call me toll free 1-877-842-3863 or simply complete our online annuity form and we’ll provide you with an annuity quote from all the companies in Canada.