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Contents

Introduction

Chapter 1

Annuity Types:

Single Life Annuity

Joint Life Annuity

Term Certain Annuity

 

Registered and Non-Registered

Factors that affect annuity income

Advantages of an annuity

Disadvantages of an annuity

 

Chapter 2

Why an annuity?

Annuity Popularity

 

Annuity Options:

Guarantee period

Indexing

Deferred

Impaired

 

Chapter 3

Turning 71

RRIFs

RRIF or an Annuity?

Annuity Taxation

Assuris Protection

 

Chapter 4

Annuity Pros & Cons

Annuity FAQ

List of Annuity Companies

Annuity Fees

 

Chapter 5

Male Annuity Rates

Female Annuity Rates

Joint Annuity Rates

 

 

Chapter 6

Annuity Calculator

Sample of an Annuity Policy

Annuity Quote Illustration

 

Conclusion

 

Chapter 1: What is an annuity?

Chapter 1 Highlights

Annuity Types

Single Life

Joint Life

Term Certain Annuity

 

Registered and Non-Registered Annuities

 

Factors that affect annuity income

 

Advantages of an annuity

 

Disadvantages of an annuity

 

Annuity Types

Lets take a look at the types of annuites that are available in Canada.

 

Single Life Annuities

Provides a series of income payments for your life. You cannot outlive your payments.

 

Joint Life Annuities

Provides a series of income payments for as long as you or your spouse live.

 

Term Certain Annuities

Provides a series of guaranteed income payments for a chosen period (e.g. 5, 10, 15, 20 years).

 

Registered and Non Registered Annuities

The funds to purchase an annuity can be from a registered plan or a non-registered plan.

 

Registered Funds

You can convert the following list of registered plans into an annuity policy.

RRSP - registered retirement savings plan

RRIF - registered retirement income fund

RPP - registered pension plan

Locked-in RRSP / LIRA / RLSP

LIF / LIRA / RLIF / PRIF

DPSP - deferred profit sharing plan

 

Non-Registered

Savings/Chequing Account

GIC - guaranteed income certificate

TFSA - tax free savings account

Stocks

Mutual Funds

 

Factors that affect annuity income

The amount of income provided through an annuity is determined by the:

Type of annuity selected

Amount of money invested

Age

Sex

Payment guarantee selected

 

Advantages of an annuity

Provide a regular income stream for retirement

Payments will continue, unchanged, for life or the designated term regardless of
Interest rate fluctuations

As part of a diversified retirement income plan, annuities reduce risk, add stability

Ideal to top-up retirement income

Annuities can create personal pension plans for those without pension plans

Annuities can be integral to estate planning (i.e. death benefit guarantees, appointment of beneficiary to avoid probate, if any and create potential creditor protection1, etc.)

Suitable for investors who can’t or don’t want to actively manage part of or all of their capital

No one knows how long they will live, and with a life annuity, you can never outlive your money; joint life annuities can also protect their spouse’s income

 

Disadvantages of an annuity

The loss of investment value due to an early death, though cash refund annuities are available

The income amount is fixed

Purchasing power reduces with inflation – if an indexed annuity is not selected

Your ability to draw lump sums from your fund is gone

 

continue... Chapter 2. Why an annuity?

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