Canadian Annuity Rates
Use of this website will increase your understanding of Canadian Annuities as they relate to guaranteed lifetime income in your retirement years. Canadian life pay annuities are available only from Canadian life insurance companies and like the variation in interest bearing term deposits at banks, annuities vary in payout value from one insurance company to the other.
To obtain an annuity one must pay a lump sum of money to a life insurance company which guarantees to pay a stream of income to that person. There are basically two types of annuities, those that pay for a person’s lifetime which are called life pay annuities and those that pay for a specific period of time which are called term certain annuities.
The majority of queries that we receive pertain to life pay annuities, apparently because this kind of annuity pays for a person’s lifetime and doesn’t it make sense as our life expectancy increases, that a person would want to arrange for some of their income stream to be guaranteed for as long as they live.
Low interest rates have dogged us for the last decade along with the occasional stock market crashes. There is no indication that financial markets are expected to get better as we move into the next decade. Annuities protect against the problem of continuing low interest rates and unexpected stock market crashes.
At Beaton Annuity Services we are fully knowledgeable about the annuity products offered by all major Canadian life insurers. If you would like to find out whether or not an annuity might become part of your retirement plan, either phone us or provide brief information about yourself in the form below and send it to us. We will respond with an e-mailed copy of current annuity market rates.
Your Retirement Savings & Canadian Annuity Rates
Take charge of setting up your retirement now so that you don’t have to worry later about how much or where your income is coming from. If your family history is long lived then the choice of an annuity that removes any need for decisions in later life may be the right one for you. By the time you retire, hopefully you will have accumulated investment assets that will augment your retirement income. Some forms of income will be fully taxable such as Canadian government benefits like Old Age Security which starts at your age 65 and Canada Pension Plan benefits which could start as early as age 60. You may also have accumulated tax deferred income in an RRSP for which you have taken tax deductions from your past income during your working years. Some of you will be calculating the conversion of the value of your home into preferred retirement income.
If you have an RRSP, you are obligated to make an election by the end of the year in which you become age 71 whether to turn that RRSP into a registered retirement income fund [RRIF] or into a registered single or joint life annuity. You may decide to retain part of your income in the form of a RRIF so you can access lump sums for emergencies. You can then put the remainder of your income into a life annuity so that predetermined, specific amounts of guaranteed income will be paid to you for the rest of your life. This guarantees to protect your re-occuring basic needs in retirement such as home expenses and food.
While you have to decide by the end of the year in which you turn 71 years of age what you are going to do with your accumulated registered savings, you don’t have to take any actual payments into income until the beginning of the year in which you become age 72.
Life annuities, insured life annuities, indexed life annuities, cash back annuities and term certain annuities all have their place in planning a structured retirement income. Insured life annuities and cash back annuities provide less income but protect your capital. Indexed annuities provide for guaranteed increasing annual income over a person’s lifetime. The bottom line is that guaranteed income benefits and contractual guarantees of annuities will reduce any of your anxieties over the risk of outliving your retirement savings and potentially ending not having enough money to meet daily needs.
Other Savings & Canadian Annuity Rates
You may also have accumulated non-registered savings which you are holding in term deposits, low interest or non-interest chequing-savings bank accounts. If your savings are earning interest income, you will pay tax on that income. There are opportunities for you to lower your taxable income by examining the benefits of annuities in comparison with other higher taxed forms of income. You may find that an important aspect of having non-registed savings in a non-registered life annuity as part of a retirement portfolio is the potential for lowering taxable income. The current legislation pertaining to Old Age Security benefits requires that the government “claw back” some of that benefit starting at an income level of about $70,000 per person, per year. For every dollar of total taxable income that exceeds the $70,000 threshold, Old Age Security income, reduces by $0.15. If you fall into this higher income bracket, this translates into approximately a 15% additional tax which cannot ever be re-claimed.
Life Annuities & Canadian Annuity Rates
Decide to purchase a life annuity, and you will not have to worry about this source of income for the rest of your life. A life annuity provides a no maintenance, unbreakable income stream that guarantees the annuity income you have purchased will be paid to you for the rest of your life. There is no investment risk and nothing to oversee. Once a life annuity is issued in your name, you can count on the payments not changing in amount or frequency for the rest of your life. Economic conditions or investment returns may change, but the payments from your annuity are guaranteed to remain the same for the rest of your life. Throughout the rest of your life you will enjoy the financial security of a guaranteed income you cannot outlive.
Sorry, only Canadians with their own Social Insurance Number can purchase Canadian life annuities. If Canadian citizens are residing outside Canada, there are circumstances where registered retirement funds can be converted into Canadian annuities. Non-Canadian citizens cannot purchase Canadian annuities in any form.
Latest Annuity Rates Canada News
Term Certain Annuities pay for a specific period of time. Life Annuities pay for a lifetime.
For a term certain annuity the guarantee period is the length of time that payments are made. For example, a term certain annuity for 10 years has a guarantee period of 10 years. It means that this term certain annuity pays for a term of 10 years, at which time the annuity expires with no further benefit. The same rules apply for any length of term of payment, whether the guarantee period is 5 years or 7 years or 20 years, etc. A term certain annuity has no mortality calculations, nor is consideration given to a person’s age or gender. A term certain annuity simply pays for a stipulated period of time and it is finished. If you die before all payments have been made, then the remaining payments can be paid to a named beneficiary.
So, a guarantee period as it applies to all annuities is a set period of time during which the insurance company issuing the annuity must make payments to the person[s] receiving payments, whether or not that person[s] is alive or dead. If the person[s] receiving the payments dies before the guarantee period is completed, then the remaining payments can be directed to a named beneficiary.
Life pay annuities on the other hand, pay for as long as a person lives. When a guarantee period of more than 0 years is applied to any life pay annuity such as a single life annuity, a joint life annuity, an indexed life annuity, a registered annuity, a non-registered annuity, a prescribed annuity, or a non-prescribed annuity, there is a change in the lifetime payment amount. For non-registered life annuities there is also a change in taxable portion of income. All payments made within the guarantee period must be paid whether the person receiving payments is alive or dead.
In its simplest form a life pay annuity would have a 0 year guarantee period in order to take advantage of a person’s age, gender, mortality calculation and any possible mortality credits. When we are searching the Canadian annuity market for best payout rates, there is a reason for us to do at least one of our searches with a 7 year guarantee period for a non-registered life annuity and a 5 year guarantee period for a registered life annuity because sometimes the best payout rates are posted by insurance companies that have these aforementioned minimum requirements for length of guarantee periods.
Please note that an annuity with 0 years guarantee period completes after first payment, upon your death, or in the case of a joint life annuity, the joint annuity completes upon the final death of the joint annuitant.