BRITISH COLUMBIA Annuity
Annuities in British Columbia
A British Columbia annuity is a contract between an individual and an insurance company where the individual provides a lump sum of money to the insurance company and the insurance company guarantees a lifetime income to the individual. This arrangement essentially creates a guaranteed income stream for the rest of that individual’s lifetime.
There are four parties to a life pay annuity contract.
- The issuer is the life insurance company that provides the annuity contract and issues the annuity.
- The owner is generally the person who purchases the annuity from the insurance company but the funds to purchase the annuity might come from a third party, such as a parent, grand-parent, etc.
- The annuitant or annuitants are the persons whose lives are used to determine the amount of the benefit payments to be made. The annuitant or annuitants are usually, but not always, the owner.
- The beneficiary is the individual who will receive any death benefit available should the annuitant die before all guaranteed payments have been made.
How do Canadian Insurance companies calculate their annuity payouts?
There are several considerations used by annuity underwriters to determine how much they will pay to the person who is purchasing an annuity from their particular insurance company.
- The amount of lump sum that the purchaser provides for the purchase. There are lower limits and upper limits set by each insurance company. The lower limit is usually in the range of $10,000 to $15,000. [We will only deal with clients with a minimum of $50,000] The upper limit can be as much as unlimited millions of dollars but most major Canadian insurance companies have an upper limit of $2,000,000 and some $1,000,000. The average query that we receive is usually in the range of $100,000 to $500,000.
- The age and gender of the person[s] who wants an income from a life pay annuity. Federal mortality tables outline the average life expectancy of males and females in Canada. These tables are periodically updated to reflect the health of this nation. The current prediction is that females live longer than males therefore if a male and a female of the same age purchase a life pay annuity, the female can expect to receive smaller payments because of her longer life expectancy.
- The specific mortality credits accumulated by the insurance company that is quoting a payout rate. Mortality credits are accumulated by the fact that some annuitants do not live as long as mortality tables predict so the insurance company does not have to pay out as much for that person. Of course, some annuitants live longer so the insurance company must continue to pay for as long as that person is alive. If the insurance company ends up with an excess amount of mortality credits, they are used as part of the calculation for new purchases.
- The health of the person who is going to received life time payments from a life pay annuity. If there is a health issue that might contribute to a shortened life span, the insurance company could do what they call an age enhancement to in effect make that person older for calculation purposes. This would result in an impaired life annuity with an increased level of payment.
Where Can I Buy A British Columbia Annuity?
Canadian insurance companies are the only sources from which Canadians can purchase life pay annuities. However, annuities cannot be purchased directly from those insurance companies. Annuities must purchase their annuity through a licensed life insurance agent or broker.It’s important to know if you are dealing with an agent of an insurance company or a broker who deals with many insurance companies. It’s unlikely that an insurance agent can offer advice on any other insurance company’s products than the company he/she is working for. He/she is essentially a captive agent only selling products for his/her employer. An insurance broker on the other hand, is able to represent multiple insurance companies and therefore is able to compare annuity payouts to find the best annuity for you.
For more than 30 years, John Beaton, the licensed insurance broker representing this web site, has been a British Columbia insurance broker. He routinely searches for and compares the best current annuity payouts available in British Columbia.
These are the Canadian life insurance companies that sell annuities in British Columbia.
Desjardins Financial Security
Industrial Alliance Financial Group
Sun Life Assurance Company of Canada
Wawanesa Life Insurance Company
These are the cities in British Columbia in which annuities can be purchased from any of the above insurance companies.
Request A British Columbia Annuity Quote
If your province of residence is British Columbia, Beaton Annuity Services will provide you with a personalized annuity market survey showing the current best payouts of all the Canadian life insurance companies that do business in British Columbia.