DELTA ANNUITY

Annuities in Delta BC

A Delta 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 the individual’s lifetime.

Whether you are learning about annuities for the first time or you are seeking further information about whether or not they are right for you, I believe we have provided enough information on this website in order for you to decide if an annuity would be meaningful to you. As an annuity broker, I have over thirty years of experience with annuities and the insurance companies that sell them. If you would like to speak with me directly and reside in the lower BC area, you can call me anytime at 604-535-2404. If you reside outside of the lower mainland, call toll free at 1-800-667-8818.

It’s likely that you are curious about the amount of income you can obtain monthly from the amount of capital you have to put towards an annuity purchase, so we have provided a quick and easy way to provide you with this information. Below is a list of the Canadian life insurance companies that sell annuities in your area. If you have questions, you can call John Beaton at 604-535-2404 in the lower B.C. mainland or 1-800-667-8818 if you reside outside the lower mainland.

The following Canadian life insurance companies sell annuities in British Columbia.

Assumption Life Beneva BMO Life Canada Life Desjardins Financial Security

Empire Life Equitable Life Industrial Alliance Financial Group RBC Life Sun Life Assurance Company of Canada Wawanesa Life Insurance Company

Request A Delta Annuity Quote

Please note that the term guarantee period refers to the period of time that the insurance company must make payments to you, whether you are alive or dead. For a life pay annuity the most common guarantee periods are 5 years for registered funds and 7 years for non-registered funds. For a term certain annuity, guarantee period outlines the total length of time that payments are to be made to you.

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 people whose lives are used to determine the amount of the benefit payments to be made. The annuitant or annuitants are normally, but not exclusively, the owner.
• The beneficiary is the person who will receive any death benefit available should the annuitant pass away before all guaranteed payments have been made to the annuitant(s).

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.

1. The lump sum amount 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.
2. 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.
3. 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.
4. 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 Delta Annuity?

Canadian insurance companies are the only sources from which Canadians can purchase life pay annuities. However, annuities cannot be purchased directly from the insurance companies. Annuities can only be purchased through a licensed life insurance agent or an insurance broker.

It’s important to know if you are dealing with an agent of an insurance company or an insurance broker who deals with multiple insurance companies. It’s unlikely that an insurance agent can offer advice on any insurance company’s products other than the company he/she is working for. He/she is essentially a captive agent who is only selling products for his/her employer. An insurance broker on the other hand, is able to represent many insurance companies and is therefore 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 Delta British Columbia insurance broker. He routinely searches for and compares the best current annuity payouts available in Delta BC.

Fundamental Annuity Information for First-Time Buyers.

First-time annuity buyers will be introduced to a variety of terms, concepts, and options throughout their purchasing process. The following “Fundamental Annuity Information for First-Time Buyers” section is created so that you will be more informed, prepared, and self-confident about annuities before you book an appointment with me. If you are not yet familiar with concepts such as “registered and non-registered funds”, “single premium immediate annuities”, and “term certain annuities”, it would be beneficial to continue reading.

Why Should I Consider Buying an Annuity for Retirement?

All retirees need a longevity strategy that focuses on 5 key areas: Income, lifestyle, housing, healthcare, and caregiving. Purchasing a life annuity can answer these problems.
Annuity payments are a series of regular payments that provide you with a steady guaranteed income just like a pension would. With a life annuity, you will receive payments for as long as you live. Life payment annuities, income annuities, and immediate annuities are also called Single Premium Immediate Annuities (SPIAs).

1. Income for Life: When you purchase a life annuity, you don’t have to worry about outliving your money. Your payments are guaranteed for as long as you live.
2. Income Security: No market or interest rate fluctuations will decrease the income you receive each month.
3. No Management Decisions: There are no more investment decisions to make once you’ve purchased your annuity.
4. Estate Planning Benefits: In the event of your death, your payments can be guaranteed to be received by your surviving spouse or other beneficiaries for a determined time. In addition, your money goes directly to your beneficiary and does not have to go through probate.

Registered and Non-Registered Funds

Annuities can be purchased using non-registered or registered funds. Registered annuities are annuities purchased with funds from a registered retirement savings plan (RRSP), spousal RRSP, registered retirement income fund (RRIF), spousal RRIF, locked-in plan, or pension plan. Every dollar received from this type of annuity is taxable as income in the year it is received. If you have a registered retirement savings plan and a spousal registered retirement savings plan, you cannot join these two sources of funds to purchase one registered annuity. These different kinds of funds cannot be commingled. You would need to purchase two separate annuities, one for each source of funds.

A non-registered annuity is any annuity purchased from out-of-pocket funds and not tax sheltered by the government.

Annuity Types

Life annuities are suitable for people who can’t or don’t want to manage their money in their later years. A life annuity can help make sure you won’t run out of money during your lifetime.

• A single-life annuity guarantees a monthly income for one individual for the duration of their life.
• A joint life annuity pays a guaranteed income while you and your spouse are alive and continues to pay that income to the surviving spouse upon the death of their partner.
• Term certain annuities provide a level of income for only a certain period. Ex. You are 60 years of age and purchase a five-year term certain annuity while you wait for your Canada Pension Plan money to start at age 65.
• If in poor health, you may qualify for an impaired (enhanced/enriched) annuity, which considers a shortened life expectancy

More On Joint Life Annuities
If you purchase a joint life annuity, you can choose to reduce income payments by a specified percentage of the original payment [usually up to 50%] when either you or the joint annuitant dies. Doing this can increase the original payment. If you have added a guarantee period to your joint life annuity, the death of one of the joint annuitants does not trigger the reduction of future payments until the end of the guarantee period.

More On Term Certain Annuities

Term certain annuities are designed to provide a level of income for only a certain period. This kind of annuity could be useful if you retire before the government Old Age Security (OAS) and Canada Pension Plan (CPP) retirement income starts. For instance, if you retire at age 50, you could purchase a non-registered term certain annuity to provide the same income you expect from OAS and CPP at age 65, to cover the period from age 50 to 65. A term certain annuity payable for 15 years would fit your need in this instance.

Please note that a term certain annuity can only be purchased with non-registered funds, registered retirement saving plan funds, or registered retirement income funds. You cannot purchase a registered term certain annuity with a registered pension plan or locked-in funds. Additionally, a registered term certain annuity purchased with registered funds can be payable only to an annuitant’s age 90.

Guarantee Period

You can buy a life annuity with or without a guarantee period. A guarantee period is a duration where your income is guaranteed to be paid, even if you die. This means that your beneficiaries would receive the income that would otherwise have gone to you.

Important Annuity Information

You must have the following requirements to purchase an annuity:
• Canadian Social Insurance Number (SIN)
• Canadian address (not a PO Box office number)
• Canadian bank account.
• Canadian government-issued photo I.D.

It is suggested that you get an independent annuity broker

It is very important that you get a competent annuity broker. While all life insurance agents are licensed to sell annuities, in fact very few ever make an annuity sale. Agents represent only one company and will only be able to give you a quote for that company. Independent annuity brokers such as John Beaton represent all the companies and will provide you with premium quotes.

You need to decide on annuity options

Discuss with your annuity broker what options you should consider.

• Should your life annuity be single or joint?
• Should the annuity have a guarantee of a certain number of years?
• Should payments start now or be deferred to a future date?

Remember that most life annuities are bought as pension plans. In other words, it is to replace a pension that would normally be paid by your former employer. With that in mind, the purchase of an annuity is to meet your needs and that of your spouse. The needs of beneficiaries should be secondary.

Get annuity quotes

You should see quotes from all companies who will quote on annuities. Your broker, John Beaton, can help you in this regard.

Recurring Payment Options

Life pay annuities are payable for the rest of your life, no matter how long you live. With a life annuity, you can choose to have monthly, quarterly, semi-annual, or annual payments.

When You Can Buy

Use your retirement savings to buy an annuity at any time — just before retirement, at retirement, or at any time during retirement. And you can convert some or all your savings into an annuity.

Annuity Protection

Your annuity income is 100% protected up to $2000 per month with each life insurance company. If your income exceeds $2000 per month, the protection is limited to 85%. For annuities purchased with non-registered funds, only the interest component of the payment is taxable. A joint life annuity pays a guaranteed income while you and your spouse are alive and after your death, continue paying that income to the surviving spouse.

Are you waiting too long to take a retirement income?

Waiting does not make sense to me, and it shouldn’t to you either. If you decide to buy a house, you take your money out of the bank and now you don’t have the money; you have the house. The same thinking applies to retirement income; you convert your cash to income.

Some retirement advisors recommend that you should defer your retirement income – registered or not – for as long as possible. I’ve seen articles suggesting you wait until ages 75 and 80. How do you know you’ll be alive to enjoy the money you saved? These suggestions to wait until after your life expectancy are questionable at best. It’s possible that you and/or your spouse could develop age-related illnesses. Income from GICs and other investments are not based on your age; only annuity incomes are age-related and will pay you more with less tax.