Category Archives: News

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The Shrinking Annuity Market

Category : News

It’s concerning that the giant life insurance company, Manulife, withdrew from the Canadian annuity market on June 29, 2018. Prior to this, in the last few years Manulife had absorbed other major players in the Canadian annuity market such as Maritime Life in 2004 and Standard Life Assurance Co. of Canada in 2015. The pool of life insurance companies that offer annuities continues to shrink leaving fewer choices for those who recognize the importance of the guaranteed lifetime income that annuities provide.

In addition to getting out of the annuity market, Manulife is currently, in the fall of 2018 approaching specific existing variable annuity clients and offering them a cash incentive to give up their variable annuity contracts to replace them with their regular segregated funds with guarantees of 75% of their holdings upon death and maturity. Clients must decide if they will take the incentive money before December 14, 2018.

If you are contemplating purchasing an annuity for your retirement years, maybe you shouldn’t wait.


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Can an Annuity Protect The Longevity of Your Assets?

Category : News

Strange question to ask? Modern medicine and good eating habits have helped increase the average Canadian’s lifetime. Along with living longer comes the need to have sufficient savings to last for your longer lifetime. It has been my observation that older people begin a process of consolidating their assets by getting rid of things that they no longer need by either selling or simply giving them away and sometimes selling their large home in preparation to downsize to a smaller living space. In or near major Canadian cities, selling a home sometimes results in what looks like a financial windfall. If this happens to you, it likely will be hard to believe that so much money could now be sitting fallow in your bank account. It won’t be long before your bank sales representative calls you to suggest ways to invest this money because, for aggressive bank employees, it’s just too good a sales opportunity to miss. In addition to pressure from your bank to invest, it’s common for close relatives to offer to help you decide what to do with all this money. The odd relative may even suggest that a loan to them or even an outright gift would be timely. Elder financial abuse abounds across this country and even though we are concerned about it, there are still no firm guidelines to protect older Canadians.

So, what puts you in the cross hairs of the opportunist with get richer quick ideas who might want to share in part of the excess funds you have come upon?

You might have:

[a] Sold a valuable home or property in preparation to downsize for retirement.

[b] Won a lottery.

[c] Come into an inheritance.

[d] Sold your thriving business.

[e] The Stock Market has been good to you.

[f] You profited from early involvement in BitCoin.

Maybe it’s time to consider setting aside part of your new found wealth to purchase a guaranteed life pay annuity. Calculate how much locked-in regular income would cover basic needs, such as food, entertainment, maybe even rent and possibly travel. Doing this would remove the temptation for anyone, friends or relatives to take a run at your assets. Now, with your essential needs covered for the rest of your life, you can more comfortably deal with the capital that you have left. Now you might feel inclined to grant occasional gifts or loans to relatives, charitable organizations or friends. Give a telephone call to John Beaton, senior annuity specialist at 1-800-667-8818. He will be happy to hear your story and maybe give you some positive feedback.


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Should you Add Indexing to Your Life Annuity?

Category : News

To hedge against future inflation, is it a good idea to add inflation protection to your life annuity. This kind of life annuity with inflation protection is called an indexed annuity. There are currently no Canadian life insurance companies offering an indexed annuity with consumer price index protection. For those companies that offer it, annuity indexing is limited to a range of 1% to 5%. Most requests for indexing that I receive have specified 2% so it appears that the common belief is that expected inflation right now is in that range.

Should indexing be something that you feel you would like to have added to your annuity, you need to talk to me first. Call John Beaton at 1-800-667-8818.


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What are The Best Canadian Annuity Payout Rates

Category : News

In comparison to the United States, Canada has a relatively smaller number of insurance companies that offer annuities. Of those Canadian insurance companies that offer annuities, there are only several players who are consistantly the top sources for best payout rates. Nevertheless, annuity rates change often, sometimes daily, so comparing payout rates often is prudent. As a full time annuity broker, I keep on top of these changes and I’m able to provide current, up to date information. I use a software computer program provided by Cannex, a Canadian company that supports the exchange of pricing information for annuity and bank products across North America.

Usually the by the same afternoon of the same day that you ask me which Canadian insurance companies have the best rates for life pay or term certain annuities, you will have precise information in your hands, presented in a manner which is useful to you.

The information you receive from me will reveal the current day’s annuity rates showing which insurance company has the best payout, which has the worst payout, and all payouts in between. Should you have questions about any aspect of what you have received, I’m available toll free at 1-800-667-8818 to explain. If you have your own insurance advisor, I would be happy to assist in making certain that you are selecting the right annuity for your circumstances.


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What is the meaning of guarantee period?

Category : News

An annuity guarantee period is the most misunderstood of all terms relating to annuities. A guarantee period applied to a term certain annuity determines the length of time that payments will be made by the insurance company to you. At the end of the guarantee period, all payments cease and the term certain annuity is finished.

For a life pay annuity, a guarantee period is an add on. A true life annuity has a 0 year guarantee period. Whether or not you add a guarantee period to a life pay annuity, that guarantee period doesn’t limit payments in any way while you are still alive. Without a guarantee period, when you die, a life annuity completes with no further payments. The addition of a guarantee period to a life pay annuity means that the life insurance company is on the hook to pay during the guarantee period, whether you are alive or dead. Once the annuity payments exceed the guarantee period, death of the annuitant[s] triggers the end of any further payments. If death takes place within the guarantee period, the insurance company has to pay to either your estate or a named survivor the difference between payments made within the guarantee period and payments not yet received. In most cases, there is a choice between continued payments to the end of the guarantee period or a discounted lump sum payment.

Usually there is a cost to adding a guarantee period to a life pay annuity. Usually, the longer the guarantee period, the less lifetime income one receives. One would think that a 0 year guarantee period would produce the most income. In reality, the best income is obtained with a 5 year guarantee period for registered funds and a 7 year guarantee period for non-registered funds. When we are dealing with non-registered funds particularly, some people want to hedge their bets by purchasing a long guarantee period so there might be money left for surviving children. The reduction in income can be costly but some times worth it.

So, to be clear, the length of the guarantee period specifies the length of time that payments are made for a term certain annuity but guarantee period does not affect the lifetime income payable by a life pay annuity.


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What is an annuity?

Category : News

An annuity is the exchange of a lump sum of money paid to an insurance company which in turn contracts to pay a stream of periodic income to you either for your lifetime or for a specified period of time. The lump sum of money may come from non-registered funds from regular savings or RRSP.

Annuities are locked-in contracts and cannot be changed once they are set in place. You can purchase annuities in various forms. You may choose a fixed term [Term Certain] so that income is payable to your for a certain number of years or you may choose a life pay annuity which will pay you for the rest of your life, no matter how long that is. A person may choose a fixed term annuity with regular savings to take advantage of preferred taxation over a set period of time. Using RRSP money restricts the payment period for a term certain annuity to your age 90 only. No other payment periods are allowed for a term certain annuity purchased with registered funds.

Canadian annuities have insurance protection, so that up to $2,000 per month in payments is protected 100%. Above $2,000 per month the protection is limited to 85% of the payment amount. You can purchase an annuity up to your age 90. Financial planners say the sweet spot for this product is when someone is nearing retirement or is already in retirement. They caution it’s not a good idea to tie up all your money in an annuity, but to make it part of a diversified retirement strategy. Make sure you understand exactly what’s entailed in the annuity you choose.