Advantages of Annuities

Pros

Permanence
Rate of Return
Ongoing Investment Opportunity
Tax Advantaged Income
Expected Income
Certainty
Trouble-Free Investing
Iron Clad Security
Optimal Asset Diversification
No Capital Erosion for RRIF Minimum

Comments

  • Income for as long as you live.
  • Depending on age, income is typically 7%-10% or higher.
  • Reinvest any excess from annuity payments.
  • Non-registered annuities provide extremely tax efficient income.
  • No fluctuation of income.
  • Complete and total safety.
  • You don’t have to worry about multiple investments.
  • Guarantee income for as long as you live.
  • Provides excellent portfolio diversification.
  • Increasing RRIF minimums means erosion of capital and ultimately declining income.

Cons

Interest Rates are Low
Capital is Gone


No Liquidity

No Flexibility
No Residual Value

Comments

  • You can never time the markets.
  • Income will last for the guarantee period or for life ( whichever is longer).  Repayment of capital depending on options selected and how long you live.  In certain circumstances, strategies are available (e.g. insured annuity) to replace capital.
  • Cannot make lump sum withdrawals from contract (Income is periodic and as per the contract).
  • No changes allowed once the contract is in force.
  • Once the guarantee period expires there is no residual value.

Annuity Type

Single/Joint Life Annuity

Term Certain Annuity

Prescribed Annuity
Impaired Annuity

Descriptions

  • Provides level income for the lifetime of one or two individuals. Guarantees can assure capital repayment.
  • Provides a guaranteed tax efficient income for a selected period of time.
  • For Non-registered funds, provides very tax efficient income.
  • For annuitants with an illness that could reduce life expectancy. Provides a higher guaranteed lifetime income.