Investment Products: Annuities

An annuity is simply a guaranteed income- purchased with either non-registered or registered money. This income can be for a "fixed" period of time, or for life.

When purchasing an annuity, there are a number of options from which to choose. The "annuitant" (the person that will receive the income) can opt for:

1. Single Life- annuity payments continue until he or she dies
2. Joint Life- payments until he or she dies and the surviving spouse also dies

Also, annuities can be purchased for a variety of periods. For example:

• Payments continue for 5 or 10 years whether the annuitant is living or not

The amount of income that can be produced is based on the age of the annuitant, interest rates at the time of purchase, the type of annuity and any options chosen.

The various options noted above are available from life insurance companies only. Algoma Financial Services has contracts with approximately 20 different companies, so we are confident that we can provide among the best rates and options available.

Annuities can also be purchased from banks, however banks can only offer "fixed term" annuities, such as 5, 10 or 20 years.

The greatest feature of "life" annuities is that the annuitant won’t outlive their money. This can be of great comfort and peace of mind for retirees.

The biggest drawback to annuities is that the income stream is "fixed" and can’t be increased in cases of emergency or unexpected costs.

For retirees or those close to retirement age, a more balanced approach may be appropriate: use some of your RRSPs to purchase an annuity, and keep the rest in your RRIF.

For additional information about annuities, email or call us today!