Annuities

In exchange for a single lump sum investment, an insurer makes guaranteed regular income payments to a client that contain both interest and a return of principal. Annuity payments can continue for a chosen period of time or for the lifetime(s) of one or two people. Payment guarantee options are available to ensure the income continues to a spouse or other designated beneficiaries, in the event the annuitant dies prematurely. These options can ensure a minimum amount is paid out of the annuity, no matter what happens. Clients can also choose to index their annuity income, to help guard against inflation.

In addition, non-registered annuities can offer significant tax advantages for clients. Because the interest income can be averaged over the lifetime of the annuity, there is an attractive element of tax deferral (conditions may apply). An annuity can provide peace of mind by reducing the need for ongoing investment decisions. Also, your clients will not have to worry about market volatility impacting their annuity investment.

Choosing an annuity depends on the income needs. These needs can be one of the following

Guaranteed retirement income for life
Income for a specific time period, or
Gradual inheritance transfers

Factors that affect annuity payments (Both term and Life)

Amount of money invested
Client's age and sex
Interest rates at time of purchase
Type of annuity - Life or Term Certain
Length of time that annuity payments are to be guaranteed
Income deferral - time period between purchase date and when the income starts

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