Benefits of Payout Annuities
Consider a payout annuity for the following benefits:
Simple – In return for a lump-sum premium, you can choose to receive a stream of payments to suit your needs. It’s ideal if you’re not able to or don't want to actively manage your money or pay fees for someone else to do it for you.
Avoid outliving your money – Not knowing how long you'll live is a retirement income planning issue. Life annuities provide payments for life and can form the cornerstone of an effective retirement plan.
Easily customized – There are many plans, terms and variations available, depending on your unique situation and circumstances. Annuities can be combined with growth-oriented products to form part of a diversified investment plan to mitigate risk.
Your choice of payments – The income stream for an annuity can start immediately or be deferred to a pre-determined date, depending on your needs and preferences.
Speedy estate settlement – You can appoint a beneficiary to avoid probate and undue delays in settling your estate and benefit from potential creditor protection.
A stable income stream – If you don't like the turbulence and volatility of stock markets, annuities can provide regular income to fund a major expense (e.g., mortgage, education, vacation, or other ongoing expenses like property taxes, utility bills, etc.).
Minimize effects of inflation – Indexed income payments help offset inflation (maximum of 4% for registered assets and 6% for non-registered assets).
More favourable taxation – Non-registered annuity payments are a blend of interest and return of capital. A prescribed annuity is taxed more favourably than a non-registered fixed-income product. These payments can help minimize claw back of applicable government benefits since only part of the annuity payment is considered net income for tax purposes. Non-registered annuities also help level out tax charges and yield more after-tax income up front.
Features vary by product. Ask your advisor for more information.