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Regular Monthly Payment
An annuity is a regular payment that is provided on a periodic basis, such as monthly, in return for a lump sum payment.
Guaranteed Income for Life or Term
It is a great way to guarantee income for life, but higher payments can also be guaranteed for a specific term, such as 10 years.
Inflation Adjustment
Annuity payments are fixed payments but can be adjusted for inflation if preferred.
Return of Cash
Annuities can be structured to provide for return of a portion of the deposit to the beneficiary upon death of the holder of the annuity (annuitant).
Tax Efficient Payments
Only a small part of payments from non-registered sources is taxable as most is structured as return of capital.
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Survivor Guarantee
Payments can be guaranteed for a survivor or beneficiary.
Higher than Interest Rates
Since payments include interest, return of capital, and a mortality credit they are often higher than what many people expect. Due to this mortality credit, rates increase with the age of annuitants.
Annuity Payment Rates
For a $300,000 deposit as at Feb. 19, 2015 a male and female could get the following for life:
- a 60 year old male could get $1,387 per month for a 5.6% annual return
- a 60 year old female could get $1,254 per month for a 5% annual return
- a 70 year old male could get $2,399 per month for life for a 7.6% return.
- a 70 year old female could get $1,679 per month for a 6.7% annual return
- an 80 year old male could get $2,714 per month for a 10.9% annual return
- an 80 year old female could get $2,377 per month for a 9.5% annual return
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