Annuities

Annuties by Gordon M.

Annuities are a Life insurance company product.  In general you pay them a lump sum, usually the all or some of the proceeds of your retirement account, and they contract to pay you an income for either a fixed period or for life.

Another benefit annuities offer is the chance to have money you are not using grow tax-deferred. The IRS and Revenue Canada treat annuities as retirement vehicles similar to how they treat an IRA or RRSP along with similar rules and regulations.

An annuity has a death benefit. Annuities death benefits work much the same as the death benefit of life insurance policies. When the owner passes away, the beneficiary will receive the higher of the account value or the death benefit. This prevents situations where an annuitant enters into an annuity and shortly dies.  This way all the capital is not lost to the estate.

All annuities offer flexibility in payment options.

• - Lump sum distribution (One time lump sum payout.)
• - Regular distributions (monthly, quarterly, and yearly)
• - Annuitization (Income for life)

Some annuities allow you to participate in market returns. Variable annuities offer an investor the chance to participate better returns.

Talk to your insurance agent who know about annuities and which annuities will work in your particular retirement scenario. All annuities are not created the same.  Professional advice is a "must have".

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