What are income annuities?
Make a lump sum premium payment to an insurance company, and in return the company guarantees to pay you a certain amount for a given period - either for a specified number of years or for as long as you live.
You may want to consider a life annuity if you’re interested in:
Guaranteed income
Create an “income floor” to ensure you have enough guaranteed income to pay your basic essential living expenses.
Financial flexibility
Supplement other sources of guaranteed lifetime income such as Canada Pension Plan (CPP), Old Age Security (OAS) or a defined benefit pension.
Security and freedom
Unlike traditional investments, you don’t have to worry about managing your investments or the ups and downs of the market since your payments are guaranteed.
Income annuity options from BMO Insurance
Consider these options and select the right annuity policy for your financial needs:
Life Annuity
A single life annuity provides income for as long as you live- A joint life annuity provides income for as long as you or your spouse lives
- If you choose a guaranteed period on your annuity, your income payments will be guaranteed for the selected number of years
- If you die during the guaranteed period, your beneficiary will receive a death benefit
- Buy an income annuity between $10,000 and $1 million depending on number of annuitants and source of funds.
Term Certain Annuity
- Provides a specified number of guaranteed income payments, from 3 to 25 years
- If you die before all the specified payments have been made, your beneficiary will receive a death benefit
- Particularly useful if you need a steady stream of income for a specific length of time
- Buy an income annuity between $10,000 and $2 million
Additional Benefits
- Potential inflation protection
- Potential creditor protection footnote 1
- Preferred tax treatment
- Estate planning advantages
Frequently asked questions about income annuities
With income annuities, you make a lump sum premium payment to an insurance company and in return, the company guarantees to pay you a certain amount for a given period, either for a specified number of years or for as long as you live.
These products serve different purposes. Life insurance pays a sum of money when an insured person dies. In contrast, annuities offer a guaranteed income stream while the annuitant is still living.
BMO Insurance offers two options that can cover your specific needs:
- A Life Annuity provides guaranteed income over the life of the annuitant for a single life policy. A joint life policy provides guaranteed income over the life of the annuitant and the life of the second annuitant.
- A Term Certain Annuity provides income over a guaranteed period of time that you specify.
The length of time is up to you!
Annuities cannot be surrendered for value.
A RRIF and an annuity can be part of a retirement plan, for different purposes. A RRIF comes with investment risk and the potential of running out of money, but offers flexibility and options. Annuities are less flexible but offer a guarantee that you won’t outlive your money. The choice between the two depends on your personal circumstances.
Insights and advice
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