What is an annuity?
An annuity protects you from the risk of outliving your money and helps to cover basic expenses in retirement. In exchange for a lump-sum premium, an insurance company – like Sun Life Financial – guarantees to pay you an income for life or as long as the annuity contract specifies. Your income will be secure from both market and interest rate risks – and, if you buy your annuity with non-registered savings, you could also benefit from tax savings.
Types of annuity products:
- A life annuity provides guaranteed income payments for as long as you live. Or in the case of a joint life annuity, as long as you or your spouse/partner lives.
- You also have the option to choose a guaranteed period. If you die before the end of that period, your beneficiary will receive the balance of the guaranteed income payments.
- With life annuities, you never have to worry about outliving your retirement income.
Term certain annuity
- A term certain annuity provides guaranteed income payments for a specific period of time.
- If you die before the end of that period, your beneficiary will receive the balance of the guaranteed income payments.
- Term certain annuities bought with money from an RRSP or RRIF must extend to age 90.
Purchasing annuity products
Step 1: Find an advisor
An advisor’s job is to help you understand how different products – each with their own features and options – can best meet your individual needs. Talk to your advisor; if you don't have an advisor, find one you're comfortable working with. There’s no cost to talk to an advisor.