Annuities: guaranteed income

An annuity provides you with a regular, fixed income payment for life or a set term of your choice, usually paid monthly. Annuities are granted at a minimum age of 50 and a maximum age of 90. You may purchase an annuity using funds you’ve accumulated in most savings plans.

There are several types of annuities available, but in most cases, your income payment amount is based on:

  • Age
  • Gender
  • Life expectancy
  • Interest rates
  • Funding amount
  • Type of guarantee

Annuities are a simple option that frees you from having to make difficult investment decisions. And, best of all, you can have a guaranteed income for the rest of your life.

Types of annuities

Single life annuity

This annuity provides fixed regular payments for as long as you live with payments stopping upon your death. While this annuity provides the maximum income, it may not be suitable for individuals who want payments to continue to a spouse or beneficiary.

Joint and last survivor life annuity

This joint and last survivor life annuity is based on two lives. It will provide income for your lifetime and, upon your death, your spouse’s lifetime.

Normally, pension plans are set up to provide a retirement income to both the employee and the spouse. Therefore, a joint life annuity must be selected unless the spouse (and the employee in certain provinces) signs a spousal waiver. This is also the case for locked-in RRSP funds.

Life with guarantee period annuity

A guarantee period of 5, 10 or 15 years is available for both single life, joint- and last-survivor annuities. This option provides a guaranteed income for the longer of either your lifetime or the guarantee period.

Term Certain Annuity

This annuity provides fixed regular payments for the period you select, for a minimum of five years.

While this annuity provides stable income for a guaranteed period, it may not be suitable for individuals who will live a long time or want to continue payments to a spouse.