What are deferred annuities best suited for? The challenge with this question is that the term deferred annuity has at least two "definitions". I will describe two scenarios and if your question is not answered, please do not hesitate to contact me.
A deferred annuity can refer to exchanging a lump sum for a guaranteed income at a point in the future. In this situation, a deferred annuity would be suited for someone who wanted a guaranteed flow of income with no management responsibilities. A life annuity may or may not include a guaranteed payout. There are different options, so ask your insurance agent for details. In addition to the income amount, taxation during the the deferral period and of the income flow should be considered.
In Canada, a deferred annuity can also refer to Guaranteed Investment Annuities (GIA) and Segregated Funds (variable annuities). Both of these are issued by insurance companies and offer the option of an annuity in the future. Since they are issued by insurance companies, they also offer guarantees not offered by other institutions for non-registered investments. These include potential creditor protection and estate planning opportunities, such as bypassing probate. Segregated funds are similar to mutual funds, but they offer maturity and death guarantees. In addition, some segregated funds include the "locking in" of gains. Depending on your individual situation, there could also be some tax advantages to these plans. These type of deferred annuities are best suited for individuals who are looking for, and would benefit from, the additional features and guarantees.
This is an overview of a potentially complex subject.
If you would like to work with a local Retirement Planner, you could start with a Google search. For example if you search for, retirement planner Halifax or retirement planning Halifax, my name along with several others will come up. It will be the same in your community.
If you have further questions, or feel that I could be of assistance please do not hesitate to contact me.
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A deferred annuity can refer to exchanging a lump sum for a guaranteed income at a point in the future. In this situation, a deferred annuity would be suited for someone who wanted a guaranteed flow of income with no management responsibilities. A life annuity may or may not include a guaranteed payout. There are different options, so ask your insurance agent for details. In addition to the income amount, taxation during the the deferral period and of the income flow should be considered.
In Canada, a deferred annuity can also refer to Guaranteed Investment Annuities (GIA) and Segregated Funds (variable annuities). Both of these are issued by insurance companies and offer the option of an annuity in the future. Since they are issued by insurance companies, they also offer guarantees not offered by other institutions for non-registered investments. These include potential creditor protection and estate planning opportunities, such as bypassing probate. Segregated funds are similar to mutual funds, but they offer maturity and death guarantees. In addition, some segregated funds include the "locking in" of gains. Depending on your individual situation, there could also be some tax advantages to these plans. These type of deferred annuities are best suited for individuals who are looking for, and would benefit from, the additional features and guarantees.
This is an overview of a potentially complex subject.
If you would like to work with a local Retirement Planner, you could start with a Google search. For example if you search for, retirement planner Halifax or retirement planning Halifax, my name along with several others will come up. It will be the same in your community.
If you have further questions, or feel that I could be of assistance please do not hesitate to contact me.