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When we refer to an annuity, we think of a person who receives a pension cheque each month. There are many types, from life annuity to an annuity certain, immediate and deferred, prescribed and non-prescribed. There are also interesting solutions when combining annuities and life insurance.

Insured Annuity Solutions - Increase your after-tax retirement income and preserve your investment

Introducing the Insured Annuity Solution...

This solution combines two financial instruments:

  • Prescribed Life Annuity
  • Life Insurance policy

This combination creates an extraordinary opportunity to increase income, lower taxation and guarantee the investment capital is returned at death to the beneficiaries.

How it Works

Step 1: Purchase the Life Annuity
The Investor's Capital is used to purchase a prescribed zero life annuity which provides income for life. This type of annuity is a blend of capital and interest and is extremely tax-efficient with non-registered funds.
The “prescribed” component levels the taxable portion to be the same each year. It is this blend which makes the income very tax efficient.

Fact: The older the annuitant, the more annual income an annuity will provide.

The “life annuity” provides an income only during the life of the annuitant. The older the annuitant, the higher the annuity income. The ‘zero’ denotes that there will be no income paid after the annuitant dies.

Step 2: Purchase the Life Insurance
A life insurance policy is purchased using a portion of the income provided by the annuity. The policy death benefit ensures that the original capital is returned for the benefit of the annuitant’s beneficiaries.

The life insurance contract must provide coverage for “life”. Cost of the insurance plays an important role as it directly impacts how much after-tax income will be generated from an insured annuity.
The most cost effective plans to do this is usually the Term to 100 plans, paid-up at age 100 or a Universal Life plan with guaranteed level cost of insurance.

Fact: The older the applicant, the higher the life insurance premium will be.

A Life Annuity backed by a Life Insurance policy

  • No risk to investment income regardless of market conditions
  • The annuity guarantees the income for life
  • Provides a higher income over traditional GIC income
  • The life insurance guarantees the preservation of invested capital, completely tax-free!

The Insured Annuity concept allows investors to earn a higher after-tax income using the annuity payout and to ensure that the original capital used to purchase the annuity will be returned to the estate tax-free!
The safety of this type of concept protects investors against fluctuating interest rates, loss of capital and at the same time earning a higher income and paying less taxes. It's a win-win situation!

Please Note...
There are some important factors to consider when purchasing an Insured Annuity:

  • The Life Insured must be in reasonably good health. This concept will not work if the investor is uninsurable or the cost of insurance is prohibitive.
  • Look for the best annuity and permanent life insurance rates, taking into consideration the strength of the company issuing each contract.
  • Each contract is issued separate and independent.
  • The Life Insured should be aware that the life annuity is not cancellable...the decision is for life!
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