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Why do I need an annuity?

After years of hard work, you deserve a rewarding retirement. But it takes planning to reach that goal and traditional sources of retirement income are decreasing. In the past, Canadians could count on three sources of retirement income – company pension plans, personal savings and government pension plans1. But today, only 38% of paid workers have a company-sponsored pension plan1 and 50 per cent of Canadians are concerned they will not have enough funds to live comfortably during retirement.

To safeguard against the risk of outliving your assets, you may want to consider an annuity.

What is an annuity?

An annuity is a contract issued by a life insurance provider that guarantees a steady stream of payments at some point in the future. Annuities have two phases:

  • The accumulation phase, during which you contribute to your annuity and your investment grows as interest is credited.
  • The payout phase, when the investment you have accumulated is paid out to you.

The size of the payments you receive from your annuity will depend on the size of your investment and the length of time that investment is held. Annuities can be registered as part of your Registered Retirement Savings Plan (RRSP) so that contributions are tax-deductible and your funds grow tax-deferred.3 You can also hold an annuity in a Tax-Free Savings Account (TFSA) where your investment earnings will accumulate tax free.

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Choose the product that’s right for you 

Annuity Plus4 Annuity Plus TFSA4

 Overview

Annuity Plus can provide a reliable source of future income in exchange for a premium or series of premiums.

Overview

Annuity Plus TFSA lets you save for your future with interest earnings that accumulate tax free.

 Best for

Conservative investors with a need for guaranteed investment growth.

 Best for

Conservative investors with a need to protect investment earnings from taxes.

 Key features

A choice of daily or guaranteed investment options
Convenient preauthorized cheque program for regular deposits
Guaranteed return of invested principal

 Key features

A choice of daily or guaranteed investment options
Take your money out whenever you want, for any reason
Re-contribute to your TFSA without penalties

 

Interest accounts 

Daily Interest Account (DIA)
 Guaranteed Interest Accounts (GIA terms of 1, 2, 3, 4, 5 and 10 years are available)

Interest accounts 

Daily Interest Account (DIA)
 Guaranteed Interest Accounts 
(GIA terms of 1, 2, 3, 4, 5 and 10 years are available)

 

Minimum deposit 

DIA: $50
GIA: $1,000

 Minimum deposit

DIA: $50
GIA: $1,000 

 Maximum deposit

$250,000 lump sum deposit (without prior approval)

 Maximum deposit

$10,000 per year

 Fees

No

 Fees

Withdrawals may be subject to 
administration fees.


1 Statistics Canada: Percentage of labour Force and Employees Covered by a Registered Pension Plan.
2 CLHIA Industry Fact Sheet – Retirement Savings 2012
3 Foresters, their representatives and employees, do not give legal or tax advice. The information given here is merely a summary of our understanding of current laws and regulations. Prospective purchasers should consult their tax or legal advisor.
4 Underwritten by The Independent Order of Foresters.

412593 CAN (09/15)
 
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