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As we approach our retirement years, we hope and expect the daily grind of life to come to a stop. It is imperative to plan financially, as monthly bills and expenses will continue to rise. Purchasing an annuity plan is a smart way to make sure that you have a continuous stream of income post-retirement, including helping you keep a tab of your expenses.

What is an annuity plan?

An annuity plan is a financial product that ensures a portion of your savings is turned into a regular source of income for either a fixed period or for the rest of your life. The decision is left solely up to you on how you want your annuity plan to be. Irrespective of how the market fluctuates, or if the interest rates change, you will still continue to receive payments to cover expenses that are essential, including supporting your retirement lifestyle. Additionally, you can place a portion of your retirement savings, such as a Registered Retirement Savings Plan (RRSP) into an annuity. The money can be used to fund your children’s education, purchase your dream property, or even take a well-deserved vacation. For further information on annuities, please do not hesitate to reach out to our professional and friendly team at InsLyf.

Different types of annuities:

There are various kinds of annuity plans. It is vital that you clearly understand each type of annuity plan, and what benefits and risks each of these plans have. Before you choose to purchase an annuity plan, you must:

  • Decide whether you wish for the annuity to continue and be paid to the beneficiary after your demise. purchase an annuity plan, you must:

  • Decide whether you want regular income payments. Below-mentioned is various types of annuity plans:

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    Single-life annuity

    This annuity plan offers a guaranteed income for one individual, irrespective of the interest rates and market fluctuations.

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    Joint-life annuity:

    This annuity plan offers a guaranteed income for two people, ideally a married couple. In the event any one of the two passes away first, the payments will continue until the life of the other surviving individual.

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    Term-certain annuity:

    This annuity plan offers a guaranteed income for a fixed period or until a certain age of the owner of the annuity plan.

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    Variable annuity:

    A variable annuity plan is when the provider invests your funds in products that will offer a variable return like equities. You have the option to receive a fixed income or a variable income. However, the fixed income portion is ideally lower than what you would earn with a non-variable annuity. The variable component you will receive is solely based on how the investment performs. If the investment performs really well, you will earn more money and vice-versa. It is unlike a non-variable annuity where regardless of the market situation and interest rates, you are guaranteed income payments.

How does an annuity plan work?

  • You must work with a reputable financial advisor like InsLyf to identify when you plan to retire, and how much regular income you will be needing.

  • Make a payment which is lump-sum.

  • Decide on receiving income payments for a set period.

  • Determine to receive from one individual or a couple.

  • Decide if you wish to receive income payments annually, semi-quarterly, quarterly, or annually.

  • Personalize your annuity with several options that suit your specific needs.

  • Begin receiving retirement paycheques.

Things to consider before purchasing an annuity plan:

You must keep the following things in mind when considering purchasing an annuity plan:

When to purchase the annuity plan:

The ideal time to purchase an annuity plan depends on your sources of income and your personal needs. For instance, you may choose to make more money early into your retirement years to take up new hobbies or travel. Or you may choose to opt for guaranteed incomes in the later stages of your retirement to cover your healthcare expenses. If that is the case, the best option is to purchase a deferred annuity plan. This is an annuity plan where you will make the payments immediately but will receive regular payments at the later stage of your retirement. Deferred annuities provide higher payments than immediate life annuities. If you wish to purchase a deferred annuity from your retirement savings or employer pension plan, there will be certain tax rules that will be applied regarding the amount limit or age.

To schedule a free consultation or to purchase an annuity plan, please do not hesitate to contact InsLyf today at +1 905-901-1717.