As we mentioned in other articles the government only represents about 30 and many of us do not have one. It is up to individuals to invest wisely short and long term in order to make up for the short fall if he or she would like to live comfortably after retirement without giving up some retirement plans. Now you have reached your retirement age, there are some important investment options for your RRSP or 401k plan. In this article, we will discuss types of annuity.



1. Life annuity

Life annuity is a financial contract signed between you and insurance companies that guarantee to makes a series of payments in the future to you in exchange for the immediate payment of a lump sum or a series of payments prior to the return payments. Depending on the types of life annuity, payments may not stop if you die, any payment may be paid to your spouse or beneficiary such as guaranteed term annuity.

2. Term certain annuity

Term certain annuity provides you with a fixed monthly income until age 90, rather than for your full life. Should you die before age 90, your spouse receives the payments until her/his 90th year.The minimum term of term certain annuity is 3 years and the maximum term is 40 years.

3. Prescribed annuity

Prescribe annuity has a tax preferred status. There is no tax on the return of capital, however the interest that is included in the annuitant's income is level throughout the term of the annuity. The taxable amount is lower in the early years and higher in later years, since it can only be purchased by non-registered money.

4. Deferred annuity

In deferred annuity, the proceeds from the plan must be used to purchase an annuity by a 'specific' date in the future such as it may not begin later than the month of January of the year you turn age 70, although they can be put in place as early as age 60.

5. Immediate annuity

Immediate annuity means as soon as you pay a lump sum, you can receive annuity payments immediately.

6. Cashable annuity

If cashable annuity is a clause in the contract, the insurance company may allow you to cash in your annuity if you lose your health, or if interest rates are much higher than when you bought the annuity.

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