How annuities work in Canada + MORE Jul 17th

Annuities are life insurance products that pay a regular income to a purchaser. When you buy an annuity, it’s like buying a pension plan with a lump sum premium paid from your savings. The payments you receive include a return of your original capital and interest income on that capital. It may also include the remaining capital of others who purchased an annuity who died before their life expectancy.

Annuity payments can be paid to you monthly, like with a pension. They can also be paid quarterly, semi-annually or annually.

When payments begin right away, you have what’s called an immediate annuity. Payments can also be deferred and begin in the future. This type of annuity is called a deferred annuity.

How are annuity payments determined?

Annuity payments depend on a variety of factors, including:

Your sex: Women are statistically more likely to live longer than men, so they receive lower payments.Your age: The later your annuity payments begin, the higher the payments since less payments are likely to be made between the starting age and your life expectancy…