What is an annuity?
An annuity is like a mortgage payment that works in reverse.
Instead of borrowing money, you invest money with a financial institution. In exchange for this investment, the financial institution will then make regular income payments back to you that contain both interest and principal. But unlike a mortgage that would typically end after a specific period, payments from a annuity can be guaranteed for the rest of your life.
Life Annuities
Life Annuities provide a guaranteed income for the remainder of an investor's life, no matter how long they live. Only life insurance companies can offer annuities that guarantee income for as long as your clients live. Banks and trust companies can only offer term certain annuities, which provide income for a specific period of time and then end.
Life Annuities are ideal for clients who:
- are concerned about out-living their savings
- want to reduce on-going investment decisions
- require a simple and secure source of income for life, without the need to access their capital
- wish to minimize tax on investment income
- need diversification in their investment portfolio
- want to support a charity in a tax-efficient manner
- prefer to transfer inheritances to their children gradually (versus one lump-sum)
Term Certain Annuities
Term Certain Annuities provide investors with a guaranteed, regular income for a specific period of time. Once this period is over, income payments cease and the annuity contract ends. If the annuitant dies before payments are scheduled to end, payments will continue to the designated beneficiary until the specified period has expired.
Term Certain Annuities are ideal for clients who:
- want to reduce on-going investment decisions
- require a simple and secure source of income
- need an income for a specific time period such as a sabbatical
- want to convert savings into income to fund a child's on-going educational costs
- prefer to transfer inheritances to their children gradually (versus one lump-sum)
Accelerated Annuities
If your client has a serious illness, health condition or multiple health conditions, they can often qualify for a higher income than offered by a traditional life annuity. The Manulife Accelerated Annuity recognizes that clients with a reduced life expectancy deserve higher income payments. The more advanced your client's health condition, the higher their resulting income.
An Accelerated Annuity is ideal for clients who:
- are age 45 or older and have suffered or are presently suffering from a life-threatening illness such as cancer, chronic heart disease, congestive heart failure, stroke, severe hypertension, diabetes, Alzheimer's, Parkinson's, multiple sclerosis, renal, liver or respiratory failure
- require a simple and secure income for life
- want to increase their current standard of living
- are concerned about funding ongoing medical treatment costs or personal care expenses
The Nursing Care Income Plan
The Nursing Care Income Plan is an innovative annuity product designed for families currently facing nursing care expenses. This plan is designed to reduce the risk of nursing care recipients outliving their savings, and uses an assessment method that is unique in Canada. Through one up-front investment, it will help families cover the on-going costs of nursing care.
The Nursing Care Income Plan is based on the Accelerated Annuity. However, the Request For Illustration and the follow-up process with the family physician are more comprehensive. For nursing care clients, this additional medical information will normally result in an even higher income or a lower up front premium.
