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The changing direction of annuities

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Philip C. Wild:

Not a fair comparison. It is not accurate to compare a non-comissioned annuity product to the expenses of a LIF paying trailing comp to an advisor. Use annuity rates with the 3% compensation built in. If it’s advisors that need to promote the use of annuities why do you quote rates without paying the advisor for his skill?

Tuesday, December 13 at 5:22 pm | Reply

Brian Poncelet,CFP:

I wrote a story on this topic about two years ago on Gail Vaz-Oxlade’s blog (‘Til debt do us apart)

The real key here is the person needs permanent life insurance to get the biggest bang, currently for males at 72 the rate is over 8.2% for life.

Another concept is rather than losing control over one’s money I put a very simple calculator on my web site

Person A who has more money saved but no life insurance and who is trying to live on his earnings every year has less money to spend in retirement than Person B who has much less money, yet wishes to spend his money to zero in twenty years has more money in retirement, pays less taxes, takes on less risk and has better protection.



Tuesday, December 13 at 5:40 pm | Reply

Peter Smith:

Great article. Your annuity system is much more complex than over here in the UK which even still is not well understood by most retirees. Do you feel over complications allows people to make the wrong choices?


Sunday, January 15 at 7:59 am | Reply

Brian Poncelet, CFP:

Back to Back Annuity (insured annuity)
This example compares GIC vs a life annuity with a matching life insurance policy.

■Current GIC rate 3.25% (five year rate lock-in)
■65 year old male purchases $100,000 non-reg annuity and $100,000 life insurance policy
■Tax bracket 31.41% ($40,970 up to $65,345) Ontario

Insured annuity

Annuity GIC

Gross income $8,165.28 $3250

Taxes payable $742.90 $1,012.37

Life insurance $3,240 $0

Total net $4,182.38 $2,237.63

After taxes are considered, a GIC of over 6% is needed to equal the annuity. At higher tax brackets, a GIC paying over 8% is needed! Also, under the annuity strategy, he pays less tax as he is showing less taxable income and is less susceptible to OAS claw backs and age amount (age 65) claw back. This could mean many hundreds or thousands of dollars saved every year

The key is to get permanent life insurance (own don’t rent term) asap. Why? To enjoy more money pay less taxes and have more money in retirement.


Monday, February 13 at 9:14 pm | Reply

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