ANNUITIES-TYPES, CONTRIBUTIONS BENEFITS AND DRAWBACKS

ANNUITIES-TYPES, CONTRIBUTIONS BENEFITS AND DRAWBACKS

ANNUITIES-TYPES, CONTRIBUTIONS BENEFITS AND DRAWBACKS

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There are various kinds of annuities designed to meet a number of different financial priorities. When choosing the right annuity for you, consider all of your options. If you are interested in exploring any of the annuity options below, please ask your financial advisor for more information. Manulife also offers a number of special annuity options for specific situations.

Life Annuities

Term Certain Annuities

Prescribed Annuities

Life Annuities

Life Annuities will provide you with a guaranteed regular income for the rest of your life, no matter how long you live. Life Annuities can be purchased as a single life, which is based on one person's life, or as a joint and survivor life, which is based on the lives of two people. Life Annuities can be purchased with or without a guarantee period(ftp.prenhall.com).

Example:

Bert and Barbara are retiring this year and want to ensure they have regular income from their investments for the rest of their lives. After discussing this situation with their financial advisor, they decided to invest a portion of their RRSP savings in a Joint and Survivor Life Annuity. By purchasing this type of Life Annuity, they have guaranteed a retirement income until the last spouse dies. Now Bert and Barbara have the added comfort of knowing they will receive a dependable income for the rest of their lives, no matter what happens.

Term Certain Annuities

Term Certain Annuities provide investors with a guaranteed, regular income for a selected period of time. Once this period is over, income payments cease and the annuity contract ends.

Example:

Marv and Betty are retired and looking for a way to help fund their daughter's living expenses in British Columbia for the next five years while she is going to medical school. After discussing the situation with their financial advisor, Marv and Betty decide to invest in a 5-year Term Certain Annuity. By purchasing this type of annuity, Marv and Betty don't have to worry about funding income for their daughter from their other investments and can better enjoy their retirement(www.manulife.ca).

Prescribed Annuities

Offer potential preferential tax treatment if you are investing in annuities using non-registered funds.

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When it comes to the availability of saving vehicles many option are available. These options include traditional passbook saving account, certificates of deposits, bonds, your piggy bank and money market accounts. Some people forget to include annuities in this list.

What is this annuity and how is this relates to this list? Annuity is basically an investment vehicle that works very similar to certificate of deposits issued by banks. It is basically an insurance product offered by insurance companies. In this type of investment a series of continuous payments is offered in exchange of an up front payment which you can say initial investment. This is best option to maximize your income if you are senior with good health. Annuity is basically of two types; immediate annuity and deferred ...