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Term Certain Annuity

A term certain annuity provides a safe and secure income stream over a specific period of time or term.

If you pass away prior to the end of your term certain annuity, the remaining payments will be paid out to your beneficiaries as outlined in the original annuity contract.

Most term certain annuities are purchased with non-registered funds or funds from your Tax Free Savings Account (TFSA) because there are special restrictions applied to registered term certain annuities.

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What Factors Affect Term Certain Annuity Payouts?

Annuitant based factors:

Desired income amount &/or your available capital to commit to the annuity contract.
Number of years (term) you wish to receive income payments.

Unlike life annuities, age and gender of the term certain annuitant or annuitants if you select a joint annuity, doesn't affect the annuity payment because the insurance company knows with certainty how many payments it will be making to the annuity owner(s).

Some of the factors the Life Insurance Company takes into consideration when determing their payout include:

The insurance company’s current capital needs to meet business objectives and fund their operations.
The insurance company’s short- and medium-term plans for expansion or mergers & acquisition.
The current interest rate environment.
The economic outlook and opportunities on the horizon.

Who Buys Term Certain Annuities?

Term certain annuities are purchased to provide an income payments for a specific number of years. They are usually purchased with a specific purpose in mind. Some common reasons Candians buy term certain annuities include:

To provide income while you start a business or make a career change.
To supplement income over an extended maternity leave.
To pay for a child or grandchild’s college or university.
To make loan or mortgage payments.
To pay for a limited payment period (10,15 or 20 pay) life insurance policy.
To bridge income so you can take early retirment.
To bridge income in retirement so that you can delay collecting CPP and/or OAS.

What To Expect When Buying Your Term Certain Annuity.

The buyer either decides how much capital they want to commit to their annuity or how much income they want to receive over the term of the annuity.

The insurance company calculates the monthly annuity income payment they are willing to provide the Annuity owner based on the initial deposit amount. Age and gender of the annuitant(s) do not affect the annuity payment because the insurance company knows with certainty how many payments it will be making to the annuity owner.

Term certain anuity payout rates fluctuate daily and may vary quite a bit from insurance company to insurance company.

Next, your independent Qualified Annuity Expert will “price check” the current annuity payment environment by conducting a market survey. This is a special report outlining what all insurance companies in the Annuity market are willing to pay you given your preferred terms and summarize it in a Market Summary Report.

Once the report is ready, you will meet with your independent Qualified Annuity Expert, who will walk you through all your options and share any additional information that is relevant to your situation like the best times of the year to purchase your Annuity and how to lock in your rate, so you won’t be disappointed once the wheels are in motion.

Once your Annuity is issued, you will receive your first monthly payment according to the terms of the contract.

These payments will continue as scheduled, every month until the term ends and the contract requirements are fulfilled by the insurance company.

If you pass away prior to the end of your term certain annuity, the remaining payments will be paid out to your beneficiaries as outlined in the original annuity contract. The payout will either be as a continuation of your monthly payments or as a lump sum, depending on your preference at the time of purchase.

Have Questions About Annuities?

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We help take the mystery out of Canadian retirement income annuities by answering some of the most commonly asked questions in a simple, educational personalized way.

Our Qualified Annuity Experts will provide you with objective annuity advice and show you how including an annuity in your retirement income plan might help you achieve your life and legacy goals.

Because they are fiduciaries, they will be frank with you and tell you if an annuity isn’t a good idea given your circumstances and point you in the best direction so you will have a better outcome.

If this is the case they will advise you in writing as to why they aren’t suitable for your situation so that you won’t end up regretting your annuity decision later.

We offer a no cost, no obligation, no sales pitch, no pressure, all questions answered 15 minute chat.

If you are interested in learning more just click the button below to schedule your chat get your answers from one of our Qualified Annuity Experts.