Insured Annuity

1
Insured Annuity

• Increase your
• after- tax Retirement
• Income
• Insurance Concepts
  
• 
  

2
What is an Insured Annuity?

• An Insured Annuity is simply a combination of
  a prescribed life annuity (provides a guaranteed
  income stream to you for life) and an insurance
  policy (returns 100 of the capital used to
  purchase the annuity to your children,
  grandchildren or estate tax free).

3
Is it right for you?

• Are you between the ages of 55 and 85?
• In good health?
• Looking for an alternative low risk investment,
  offering a higher after-tax yield?
• Have cash assets outside a registered plan?
  (RRSP, RIF etc.)

4
The Insured Annuity Advantages

• Increased income - can provide as much as up to
  90 more income over a traditional GIC or
  equivalent, for life.
• These increases can also mean a GIC would
  need to pay a pre-tax rate of return of up to 10
  on your investment..
• Estate protection - an amount equal to your
  initial investment is paid to your beneficiaries
  or estate when you die without estate or
  probate fees!

5
More advantages.

• Lower taxable income The taxable portion of
  your reportable income is decreased when using a
  prescribed life annuity. This means you will pay
  less tax on your annuity income, providing you
  the opportunity to maximize your government
  benefits.
• Minimized Investment Risk both the life
  insurance and the annuity contracts are fully
  guaranteed, giving you complete peace of mind.

6
How is that possible?

• A part of the income from your Annuity
  represents reimbursed capital, which is tax-free.
  
• The balance represents interest earnings on
  your investment, which are subject to tax.
• Ultimately, the net (after-tax) return on
  your Annuity will be far greater than what you
  would receive from a GIC.

7
Lets look at an example

• Bill is 75 yrs, healthy non-smoker.
• Retired and recently widowed.
• Received death benefit for 500,000 from his
  wifes insurance policy.
• Bill would like to use this money, both to draw
  an income and leave the capital for his children.
• The chart on the next page shows how Bill would
  compare investing in an Insured Annuity versus
  investing in a GIC.

8
62.19
9
Capital returned to Estate is 500,000
24,734
15,250
10
GIC Investment using Insured Annuity Income of
24,734 per year
11
Insured Life Annuity(back to back)
12
GIC Investment (using Insured Annuity net income)
13
To recap..

• Bills net annual income will be 24,734
  after paying for his life insurance policy. His
  equivalent annual pre-tax yield is 8.11
• Bill also benefits from a taxable income
  reduction of 80.
• This income will continue until death. The
  full 500,000 from the life insurance would be
  payable at that time, to Bills beneficiaries,
  tax-free.

14
One word of caution..
When purchasing an insured annuity you give up
the flexibility of reinvesting the GIC funds each
term. If you feel that the higher equivalent rate
of return compensates for this lack of
flexibility, the insured annuity might be for
you. As with any financial strategy, the
Insured Annuity should be viewed in conjunction
with all of your financial affairs. Actual
annuity income insurance cost will depend on
your age, gender, insurability rating, current
annuity rates and the amount deposited
15
The Insured Annuity Strategy

• Guaranteed income for life,
• Preferential tax treatment of annuity income,
• Replacement of your capital at death,
• Permanent life insurance protection,
• Tax free death benefit,
• Flexibility to change policy beneficiary and
  coverage amount,
• No probate fees on death benefit with named
  beneficiary,
• Maximize Government Benefits.

16
Insured Annuity
Increase your after-tax Retirement Income May
we provide you with a customized quote? Contact
us at Tel [phone]
Or E-mail info_at_insuranceconcepts.ca