Investment Solutions Conventional Annuities

Transcription

1 Investment Solutions Conventional Annuities with Standard Life

2 Hello. After years of hard work and saving, you want to make the most of your retirement. You shouldn t have to worry about not having enough money to help you live your retirement dreams and still be able to cover basic expenses. That s why a Standard Life annuity can help. It provides an income for life and, best of all, is simple and easy to understand. Conventional annuities offer steady, guaranteed income peace of mind that you will not outlive your assets transparency a simple investment

3 The Annuity Advantage How does an Annuity compare with a Guaranteed Investment Certificate (GIC)? With an annuity, you can generate the same income as a GIC, and the income is guaranteed for life. The income advantage A GIC does not provide a guaranteed rate for life. It will provide an interest rate for a fixed period of time, and the interest you get depends on the rates at the time the money is invested or renewed. For example, John, age 80, has a 5-year GIC of $500,000 earning 4.0% annually and paying him a gross monthly interest income of $1,667. At the end of the 5 years, his income will be based on the interest rates at that time, and he will have to renew the GIC. While he may be able to get the same rate, if the rate is lower, his income will go down. With an annuity, he can generate the same income as a GIC, $1,667, and it s guaranteed for life. It would only require a $166,450 1 premium to generate that same income. This is 67% less than the GIC, and represents an annual return of a little over 12%. Similarly, with a $500,000 initial investment, an annuity would generate $5,066 2 in gross monthly income over 3 times the GIC income. With a GIC ($500,000 with an interest rate of 4.0%), a monthly income of $5,066 would exhaust the GIC in 10 years, or by age 90. The tax advantage All else being equal, there is less taxable income from an annuity than a GIC. In our example, a gross monthly income of $1,667 from a GIC would generate an annual taxable income of almost $20,000 each year. On the other hand, an annuity with the same gross monthly income as the GIC would generate an annual taxable income of approximately $1, Less tax to pay means more income for you. Enriched Annuity The Enriched Annuity is Standard Life s tailor-made annuity solution. Individuals with a health problem, such as high blood pressure, diabetes, or heart disease, can benefit from special rates to generate a higher income and help enrich their lifestyle. For example: Susan, 67 years old, is 5 6 and is overweight. She suffered a stroke 5 years ago and currently has hypertension (high blood pressure), high cholesterol and diabetes, which are controlled by medication. How can an annuity help Susan? If Susan were in better health, a $500,000 conventional annuity would provide her with an income of $3,135 per month. Due to her health issues, Susan qualifies for an Enriched Annuity, which would give her $3,581 per month. That s $446 more every month. 3 1 Assumptions: $1,667 monthly, single premium paid on May 1, 2009 and Annuity Commencement Date June 1, Single Life, non-registered annuity with 5 year guarantee. On a prescribed taxation basis. 2 Assumptions: $500,000 single premium paid May 1, 2009 and Annuity Commencement Date June 1, Single Life, non-registered annuity with 5 year guarantee. 3 Assumptions: $500,000 single premium paid May 1, 2009 and Annuity Commencement Date June 1, Single Life, non-registered annuity with no guaranteed period.

4 The table below provides an example of income at different ages and with different guaranteed periods.* For example, a male, age 75 who purchases an annuity with the Life Cash Refund option, would receive $3,824 per month. $500,000 Premium Monthly annuity income with: 10-year income guarantee Installment 1 Refund Life Cash 2 Refund CPI-Indexing (10-yr guarantee) no guarantee Age 60 Male $2,910 $2,865 $2,801 $2,773 $1,965 Female $2,706 $2,688 $2,649 $2,635 $1,796 Joint & Survivor $2,493 $2,492 $2,486 N/A $1,617 Age 65 Male $3,262 $3,168 $3,080 $3,039 $2,275 Female $2,992 $2,954 $2,897 $2,876 $2,068 Joint & Survivor $2,716 $2,713 $2,699 N/A $1,844 Age 70 Male $3,736 $3,539 $3,442 $3,381 $2,663 Female $3,396 $3,307 $3,231 $3,197 $2,431 Joint & Survivor $3,024 $3,014 $2,987 N/A $2,152 Age 75 Male $4,385 $3,973 $3,917 $3,824 $3,118 Female $3,964 $3,752 $3,679 $3,624 $2,890 Joint & Survivor $3,456 $3,420 $3,371 N/A $2,563 Age 80 Male $5,269 $4,407 $4,520 $4,385 $3,590 Female $4,779 $4,244 $4,263 $4,181 $3,415 Joint & Survivor $4,065 $3,924 $3,883 N/A $3,088 Age 85 Male $6,435 $4,760 N/A $5,073 $3,978 Female $5,862 $4,660 N/A $4,865 $3,867 Joint & Survivor $4,877 $4,435 N/A N/A $3,631 * Assumptions: $500,000 single premium paid May 1, 2009 and Annuity Commencement Date June 1, Non-registered annuity. 1 Installment Refund: Annuity payments continue until the sum of these payments equals the premium paid. 2 Life Cash Refund: Policyholder s premium, less annuity payments already made, is paid to his/her beneficiary.

5 It s your choice Single Life Annuity A steady source of income for as long as you live. Options available: Guaranteed Period Life Cash Refund Installment Refund Joint Life Annuity A steady source of income for as long as you live. Upon first death, income continues in full or at a reduced amount to the surviving spouse. Options available: Guaranteed Period Installment Refund Term Certain Annuity Provides guaranteed income payments for a specified period. Income options Annuities provide several income payment options, including: level income, increasing income based on a specific percentage or amount you choose, or indexed to the Consumer Price Index (CPI). Sources of funds An annuity can be set up with either registered money, such as an RRSP or RRIF, or with non-registered funds, such as savings or the sale of a home. Security benefits Both The Standard Life Assurance Company of Canada and Standard Life Assurance Limited are members of Assuris. Details about the extent of Assuris protection are available at or in its brochure, which can be obtained from your financial advisor, life insurance company or Assuris from info@assuris.ca or by calling Standard Life s sound investment practices can give you the peace of mind you need when it comes to your retirement especially in these uncertain times. Rescission rights: An Annuity Policy cannot be surrendered on or after the Annuity Commencement Date.

6 Retirement Investments Insurance Talk soon The information provided in this document is for illustration purposes only. Though Standard Life has taken all reasonable care to show accurate information, it reserves the right to correct any error or omission. Premiums are not guaranteed and may vary depending on the particulars of each case. Certain conditions, restrictions and limitations apply, please refer to the policy for detailed information on the products. The Standard Life Assurance Company of Canada Standard Life Assurance Limited