An Annuity is a product that is offered by Insurance Companies and it provides a guaranteed income during retirement. Unlike other retirement income products such as a Life Income Fund (LIF) or a Retirement Income Fund (RIF) an Annuity can be purchased with both registered money from an Registered Retirement Savings Plan or non registered money such as personal savings or an inheritance.
Types of Annuities
There are several different types of Annuities available to investors but the basic concept is the same for all products. An annuity is a fixed contract between an investor and a company. The investor agrees to invest a one-time lump sum amount of money and in turn the company guarantees regular payments over a pre determined period of time. The payment amounts are calculated based on various factors such as the investment amount, interest rates, the persons age, their projected life span, and their gender.
