May 8th, 2013
Life Annuities are a contract that's typically sold by life insurance carriers where the client can deposit a lump sum of cash, and depending on the nature of that deposit, the insurance company can offer them a contract, which guarantees them an income over their lifetime.
According to Alex Lekas, director of sales in Ontario for Industrial Alliance Insurance and Financial Services Inc., there are various marked advantages to this arrangement, including income security, peace of mind, help with retirement planning, and tax efficiencies that may be available in the future.
Of course, along with these advantages come with one major shortcoming. "Once you make that cash deposit, you are essentially locked into the contract, so even though you are getting this guaranteed income for life, you no longer have any flexibility with the money." says Lekas.
(How to Create a Guaranteed Retirement Fund with Life Annuities