Insured Annuity: A Great Alternative and a Low Interest Rate Environment

An insured annuity is a strategy that provides an alternative to today’s low interest rate fixed investments, including GICs, T-Bills and Guaranteed Investment Accounts.

They provide a tax-efficient lifetime income and guaranteed income from the original principal investment.

How does it work?

The applicant deposits a lump sum into a lifetime annuity and takes out a equivalent amount of Permanent Life Insurance. A small amount of the income the applicant receives is taxable and a portion of this money can be used to pay the cost of the life insurance policy. The life insurance pays out to the insured’s beneficiary tax-free. A twist to this option is choosing an increasing death benefit, allowing the insured’s beneficiaries to receive a death benefit in excess of the applicant’s initial investment.

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