Retirement Income Enhancer – Insured Annuity

 If you are like most Canadians, you may be looking for:

  • Guaranteed supplemental retirement income
  • Ways to guarantee you don’t lose any of your hard-earned money

A guaranteed income certificate (GIC) will work perfectly. The problem is that GIC revenue is interest income and is taxed at your marginal tax rate. In today’s low interest rate environment, you are lucky to earn 1.5% before tax.

An alternative is to take your lump sum of cash used to invest in a GIC and purchase a life annuity.  This pays you a regular income for the rest of your life.  You then use a portion of that preferentially taxed annuity income to purchase a permanent life insurance contract.  This will replace the money used to purchase the annuity when you pass away.  This strategy will typically produce a pre-tax rate of return between 3-5% and is guaranteed for life.

Benefits of the Retirement Income Enhancer 

  • Higher amount of net spendable income
  • Income guaranteed for life
  • Preferential tax treatment on the annuity income
  • Capital replaced at death and paid directly to your heirs
  • Beneficiaries can be changed at any time
  • No probate fees on the life insurance death benefit 

Male, 65, non-smoker, regular health
Non-Registered Funds GIC rate= 1.5%
Marginal Tax rate= 40%

An increase of 175% or $3,946/year
Rates are from the summer of 2021 and are subject to change.
An Increase of 158% or $3,547/year
Rates are from the summer of 2021 and are subject to change.