Annuity

Preparing for life after work. RRSPs, RRIFs, TFSAs, annuities and meeting future financial and psychological needs.
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SQRT
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Annuity

Post by SQRT » 29 Oct 2017 12:18

Ok I agree that annuities may not be for everyone. But I have the option of converting my alimony requirement into a life annuity for the Xwife. It would be a prescribed annuity and quite large (cost well into 7 figures). My issue is how to get the best price? I’m reluctant to get a commission salesperson involved because their comp is opaque to me and I don’t trust these guys. Can you buy these things directly from an insurance co? Thanks.

bill2009
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Re: Annuity

Post by bill2009 » 31 Oct 2017 19:28

yes you can buy them directly from insurance companies.

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Shakespeare
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Re: Annuity

Post by Shakespeare » 31 Oct 2017 19:52

There are quotes available at Annuity Rates Canada: Best annuity rates in Canada | LifeAnnuities.com. You may get a better rate because of the amount.
“A wise man should be prepared to abandon his baggage at any time.” -- R.A. Heinlein, The Door Into Summer.

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Re: Annuity

Post by SQRT » 01 Nov 2017 04:25

Shakespeare wrote:
31 Oct 2017 19:52
There are quotes available at Annuity Rates Canada: Best annuity rates in Canada | LifeAnnuities.com. You may get a better rate because of the amount.
Thanks. I have seen these type of sites before. They are put up by commissioned annuity brokers. I wonder if they would be cheaper if I went direct? I guess I should find out by doing that.

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Re: Annuity

Post by nomad » 01 Nov 2017 07:21

SQRT wrote:
01 Nov 2017 04:25
Thanks. I have seen these type of sites before. They are put up by commissioned annuity brokers. I wonder if they would be cheaper if I went direct? I guess I should find out by doing that.
Please let us know the outcome of your enquiry. I will have to look seriously at this option in a few years and the rate tables in the link provided look pretty dismal.
Not all those who wander are lost... J.R.R. Tolkien

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snowback96
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Re: Annuity

Post by snowback96 » 01 Nov 2017 08:13

Great site. Thanks for sharing the link!

I'm curious if anybody knows the minimum investment required to buy a life annuity in Canada? I've seen a few Canadian annuity calculators that use $50k as a minimum (e.g. RBC Insurance) for the calculation. I'm not sure if this is a real lower limit or just a nice round number for illustrative purposes.

I have a small Ontario LIRA and would be interested in turning it into an annuity at age 55 (by way of a LIF) to capture an extra 10 years of the pension tax credit. However, unless I get more aggressive and lucky with the account, it will be below $50k by the time I reach Freedom 55.

As for the original question...
SQRT wrote:
01 Nov 2017 04:25
Shakespeare wrote:
31 Oct 2017 19:52
There are quotes available at Annuity Rates Canada: Best annuity rates in Canada | LifeAnnuities.com. You may get a better rate because of the amount.
Thanks. I have seen these type of sites before. They are put up by commissioned annuity brokers. I wonder if they would be cheaper if I went direct? I guess I should find out by doing that.
My best guess is that the major insurance companies will not undercut the brokers that sell their product. Insurance products are typically a sales intenstive product so I'd be surprised if they want to piss off the sales channel for a few direct sales.

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Re: Annuity

Post by twa2w » 01 Nov 2017 13:07

SQT, you could try calling TD Ins to see if they will sell an annuity directly. I know RBC Ins did a few years ago. Not sure on pricing but their term life at the time was cheaper than through a broker.
Who knows you may get an employee pricing :-) at TD.

Snowback, if 50 K is indeed a minimum, you may be able to buy it for 50,000 by using the LIRA plus some top up funds from your RSP. Not sure if this would make a difference. The annuity pricing and taxation is normally the same for a RSP or LIRA sourced annuity.

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Re: Annuity

Post by SQRT » 01 Nov 2017 15:33

twa2w wrote:
01 Nov 2017 13:07
SQT, you could try calling TD Ins to see if they will sell an annuity directly. I know RBC Ins did a few years ago. Not sure on pricing but their term life at the time was cheaper than through a broker.
Who knows you may get an employee pricing :-) at TD.

Snowback, if 50 K is indeed a minimum, you may be able to buy it for 50,000 by using the LIRA plus some top up funds from your RSP. Not sure if this would make a difference. The annuity pricing and taxation is normally the same for a RSP or LIRA sourced annuity.
Yes. I thought of this. Called my personal banker (In HR) and she said she had been transferred and didn’t know who my new personal banker was. Do you believe that? She tried to pass me off to a full service broker. Ya right?

Disappointing. Boy, doesn’t take long before you’re a nobody. Hope I don’t have to call Bharat.

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Re: Annuity

Post by Shakespeare » 01 Nov 2017 17:06

Boy, doesn’t take long before you’re a nobody.
About a week.... :?
“A wise man should be prepared to abandon his baggage at any time.” -- R.A. Heinlein, The Door Into Summer.

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Re: Annuity

Post by adrian2 » 01 Nov 2017 17:31

Shakespeare wrote:
01 Nov 2017 17:06
Boy, doesn’t take long before you’re a nobody.
About a week.... :?
For the C-suite it may a take a little longer; a year or two, maybe?
Imagefiniki, the Canadian financial wiki
“It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong.” [Richard P. Feynman, Nobel prize winner]

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Re: Annuity

Post by SQRT » 01 Nov 2017 17:57

adrian2 wrote:
01 Nov 2017 17:31
Shakespeare wrote:
01 Nov 2017 17:06
Boy, doesn’t take long before you’re a nobody.
About a week.... :?
For the C-suite it may a take a little longer; a year or two, maybe?
Yup. As soon as the people who know you move on to other jobs.

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Re: Annuity

Post by kcowan » 01 Nov 2017 18:54

SQRT wrote:
01 Nov 2017 17:57
adrian2 wrote:
01 Nov 2017 17:31
For the C-suite it may a take a little longer; a year or two, maybe?
Yup. As soon as the people who know you move on to other jobs.
I found that it was about 6 months. Of course they resented the fact that I escaped. So it was kind of spotty.
For the fun of it...Keith

SQRT
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Re: Annuity

Post by SQRT » 01 Nov 2017 20:36

kcowan wrote:
01 Nov 2017 18:54
SQRT wrote:
01 Nov 2017 17:57
adrian2 wrote:
01 Nov 2017 17:31
For the C-suite it may a take a little longer; a year or two, maybe?
Yup. As soon as the people who know you move on to other jobs.
I found that it was about 6 months. Of course they resented the fact that I escaped. So it was kind of spotty.
I went back to a few functions. Mostly for people who were retiring. It was OK but not sure I would bother now. Certainly the people I worked with who are still there remember me, but this group is dwindling. Probably I would be close to about half the senior team. It’s the everyday workers I have to deal with that are the problem. :(

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Re: Annuity

Post by BRIAN5000 » 01 Nov 2017 20:54

Management used to say the everyday workers were their greatest asset until they started saying they were their biggest expense, humf.
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Re: Annuity

Post by SQRT » 01 Nov 2017 21:44

BRIAN5000 wrote:
01 Nov 2017 20:54
Management used to say the everyday workers were their greatest asset until they started saying they were their biggest expense, humf.
I guess it depends who you are talking to. Like most things.

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Re: Annuity

Post by OptsyEagle » 07 Nov 2017 12:21

bill2009 wrote:
31 Oct 2017 19:28
yes you can buy them directly from insurance companies.
Has anyone actually done this and if so, what insurance companies. Also, do you know if the price was discounted compared to what they offer if bought through an agent. I believe the agent has about a 2% cost to the annuity so I am wondering if this is added to the customer if the agent is bypassed.

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Re: Annuity

Post by ghariton » 07 Nov 2017 13:35

OptsyEagle wrote:
07 Nov 2017 12:21
bill2009 wrote:
31 Oct 2017 19:28
yes you can buy them directly from insurance companies.
Has anyone actually done this and if so, what insurance companies. Also, do you know if the price was discounted compared to what they offer if bought through an agent. I believe the agent has about a 2% cost to the annuity so I am wondering if this is added to the customer if the agent is bypassed.
I shopped around for an annuity a few years ago, and found that the quoted price was the same, whether through an insurance broker or directly. I suppose that they don't want to alienate the brokers.

I wound up deciding to "roll my own", as the annuities I could find were a poor deal for me (1) return based on Government bond yields (2) mortality tables based on experience of annuitants, hence assume longer lives than typical Canadians (3) as far as I could work it out, total expense ratio of almost 3 per cent.

I recognize that there are cases, such as that of the OP, where the benefits of an annuity outweigh these costs. But I think that the decision is far from a slam-dunk.

George
The plural of anecdote is NOT data.

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Re: Annuity

Post by OptsyEagle » 07 Nov 2017 16:06

The problem with alternatives, is that if one truly wants to buy a guaranteed pension, if one did not have the ability to accrue one during their working lives, there are no better alternatives then a life annuity.

I am pretty sure I would be a much better stock investor if I didn't have to worry about putting food on the table every time the stock market decides to come undone. Dividend stocks are great but at the end of the day, they are stocks and will always act like stocks. I like the idea of having my most basic income needs guaranteed.

I suppose it is possible for a person to find an insurance company that will sell them an annuity directly (although I haven't heard of it), but where my skepticism was, is will it end up being any better then the one from the agent. The insurance industry also has to deal with the regulatory issue that they are forbidden from providing any financial inducements to a customer, to buy an insurance product. I would think that selling one person an annuity at a lower price then selling it to another identical person, might be considered an inducement. It also rules out them returning the commission to the customer in any form whatsoever.

So if all that happens is the insurance company keeps the commission then I don't see how one is that far ahead.

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Re: Annuity

Post by gaspr » 07 Nov 2017 16:36

If you want to keep an eye on rates without getting quotes, look here

http://www.globeinvestor.com/servlet/Pa ... sidence=ON

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