RETIREMENT INCOME PLANNING — ONTARIO • BC • ALBERTA
Annuities in Canada
Guaranteed Income. For Life.
Turn your RRSP, RRIF, or savings into a predictable, guaranteed income stream you cannot outlive. No market risk, no surprises — just reliable income every month in retirement.
THE BASICS
What Is an Annuity?
An annuity is a financial contract between you and a Canadian insurance company. You provide a lump sum of money — typically from your RRSP, RRIF, or non-registered savings — and in return, the insurer guarantees you a fixed income payment for a set period or for the rest of your life.
Unlike investments that fluctuate with markets, an annuity provides certainty. You know exactly how much you will receive and for how long. This makes annuities one of the most powerful tools for retirement income planning in Canada — especially for those without a defined benefit pension.
💡 Simple Example — Ontario Retiree
You invest $200,000 from your RRSP into a life annuity at age 65. The insurer guarantees you $1,050/month for the rest of your life — regardless of how long you live or what happens in financial markets.
HOW IT WORKS — 3 STEPS
Choose your annuity type & amount
Select a life annuity or term certain annuity and decide how much of your savings to convert. We compare rates from Canada's top insurers.
Receive guaranteed payments
Payments begin immediately or at a future date you choose. Monthly, quarterly, or annual — your preference.
Income continues for life
With a life annuity, payments never stop — even if you live to 100 or beyond. Your income is guaranteed by the insurer and protected by Assuris.
YOUR OPTIONS
Two Types of Annuities in Canada
Choose the annuity type that best matches your retirement income needs and financial goals.
MOST POPULAR Life AnnuityGuaranteed income payments for the rest of your life. Payments never stop, no matter how long you live. Optional features include joint-life coverage for spouses and a guaranteed period to protect your estate. BEST FOR: ✓ Retirees who want income they cannot outlive ✓ Couples who want joint survivor protection ✓ Converting RRSP/RRIF at maturity (age 71) ✓ Those with longevity in their family history | FIXED PERIOD Term Certain AnnuityGuaranteed income payments for a specific number of years (e.g., 10, 15, or 20 years). If you pass away before the term ends, remaining payments go to your beneficiary. BEST FOR: ✓ Bridging income until CPP or OAS begins ✓ Covering a specific financial obligation period ✓ Estate planning with guaranteed payments to heirs ✓ Those who want flexibility with a defined end date |
KEY BENEFITS AT A GLANCE
Why Canadians Choose Annuities for Retirement
Annuities provide unique advantages that no other financial product can match for guaranteed retirement income security in Canada.
No Market Risk
Your income is completely insulated from stock market volatility. Whether markets rise or fall, your monthly payment never changes.
You Can't Outlive It
A life annuity guarantees income for as long as you live — even if you live to 100 or beyond. Eliminate the risk of running out of money in retirement.
Inflation Protection Option
Add an indexing option to have your payments increase annually with inflation, preserving your purchasing power throughout retirement.
Creditor Protection
Annuity income is generally protected from creditors when a spouse, child, or grandchild is named as beneficiary — a powerful estate planning advantage.
Estate Planning Advantages
With a guaranteed period or joint-life option, remaining payments pass directly to your beneficiary outside of your estate, avoiding probate.
Assuris Protection
Canadian annuities are protected by Assuris up to $2,000/month or 85% of your promised benefit — providing an additional layer of security for all Canadians.
SIDE-BY-SIDE COMPARISON
Life Annuity vs. Term Certain Annuity
Not sure which annuity type is right for your retirement? Here is a clear comparison to help you decide.
| Feature | Life Annuity | Term Certain Annuity |
|---|---|---|
| Payment Duration | For life (never stops) | Fixed term (e.g., 10–20 years) |
| Longevity Protection | ✓ Yes — cannot outlive it | ✗ Ends at term completion |
| Payments to Beneficiary | Optional guaranteed period | ✓ Remaining payments transfer |
| Joint Coverage | ✓ Joint-life option available | Single or joint available |
| Monthly Payment Amount | Higher (if no guarantee period) | Lower — spread over fixed term |
| Market Risk | ✓ Zero market risk | ✓ Zero market risk |
| Inflation Indexing | ✓ Optional add-on | ✓ Optional add-on |
| Best For | Longevity risk, lifetime income security | Bridging income, estate planning |
IS IT RIGHT FOR YOU?
Who Benefits from an Annuity in Canada?
Annuities are a powerful retirement income tool for a wide range of Canadians at or approaching retirement age.
Retirees Seeking Certainty
Eliminate the anxiety of market-dependent income. Know exactly what you will receive every month for the rest of your life.
Couples Planning Together
A joint-life annuity ensures your surviving spouse continues to receive income after you pass away — protecting both of you throughout retirement.
RRSP/RRIF Holders at 71
When your RRSP must convert at age 71, an annuity is one of the most tax-efficient options for generating steady registered income in Canada.
Those Without Pension Income
If you don't have a defined benefit pension, an annuity can replicate that guaranteed monthly income structure using your own savings.
Estate Planners
Use a term certain annuity to transfer guaranteed income to beneficiaries outside of your estate, bypassing probate and legal delays.
Conservative Investors
If you prefer guaranteed returns over market exposure, an annuity provides the certainty of a GIC with the added benefit of lifelong income.
TAX TREATMENT IN CANADA
How Are Annuity Payments Taxed in Canada?
The tax treatment of your annuity payments depends on the source of funds used to purchase it. Understanding this helps you maximize after-tax retirement income.
Registered AnnuityPurchased with RRSP, RRIF, or other registered funds ✓ 100% of each payment is taxable as ordinary income ✓ Tax is deferred until you receive payments ✓ Eligible for pension income splitting with spouse ✓ May qualify for the $2,000 pension income tax credit ✓ Insurer withholds tax at source | Non-Registered AnnuityPurchased with after-tax savings or non-registered funds ✓ Only the interest portion is taxable — not the return of capital ✓ Prescribed annuity rules allow level taxation over the payment period ✓ Significantly more tax-efficient than GICs or bonds ✓ Eligible for pension income splitting ✓ Ideal for high-income retirees seeking tax efficiency |
COMMON QUESTIONS
Frequently Asked Questions About Annuities in Canada
Answers to the most common questions Canadians have about annuities, retirement income, and how annuities compare to other options.
Can I use my RRSP to buy an annuity in Canada?
Yes. In fact, converting your RRSP to an annuity is one of the three options available when your RRSP matures at age 71 (the others being a RRIF or lump-sum withdrawal). An annuity purchased with RRSP funds is called a registered annuity, and payments are fully taxable as income when received.
What happens to my annuity when I die?
It depends on the annuity type and options selected. A life annuity with no guarantee period ends at death. However, you can add a guaranteed period (e.g., 10 years) so that if you die early, remaining payments go to your beneficiary. A joint-life annuity continues payments to your surviving spouse. A term certain annuity pays remaining payments to your estate or named beneficiary.
Is my annuity protected if the insurance company fails?
Yes. Canadian annuities are protected by Assuris, the industry-funded consumer protection organization. Assuris guarantees up to $2,000/month or 85% of your promised benefit — whichever is higher — in the event your insurer becomes insolvent.
How do annuity rates compare to GICs in Canada?
Annuity payout rates are typically higher than GIC interest rates because they incorporate a return of capital component and mortality credits (the pooling of longevity risk across all annuitants). For retirees, this often means more after-tax income per dollar invested compared to a GIC.
Can I cancel my annuity after purchasing it?
Annuities are generally irrevocable once purchased — this is what makes them so reliable. However, most insurers offer a short free-look period (typically 10 days) after purchase during which you can cancel for a full refund. This is why it's important to work with an advisor who compares multiple insurers before you commit.
TAKE THE NEXT STEP
Ready to Secure Your Guaranteed Retirement Income?
Our advisors compare annuity rates from Canada's top insurers including Canada Life, Desjardins, Manulife, Sun Life, and more to find you the best payout for your savings. No obligation, no pressure.
Serving clients across Ontario (London, Toronto, Ottawa), British Columbia, Alberta, and all of Canada.