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Thinking of buying an annuity? - now or ever?
May 7, 2016
11:01 am
Loonie
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Apparently the rates of return on new contracts are expected to go down, based on longer life expectancies, beginning January 2017. If you buy this year, you're OK, according to this report:
http://annuitybrokers.ca/

May 8, 2016
9:26 pm
Norman1
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Advisor.ca: Changes to insurance pricing on the way has some more technical details.

They are switching from the 1971 Individual Annuity Mortality Table to the Annuity 2000 Basic Mortality Table:

Under the current mortality table, a 65-year-old male has a life expectancy of 17.3 more years. The new table, effective for annuities after 2016, moves his life expectancy to 19.6 more years, …

May 8, 2016
9:33 pm
Norman1
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A copy of the new life expectancies, based on the Annuity 2000 mortality table, is at LifeAnnuities.com: Annuity Mortality Table.

July 30, 2016
2:54 pm
Norman1
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According to Globe & Mail (Jul. 29, 2016): Buying a prescribed annuity? Act fast, there's no change in the rates of return.

The life insurance companies have been using more updated mortality numbers all along.

The adoption of more recent mortality tables is for tax purposes by CRA. The result is increased taxable portion of the payments from annuities purchased with non-registered funds.

No change in taxation of payments from annuities purchased with RRSP or RRIF funds. Such payments have been and continue to be fully taxable.

July 30, 2016
4:50 pm
Loonie
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Thanks, Norman. Good to know.

February 14, 2017
6:41 am
Bill
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I'm too dumb to figure out how to start a new topic on here so I'll use this one. Does anyone know if you can buy an annuity at an advanced age, say 90 or so? (It's not for me, I've been asked and I know next to zero about annuities.) Are there annuity brokers out there that deal with various companies or do you have to contact each insurance company and bank?

February 14, 2017
8:25 am
Loonie
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I've wondered this too - if there is an age limit. Looking at various charts, comments from Gordon Pape etc., it seems to fade out around 80 or 85, depending on the company.

Yes, there are annuity brokers. If you google that term, you will find. from what little I've read, it seems to be a complicated business, so you would want someone who specializes in this.

It must be an amazingly healthy person who wants an annuity at 90!

February 14, 2017
9:32 am
Bill
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I've googled (not extensively) and aside from some guy out in BC I found no annuity brokers per se, just the individual insurance companies, etc. Just wondering if someone knows anything to save me some time.

February 14, 2017
9:47 am
Loonie
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Here's one in Montreal https://lifeannuities.com/annuity-broker.html

This one is in BC but licensed to sell in AB and ON. https://annuitybrokers.ca/canadian-annuity-broker/
He says you can buy them "at any age". However, I doubt this is literally true - or at least that there are few if any competitors for this business. If you look at the various possibilities from the charts available here http://www.globeinvestor.com/s.....sidence=ON , you get the impression it would be unlikely to be able to get one at age 90.

Here's one in Woodbridge, Ontario (near Toronto). http://instantannuity.ca/index.php

Which province do you want it for?

February 14, 2017
12:33 pm
Bill
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Thanks, Loonie, appreciate the legwork!

The Montreal and Woodbridge links you gave me have age 85 as the oldest age possible when you try their online calculators. I called the BC broker who also covers Alberta and Ontario (the province I've been asked about) and they say they deal with some companies that will sell up to age 95, not that hard to get.

The person who asked me is 88, so lots of time (relatively).

February 14, 2017
3:16 pm
Loonie
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I think it's generally useful to have this info handy, so didn't mind looking it up.
Let us know if you find out any other interesting facts.

From an insurance company point of view, why wouldn't you want to sell an annuity to someone over 90? Seems like a gold mine for them, at least to me.

I understand why someone might want to buy one at 90, especially if in RIF, as it smooths out the income better so you can avoid highest mandatory withdrawal rates maybe. I can't see any advantage for non-registered though, even though taxation is minimal. You would just lose too much capital, more than likely.
I suppose one additional reason, which governs both RIF and non-registered, is that it takes it out of the hands of your power of attorney, whoever that might be, and largely avoids fights over your will - at least for the portion that is annuitized. A good option for people who don't trust anyone and who recognize their own increasing vulnerability and/or weakness. I would do it for that reason, but would likely do it through a charity. Not sure exactly how that works. No doubt it's time I found out.

February 14, 2017
7:20 pm
Bill
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In my case I believe the motivation is, due to minimal income, person is considering buying the annuity as insurance against the small chance they might outlive their capital (sort of like we all buy insurance, paying lots of money over our lifetimes, for stuff that never happens to most of us). Plus leaving some for heirs is not a factor in this case.

February 14, 2017
9:44 pm
Loonie
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I see.
Odds are it will be a gold mine for an insurance company, so, again, why woudn't they all offer it, no matter if you're 101?!

February 15, 2017
6:17 am
Bill
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Loonie, maybe they don't offer it because it's more trouble than it's worth - entering into lopsided contracts with very, very elderly folks doesn't look very good, there would probably be lawsuits regularly from disgruntled family members or other interested parties claiming the companies are taking advantage of mental confusion or incapacity, and a lot of ill will would result for the industry in general from disinherited folks all over, society in general. I don't know.

February 15, 2017
4:43 pm
Loonie
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You might be right about that, Bill! Maybe their legal department warns them to stay away.
On the other hand, where's the cut-off? Some people have serious dementia well before 80 or 85. The old person may in fact be quite sane, wanting to protect their income from a questionable or absent power of attorney - the very same who would go to court asking for more!

February 16, 2017
12:42 pm
julio
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There are currently 16 companies in different parts of Canada offering annuities. The issue ages are between 0 (zero) and 105 (hunderdfive), depending on the company and chosen options. If or when I'll be buying an annuity, I will call each company and get a proposal from them. If going through brokers, make sure they cover (overlap) all these companies. Brokers are limited as to with which company they can place their business and, of course, just theoretically, maybe, be guided by their potential compensation. The companies are: Assumption life, BMO insurance, Canada life, Co-Operators, Desjardins insurance, Empire life, Equitable life, Great west life, iA Financial group, ivari, La capitale, Manulife, RBC insurance, Sun life financial, UL mutual, and Wawanessa life. Happy hunting!

February 16, 2017
6:00 pm
Loonie
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Great work, julio!
Where did you find this info? Very curious who offers for 105 year-old. Almost nobody makes it to 106 (although I have one distant relative who did!) and life expectancy at that point is almost certainly less than a year, if the actuaries have even calculated it. That may be the reason for the cut-off, i.e. that the actuaries haven't bothered to figure out life expectancy at 106. It might be impossible to get statistically valid info for that age anyway. I'm just trying to imagine that 105 year old going into the office and asking for an annuity. Imagine the looks on their faces!sf-laugh
The monthly payouts at 105 must be spectacular!

February 16, 2017
7:23 pm
julio
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Loonie: Very curious who offers for 105 year-old.==>Assumption Life. Loonie: Where did you find this info?==> in a magazine "The Insurance And Investment Journal" in the waiting room of an investment firm.

February 16, 2017
7:32 pm
Loonie
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Thanks.
I'm guessing you learned more from the waiting room than from the advisor!

Lots of good info here for Bill and his friend.

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