Do you want money for life?

Recently life insurance companies have been promoting their retirement policies which offer a guaranteed income at certain ages, most using a minimum 5% income guarantee.

As longtime brokers who have seen a lot of promotions, we are always suspicious of guarantees where the stock market is concerned.

If you remember, 2008 was not a good year. But many people forget that and say, well, maybe the stock market results are not guaranteed but look how it has come back to life. Are these people not worried about guaranteed income when they retire or is their retirement income guaranteed by some other means?

Guaranteed Income

The only guaranteed income we know of flows from RRIF's and annuities. But RRIFs are finite also so, if you want your retirement income guaranteed for life, you need to get the best possible type of annuity. Most people believe that there are only life annuities for registered (RRSP) or non registered money. But there are term certain annuities and cash refund annuities which may be more suitable for your lifestyle.

Money For Life

So, money for life does not mean that you need to have your money in the stock market or even in conservative bond or money market funds. You can get a permanent, steady and reliable source of guaranteed income, through the judicious purchase of a life annuity. It may not be called "Money for Life", but in fact that is what it represents.

Sun Life's Money For Life

One of the leading retirement insurance companies, Sun Life, has introduced a program called Money for Life. This is obviously a promotion for their life annuity program which has some good features. In fact for older people with non registered moey , Sun Life has extended guarantee periods. Using this feature, the client receives a better income with less taxes payable than a GIC. And if the guarantee outlives the client, Sun Life continue payments to the beneficiaries.

Caution

And it is Money for Life, not only for you and perhaps your spouse, but also for your children who may inherit the payments after your death.

You always need to be careful not to invest in things you don’t understand. If you don’t understand it now, you won’t understand it in 10 or 15 years. Be like Warren Buffet and only invest in things you know about and which are simple to understand.