Deferred Annuities  

A deferred single or joint life annuity is a tax-efficient way of saving money which the annuitant can withdraw at a later date as an income stream or a lump sum. If an annuitant or annuitants deceases prior to the first periodic annuity payment, the premium is refunded at a specific rate of interest or with no interest. Each insurance companies deferred annuity offerings are different in their benefits and terms and conditions.

Tax Deferral Benefits

The accumulated gains in the deferred annuity that consist of interest and/or dividends are not taxed until they are withdrawn. Payments made into a deferred annuity accumulate interest and/or dividends. These payments benefit from tax deferred reinvestment of accumulate interest and/or dividends in the deferred annuity. The tax deferral benefits are significant, they add a substantial amount of additional savings that would otherwise be paid in tax with non-registered investments.

The chart illustrates the compounding effect of savings that grow tax deferred in a deferred annuity. If invested in GICs or high yield savings accounts the ongoing annual taxation of interest would substantially reduce the amount of savings over time. With deferred annuities you are only taxed if you make a withdrawal. If you are saving for retirement and have a long term time horizon the compounding effect of tax deferred growth of your savings is substantial. When you cash in your gains, your interest and/or dividends (not your invested capital) will be taxed as ordinary income. Tax deferral works to your advantage if you are in a high tax rate during the accumulation phase and in a low tax rate during the withdrawal phase.

Annuities Are Complex Products That Require Professional Guidance

When deciding which type of annuity is best suited for you Stone-Hedge Financial Group Inc. will guide you through this process.

Stone-Hedge Financial Group Inc. will provide quotes from some of Canada’s most competitive insurance companies.

The information provided on this web site is intended for general information only. It should not be construed as legal, accounting, tax or specific insurance and investment advice. Clients should consult a professional advisor concerning their situations and any specific insurance and investment matters. While reasonable steps have been taken to ensure that this information was accurate as of the date hereof, Stone-Hedge Financial Group Inc. and its affiliates make no representation or warranty as to the accuracy of this information and assume no responsibility for reliance upon it.