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Retirement
Protect your financial independence with us
Your insurance needs evolve and change in retirement, so should your coverage.
The hour of retirement will soon ring? It is recommended to prepare well for this brand-new stage of life. As a general rule, the following coverages must be considered and adjusted:
Disability:
Disability insurance is salary insurance. If you work less or stop working, it is normal to adjust your coverage. Have you achieved financial independence and are still working? Maybe you just don’t need that coverage anymore.
Overhead:
During retirement, it is important to quickly notify your advisor to stop this coverage.
Travel insurance:
If you are thinking of taking advantage of retirement to travel, good travel insurance will be necessary. Contact us to plan the transition and choose the product that will best meet your needs.
Life insurance:
With retirement, do your coverages still meet your needs? Is your beneficiary designation up to date? Retirement is a good time to review your life insurance coverage in general.
You wish to find out more? Ask us for advice.
Q&A: Prepare properly for retirement
What are the different types of annuities?
To ensure the retirement of your dreams, you can opt for different types of annuity, the most popular being:
- A life annuity, that provides guaranteed income payments for your lifetime and may qualify for the federal pension income tax credit (if considered eligible pension income).
- A joint and survivor annuity, which provides payments for as long as you or your spouse are alive. This annuity is called joint and survivor since it allows all or part of the annuity to be transferred to the surviving spouse.
So-called “back-to-back” annuities also make it possible to purchase an annuity while subscribing to life insurance, the cost of the annuity being identical to the insurance coverage (without surrender value). Talk to your Sogemec Assurances advisor and take advantage of strategic tools that deserve to be discovered.
What factors influence the minimum pension amount?
Various factors have an impact, including:
- Capital invested
- The current interest rate
- The duration of the pension
It is possible, in advance, to choose a guaranteed payment period of 0 to 40 years. This option ensures that your pension will be payable for at least a fixed number of years. Let’s say you have chosen a guaranteed payment period of 10 years. Even if you die within the first 10 years of annuity payments, the annuity will continue to be paid to named persons until the end of the tenth year. If you live longer than 10 years, payments will continue as long as you are alive.
Minimum and maximum amounts may also apply depending on the insurer, for example:
- Minimum amount: $5,000 (combined total from all sources)
- Maximum amount: $5 million (or more, subject to review and special rate)
Finally, people suffering from a terminal illness can receive an increased life annuity, upon presentation of medical evidence. Certain conditions and pricing apply.
What are the payment options?
The frequency of payments is optional (monthly, quarterly, semi-annually or annually) according to the following payment options:
Uniform payments: the payment amount remains constant throughout the payment period.
Indexed payments: income increases each year by a specified percentage of 1-4%, subject to the rate of increase selected at the time of purchase. Life annuities only.
Decreasing payments: when one of the annuitants dies, the income decreases by the percentage that was selected at the time of establishment. Joint and survivor annuities only.
Coordinated payments: income decreases when QPP, CPP and OAS benefits begin to be paid. Not available for prescribed annuities.
Are annuities taxed?
It depends. The amount paid by the annuity includes a capital portion and an interest portion. The taxation of the interest portion may or may not be prescribed, with different factors applying. When purchasing an annuity, it is important to consider the amounts that will be taxable annually. Talk to your Sogemec Assurances advisor.