Guaranteed income payments for life

A life annuity is an insurance contract that guarantees you’ll receive income payments for life – or 2 lifetimes, for a joint life annuity.  Once you’ve purchased your annuity, you never have to worry about how that money is invested or how long your income will last. Income from a life annuity may also qualify for the federal pension income tax credit (of qualified pension income).

You should consider a life annuity if:

  • You are a Canadian looking for a source of guaranteed lifetime income, typically for retirement
  • You’re interested in supplementing other sources of guaranteed lifetime income such as Canada Pension Plan (CPP), Old Age Security (OAS) or a defined benefit pension
  • You want an “income floor” to ensure you have enough guaranteed income to pay your basic essential living expenses throughout your retirement years

Plan details:

Residency requirements

We'll issue a policy only if the policyholder and annuitant(s) are Canadian residents. There is an exception if the policyholder has an existing Sun Life Financial policy with a contractual right to purchase a payout annuity.

Annuity types

  • Life annuity
  • Joint life annuity

Issue ages

  • Registered (including locked-in funds): ages 18 to 100*
  • Non-registered: ages 0 to 100*

*Subject to restrictions

Premiums

  • Minimum amount: $5,000 (combined total from all sources)
  • Maximum amount: $5 million

Premium sources

  • Registered retirement savings plan (RRSP)
  • Registered retirement income fund (RRIF)
  • Locked-in retirement account (LIRA)
  • Deferred profit sharing plan (DPSP)
  • Life income fund (LIF)
  • Locked-in retirement income fund (LRIF)
  • Registered pension plan (RPP) funds
  • Non-registered funds

Payment deferral periods

Payments may be deferred for a maximum of 10 years, subject to restrictions and based on the source of premium.

Guarantee periods

  • 0 - 40 years, subject to restriction based on the source of premium

Payment frequency

  • Monthly, quarterly, semi-annually or annually

Payment options

  • Level payments.  Payment amount remains the same throughout the payment period.
  • Indexed payments. Income increases yearly by a fixed percentage. You select an increase between 1% and 4% at purchase. Not available for prescribed annuities.
  • Reducing payment (joint life annuities). Income reduces by a certain percentage selected at issue when one of the annuitants dies.
  • Integrated payment. Annuity income decreases when CPP, QPP or OAS payments begin. Not available for prescribed annuities.
  • Registered funds are subject to legislative restrictions.

Taxation

  • Registered. Income from an annuity purchased with registered funds is fully taxable to the policyholder in the year it's received.
  • Non-registered. Only a portion of the income from an annuity purchased with non-registered funds is taxable. The amount of tax and when it is payable depends on the tax treatment the annuity qualifies for.
  • Withholding tax. Canadian withholding tax is mandatory for annuities purchased with RPP (locked-in and non-locked-in), LIF or DPSP premiums.

Death benefit

Death benefits depend on whether income has started, the source of premium and the guaranteed period chosen.

Surrender

A payout annuity cannot be partially or fully surrendered and has no cash surrender value.

Essential Care Annuity

If you have a life-shortening condition, we'll consider issuing an enhanced life annuity. This can result in a lower premium or higher income than for someone of the same age and gender without a health impairment. You must provide acceptable medical evidence and special underwriting rules will apply.