Annuities are issued by insurance companies and are considered insurance products. An annuity is a stream of income that is structured to be paid out over a predetermined period. These payments can be paid out monthly or annually. The terms of the annuities can be for a set period (i.e. 10 or 20 years) or for life. Life annuities normally come with a guarantee period to ensure a minimum amount of payments for premature death. Individuals who are concerned about outliving their savings may find the life annuities of particular interest. Annuities may be purchased from registered accounts and non-registered accounts. When purchased with non-registered funds, the payments from an annuity may be taxed on the prescribed basis. This means that a portion of each payment is considered a return of your original capital (non-taxable portion) and the remainder is reported as income. When the payment is received from a registered account the full payment is reported as income.
