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Three insurers, four products! The offer of guaranteed withdrawal benefit plans (GWB) has shrunk dramatically from just over 10 years ago, when most insurers in the segregated fund market had several versions on offer. Long-term interest rates, which have been dragging for years, have undeniably taken their toll on the market.
Sun Life offers two GWB products: Sun Lifetime Advantage GIF and Sun GIF Solutions – Income Series. The other two insurers in this segment offer one product each. Class Plus 3.0 is available from Empire Life and iA Financial Group offers the FORLIFE Series.
Variable structure
iA Financial Group’s FORLIFE Series comes in two versions: Savings Stage, which offers the smallest investment amount in the market, at $100, and Income Stage, which requires a minimum initial deposit of at least $25,000.
At Sun Life, the minimum deposit is set at $25,000 for both products. The company has indicated that it will accept smaller initial deposits.
In contrast, Empire Life requires a minimum investment of $10,000.
For all three insurers, the amount of guaranteed lifetime income varies depending on the age at which the investor begins withdrawals. Each year that the client defers the income payment date, the guaranteed lifetime income increases, Sun Life says. iA offers a separate rate for each age at which the client could choose to start receiving income.
Retirement security
Admittedly few in number, GWB plans, a category of segregated funds, are sought after because they are one of the few options that guarantee withdrawals for life. Life annuities make the same promise, but they do not provide returns on the amount invested. This is why GWBs are pivotal to financial planning for retirement.
And then there are the segregated fund guarantees. For all products, the maturity benefit guarantee (when withdrawals must begin) is 75 per cent. The death benefit guarantee is also 75 per cent for Empire Life and Sun Life products. iA Financial Group is the only insurer to offer a death benefit guarantee of 100 per cent. However, this percentage decreases to 75% if the client is 80 years of age or older at the time of the initial investment in a guaranteed withdrawal fund.
Finally, an annuitant can start receiving a guaranteed income for life as early as age 50 with IA Financial Group and Sun Life products. Empire Life sets the minimum age at 55. For all products, the longer a client waits to receive the first payment, the higher the lifetime income.