The annuity option What is an annuity? An annuity provides regular level income payments for the duration of its annuitant's lifetime or for a specified number of years. There are three basic types of annuities: 1. Life annuity – payments are guaranteed for the annuitant's lifetime. If you purchase a life annuity, you have the option of selecting a minimum guaranteed period that will provide a death benefit to your beneficiary if you die before the end of that guaranteed period. 2. Joint and survivor life annuity* – payments are guaranteed for as long the annuitant and annuitant's spouse live. If you purchase this type of annuity, you have the option of selecting a minimum guaranteed period that will provide a death benefit to your beneficiary if both you and your spouse die before the end of this guaranteed period. 3. Term certain annuity – payments are guaranteed to the annuitant -- or the annuitant's beneficiary -- usually until age 90. At the end of the term, the annuity is collapsed and no further payments are made. (This type of annuity cannot be purchased with money from an RPP.) *This type of annuity is mandatory in many provinces if you have a spouse and are purchasing the annuity with locked-in money from a Registered Pension Plan (RPP). The amount of income provided from an annuity is determined at the time of purchase and generally depends on: the amount of money deposited, the current interest rate, the annuitant's age, the annuitant's sex, and any guaranteed period that applies. If the annuity was purchased with registered money, any payments received from it are taxable and must be included in the annuitant's income in the year they are received. For more details about annuities, see Retirement Income Options This option might be right for you if your retirement goals are … Safety - you don't want to worry about outliving your original investment. A life annuity guarantees you an income for as long as you live. Level income - you want level income payments and won't need to change your payment details once the annuity payments begin. No ongoing investments decisions - you no longer want to manage investments.