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GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

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Annuity


Synonyms:allowance, annuitize, capital extraction, receive payments, retirement account, subsidy
Filed Under: annuities, estate-management, financial-banking, investments
Tags: annuity, banking, investment
 

Definition of annuity

annuity
1. A financial agreement which arranges an agreed upon number payments over a set period of time. Commonly used for dispersing retirement income, making plans for regular payments to a savings account, or arranging periodic payments like mortgage or insurance payments.

Related Terms and Acronyms:

  • Canada Pension Plan (CPP)   A public pension plan administrated by the Canadian government.
  • Certified Annuity Specialist (CAS)   A professional who is certified to provide investment advice about annuities to clients.
  • old age security (OAS)   A Canadian pension plan for eligible Canadians over the age of 65.
  • pension   A retirement plan where money is set aside over many years for an individual's retirement.
  • premium   A payment made to an insurance company for insurance coverage.
  • private annuity   An arrangement where one party agrees to transfer ownership of an asset to another party (usually a beneficiary) in exchange for lifetime payments.
  • Registered Retirement Savings Plan (RRSP)   A savings plan introduced by the federal government to encourage Canadians to save money for retirement. The investment and the interest earned on it is sheltered: it will not be taxed as long as it is left in the plan.
      ➥  Tax deferred investment contribution used to reduce income tax.
  • reverse mortgage   A loan that allows an older homeowner to convert built-up equity into cash. The loan comes due when the owner dies, sells the house or moves out.
  • tax deferred annuity (TDA)   A type of annuity where taxes are deferred until the annuitant decides to withdraw money from the annuity.
      ➥  More commonly known as a Tax Sheltered Annuity (TSA).
  • Tax-Free Savings Account (TFSA)   A savings account for Canadians where income earned is not taxed.

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