How your money is invested
Your deposits buy units in a fund offered through a life insurer. The fund may hold stocks, bonds or other investments. The value of your units can rise or fall, and you can receive less than you deposited when you withdraw.
When guarantees apply
A maturity guarantee applies at a date defined in the contract. A death benefit guarantee applies on the death of the annuitant specified by the contract. At an eligible event, the insurer may top up the benefit if the applicable market value is below the adjusted guaranteed amount. The contract sets the percentage, dates, any reset terms and eligibility rules.
How withdrawals affect the guarantee
A withdrawal can reduce both the market value and the amount used to calculate your guarantee. Some contracts reduce the guarantee proportionally. For example, if the fund is worth $80,000 and you withdraw $20,000, you’ve withdrawn 25% of its value. Under a proportional rule, a $100,000 guarantee base would fall to $75,000. Use the actual contract’s formula for a decision.
What to check before buying
Review the Fund Facts and information folder for management expenses, any applicable sales or withdrawal charges, how the guarantee is calculated, and how long you need to stay invested. Fees reduce returns. Ask for the dollar cost on the amount you plan to invest.