A Principle Protected Annuity is an insurance product. It will return less cash flow to the OP, but leave more to his beneficiaries. So it is more of an estate planning tool than a retirement income tool.
Hi Guru. Actually Life Annuities are the oldest and most fundamental retirement income tool. You are correct that today's life annuities also have useful estate planning features.
The annuity concept is thousands of years old. The modern annuity concept is the basis of programs like OAS, CPP and every Defined Benefit pension plan. In fact, until the the late 1970's Life Annuities/pension plans were almost the
only retirement tool available.
Life Annuities are insurance products because only a life insurance company is legally allowed to offer a "guaranteed-for-life" stream of payments. Banks can't offer their own life annuity, not even the Royal Bank of Canada.
The Life Annuity (registered or non-registered) will also provide a higher cash-flow than the equiv. amount invested in either bonds or GICs. Partly because of the return-of-capital and later (past 70) partly because of mortality credits.
Annuity Primer video:
http://www.retirementsolutionscentre.ca/en/ProductAllocation/immediate_annuity.html
It takes time to put together and shop the best annuity package for someone. OP is welcome to use our convenient low cost service specifically designed for that purpose.
http://www.yourwealthadvisor.ca/apps/webstore/products/show/764950