ANNUITIES FAQs
What is a BAF Annuity?
Among the many investment products you can choose from is a BAF Annuity. An annuity is a contract between you and an insurance company, which states that in exchange for your payment (deposit/contribution), the company agrees to pay you an income in the future.
Are there different types of Annuities?
Yes. BAF offers three different types of Annuities.
- Single Annuity – You make a lump-sum investment. Currently, the required minimum investment in this type of annuity with BAF is $2,500. If you wish to increase the principal amount, you may do so in increments of $2500 or more. BAF will offer a guaranteed rate of return for the first 12 months of your annuity. Each year thereafter, a rate is declared and your annuity will earn that rate. A minimum rate is also declared. At no time will your interest rate fall below the minimum rate set.
- Flexible Annuity – This plan allows you to make subsequent contributions to the account. An initial contribution is made and an agreement is made to make monthly contributions of a specified amount. Presently, the minimum requirement to begin this plan is $500, and monthly contributions of $100 or more are accepted via salary deduction, pre-authorized chequing deductions, or post-dated cheques. You may contribute more than your agreed monthly payment, but you are encouraged to not fall below that amount in order to meet your projected targets. This plan also offers a guaranteed rate of return for the first 12 months of your annuity. Each year thereafter, a rate is declared and your annuity will earn that rate. A minimum rate is also declared. At no time will your interest rate fall below the minimum rate set.
- Immediate Annuity – This plan has little or no accumulation phase. You can purchase it with one lump-sum payment, usually a significant amount, and begin receiving monthly income payments right away. Various payment plans are offered, for example, 10 year guaranteed monthly payments, with payments to a beneficiary should you die within the 10 years, or monthly payments for a specified/certain period, with no payments to a beneficiary and so on. This plan is popular with retirees as it guarantees a monthly income.
What is the Surrender Period?
Both the Single and Flexible Annuity have surrender periods of 36 months. This means that a penalty fee is charged for withdrawal of funds within the first 36 months of the life of the annuity. With BAF, the penalty is calculated based on the amount of funds withdrawn and not on the entire principal amount. The penalty percentage is lowered as the annuity approaches 36 months. Beyond 36 months, no penalty is charged for withdrawals. You may continue to maintain the account, may withdraw partial funds, or all of the funds if desired. This is designed to encourage and achieve long-term saving and investing goals.
Are there any administrative or maintenance fees?
There are no administrative or maintenance fees associated with BAF Annuities.
What can you use an Annuity for?
- Supplement retirement plans
- Stand alone as a retirement plan
- Pension Plan
- Child’s College Education
- Assist with down-payment for property or home
- Entrepreneurship
- Accumulate savings
How much risk is involved?
Investing in an annuity with BAF is a safe investment. Your rate of return is guaranteed by BAF and we invest in fixed income portfolios. If you are looking for a secure investment opportunity, without having to be concerned whether the stocks are doing well or not, or if you are just not in a position to take risks with your money, a BAF annuity provides a comfortable solution, with a high rate of return.
What happens if I die?
When you complete your application, you will be required to name a beneficiary. The individual will be paid the funds once proof of death is provided along with acceptable form of identification. If Estate is named, the account will be handled as stipulated in your Will.
How do I get started?
- Contact your BAF Financial Service Representatives
- Complete the Annuity Application
- Complete the Customer Declaration/Verification Form
- Provide identification ( 1st four pages of passport or driver’s license )
- Pay funds to BAF
- If you choose the Flexible Annuity, provide/complete method of monthly payment (salary deduction form, PAC form, or post-dated cheques)
