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This sometimes becomes a confusing issue. Many people invest in annuities at their local bank. It is important to understand that the person in the bank is acting as an agent for the insurance company. The bank itself is not a party to the contract, only yourself and the insurance company. It's critical that you not be under the impression that the bank is providing any financial security to your investment, they are not.
There is also sometimes confusion with 403(b) plans. 403(b) plans are retirement savings vehicles available to many teachers, hospital workers and certain government agencies. When they were first developed the funding vehicle had to be an annuity, and they took on the moniker of TSA (Tax Sheltered Annuity). Today a 403(b) may use a variety of investment vehicles, usually mutual funds or managed money accounts. However many people still use the words TSA, annuity and 403(b) interchangeably. This is technically incorrect and causes a lot of confusion with investors.
Guaranteed Investment Annuities (GIAs) are similar to Guaranted Investment Certificates (GICs) the interest and principle in both are guaranteed. An example of the Guaranteed Investment Annuity's "insurance element" is the annuity or monthly income.
Guaranteed Investment Funds (GIFs), are segregated funds and are similiar to mutual funds.The funds invested in both are at risk. However, Guaranteed Investment Funds, in addition to the annuity or income element offer maturity and death guarantees of 75% to 100%.
These investment vehicles offer benefits that could prove to be valuable. For more information please visit JPW.ca or contact me via this web site.