Canadian Life and Health Insurance Facts, 2014 Edition

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10 A nnuities include all types of registered (tax sheltered) and non-registered group annuities and retirement plans, and individual products administered by life insurers through their general fund and segregated fund operations. Annuity premiums During 2013, Canadians paid $37.3 billion in premiums for annuities in the accumulation stage and for payout annuities providing income benefits, 3.5 per cent over the record levels of the previous year. Canadians continued to focus on wealth accumulation and retirement planning through market- value-based products offered through life insurers' segregated funds. These products generated premiums of $31.5 billion (up 1.8 per cent). At the same time, premiums for general fund (fixed- return) products experienced double- digit growth, rising 13.3 per cent to $5.8 billion. Segregated fund products continued to dominate the total annuity market with an 84 per cent share, compared with 86 per cent from the previous year and 71 per cent 10 years ago. Continuing the trend set in 2001, group annuities continued to predominate with 66 per cent of total annuity premiums for 2013. Individual annuities In 2013, premiums for individual annuities decreased by 9.4 per cent to $12.7 billion, continuing the decline that began in 2010. Contributions to segregated fund (market-value-based) products slowed by 12.1 per cent as insurers took product design initiatives to de-risk their portfolios, and individual Canadian investors' confidence in capital markets continued to waver. At the same time, premiums for general fund (fixed- return) products rose (up 2.7 per cent), recovering slightly after three years of decline. Of the total individual premiums, 79 per cent was for annuities still in the accumulation stage (deferred or accumulation annuities), such as Registered Retirement Savings Plans (RRSPs), Tax-Free Savings Accounts (TFSAs) and similar arrangements on a non-registered basis. The remainder was in the form of single premiums for annuities providing immediate income benefits (immediate or payout annuities), such as life annuities and Registered Retirement Income Funds (RRIFs). Assets held by life insurers for all individual annuity products rose 4.7 per cent to $142.7 billion by the end of 2013. Of this total, 68 per cent were held for deferred annuities and 32 per cent for immediate annuities. Segregated fund assets (up 9.9 per cent over the previous Annuities ❖ During 2013, Canadians paid premiums for: Individual annuities $12.7 billion Group annuities 24.6 billion Total annuities $37.3 billion ❖ RRSPs (individual and group) accounted for 36 per cent of total annuity premiums and 35 per cent of total annuity assets. ❖ Canadians owned 3.2 million individual annuity contracts at the end of the year. RRIFs 10.3% Other 10.7% RRSPs 41.9% Other 37.1% Payout products 21.0% Accumulation products 79.0% Source: CLHIA special survey ("Annuity Business in Canada – 2013") Individual Annuity Premiums by Product Type – 2013

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