Short answer
A life annuity is an insurance contract. You give an insurer a lump sum and, under the contract, receive income for life. It can add income that does not depend on selling investments, but the purchase amount is no longer part of the accessible investment portfolio.
Where it may fit
Retirement income can come from several places. CPP and OAS follow their program rules. A workplace pension follows its plan. An annuity follows its insurance contract. The invested portfolio remains available for withdrawals, flexibility and later goals.
- Benefits and pensions may provide recurring income under public-program or pension-plan rules.
- A life annuity may add contractual lifetime income bought with part of the portfolio.
- The remaining portfolio can continue to support preferred spending, unexpected costs and future needs, but its value can rise or fall.
Connect the quote to must-cover spending
Begin with the part of spending you would be reluctant to reduce. Compare that amount with income already expected from benefits and pensions. A quote can then be tested as one possible source of the remaining must-cover income—not as an automatic instruction to buy.
Preferred spending can be higher than must-cover spending. Keeping the two amounts separate makes the trade-off visible: more contractual income may reduce reliance on the portfolio, while using more capital for a contract leaves less invested and accessible.
Capital becomes contractual income
A quote should be read in both directions. It shows the income promised by the contract and the capital required to buy it. Contract choices such as joint-survivor income, guarantee periods, refund features and payments that change over time can affect the quoted payment. Options that provide additional protection commonly reduce the starting payment.
Estimate, quote and contract are different
- An online market example may come from an article, advertisement, search summary or AI-generated answer. It can provide context, but may omit or mix important terms.
- A provider calculator estimate uses the terms entered into that tool. It is still an illustration unless the provider issues a written offer for you.
- A written quote is a dated offer issued for the terms shown. Check its provider, purchase amount, payment basis, expiry and all contract features.
- A purchased contract records the agreement that is actually in force. Keep it separate from an earlier estimate or quote.
Retired Kevin can test an estimate temporarily, but only a current written quote can be added to the saved Income Plan. A search result is not automatically a quote.
What to collect from a written quote
- the quote date and how long it remains valid;
- the purchase amount and monthly income before tax;
- whether the payment is level or changes over time;
- whether it covers one life or continues for a survivor, and at what percentage;
- any guarantee period, refund or cash-back feature;
- the insurer and the exact product or contract name; and
- how the account used for the purchase may affect tax treatment.
Quotes can differ by insurer, timing and contract design. Compare current written quotes on the same basis and read the contract before making a decision.
Trade-offs to keep visible
- Lifetime income can reduce the risk of outliving that income stream, but a level payment may lose purchasing power as prices rise.
- The purchase is generally difficult or impossible to reverse after the contract is in force.
- Guarantee, survivor and refund choices can change both the payment and what may remain for beneficiaries.
- The financial strength of the insurer and applicable protection arrangements deserve review.
- Tax treatment depends on the source of funds and contract details; this article does not calculate it.
What the Retired Kevin comparison does
The Income Planner can build a search phrase from comparable terms and test a figure you enter. The comparison subtracts the entered purchase amount from the portfolio and adds the entered monthly income. Both sides use the same modelled market paths.
A calculator or online estimate remains an unsaved test. A current written quote remains temporary until you explicitly choose to use it in the base Income Plan. An adopted quote is still a plan, not proof of purchase. If you later record the exact figures from a purchased contract, the Income Plan labels them as visitor-confirmed contract facts and keeps the actual Portfolio checkpoint separate.
The tool does not calculate an annuity payout, retrieve search results, price mortality, recommend an insurer, calculate personal tax, choose an annuity amount or change actual holdings.
Official checks and a practical next step
Use the Financial Consumer Agency of Canada overview to understand contract features and questions to ask. Confirm that an insurer or insurance professional is authorized in your province or territory, compare written quotes and review tax or estate details with qualified professionals when they matter.
Then return to the Income Planner. You can prepare comparable terms, test an estimate without saving it, or enter a current written quote exactly.
Prepare or compare
Find current examples or bring a written quote.
Build a search phrase from comparable terms, or enter the exact figures from a quote you already have.