When Are Annuities Used? 
There are two basic types of annuities , immediate and deferred . Deferred annuities are used as money accumulation vehicles , since they are issued by insurance companies they have features and guarantees other investments can not match . These are of particular interest to self - employed -LRB- any age -RRB- , OR those within 10 to 15 years of retirement or already retired . Guaranteed Investment Annuities -LRB- GIAs -RRB- are similar to Guaranteed Investment Certificates -LRB- GICs -RRB- more information is available at www.GuaranteedInterest.ca In Canada , variable annuities are called segregated funds or seg funds they are similar to mutual funds . More information available at www.ProtectandGrow.ca Immediate annuities provide a guaranteed income stream in exchange for a lump sum premium . They are used as part of a retirement income strategy to provide stability.They are often used to build a guaranteed income to cover fixed expenses . If have assets that are generating interest income and you do not need access to all the capital during your lifetime , the `` insured annuity strategy '' is worth exploring . The objective is to increase your current after tax income while preserving your asset for your heirs . Not for everyone , but the results can be quite dramatic , so it is worth a look . Annuities can also be used to assist in a number of personal and corporate planning strategies , too numerous and complex to be cover here . In Canada , if you are over 65 , income from Interest from a prescribed non-registered annuity qualifies for the $ 2,000 pension tax credit . Note : Interest from a Guaranteed Interest Annuity -LRB- GIA -RRB- also qualifies . GIAs are like Guaranteed Investment Certificates -LRB- GICs -RRB- but the are issued by insurance companies . If you have further questions , or feel that I could be of assistance , please do not hesitate to contact me . 