You pay an up-front commission or sales charge when you buy an annuityAnnuity A contract usually sold by life insurance companies that guarantees an income to you or your beneficiary at some time in the future. An annuity is a contract with a life insurance company. When you buy an annuity, you deposit a lump sum of money, and the insurance company agrees to pay you a guaranteed…+ read full definition. The commission can be up to 3% of the lump sum you’re depositing.
Other fees and costs, such as administrative charges and the costs of options, are factored into the calculation of your annuity payments. You won’t see these costs broken out anywhere.
If you’re buying an annuity at the same financial institution where you have your RRSP, ask them if they’ll waive the sales commission on the annuity.
Most annuity costs and charges are factored into the calculation of your annuity payments.