How a LIF can fit into your financial plan:
- You control your investments. Your money can be invested in many ways, so it keeps growing and working for you.
- You have some control over your income. While there is a variety of income payment options available, there is also a minimum income you're required to take out of the plan every year and a maximum you're allowed to take. The maximums for LIFs are a bit different than for LRIFs/RLIFs.
- You maximize the tax deferral. Since income is taxed only when it's taken out of the plan, the tax deferral you enjoyed with your LIRA or locked-in RRSP continues.
- You can use money remaining in a LIF to purchase a secure guaranteed income in a life annuity.
- You can name a beneficiary to receive your money after you die.
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