FAQs
How does the IncomePlus Bonus Work?
When an investor buys a GIF Select contract and allocates deposits to the IncomePlus Series, a Bonus of 5% of the (GWB) Bonus Base is added to the GWB Benefit Base every year in which no withdrawal(s) is taken. The GWB Bonus is not cash -- it is not added to the market value and it cannot be withdrawn from the contract except through periodic payments of the Lifetime Withdrawal Amount (LWA). The GWB Bonus simply increases the amount guaranteed to be paid over time.
For all deposits made to the IncomePlus Series in the first calendar year, the income bonus is pro-rated based on the month of the initial deposit.
How do I find an advisor and find out if IncomePlus suits my personal financial situation?
To locate an independent advisor near you, please contact: Manulife Investments by calling 1–888–626–8543 (option 3). You can also email manulife_investments@manulife.com
How does IncomePlus work in RRIF accounts?
IncomePlus can provide advantages for Registered Retirement Income Fund (RRIF) investors:
The flexibility to withdraw more than the annual guaranteed amount to meet the required RRIF minimum,
An income floor that’s guaranteed to continue throughout retirement, regardless of RRIF minimum amounts, even if the market value of the investment reduces to zero
In years where the RRIF minimum is higher than the guaranteed income amount, you can exceed up to the five per cent payout without affecting your future guaranteed steam of lifetime payments,
IncomePlus resets and bonuses (f applicable) also present opportunities to increase your lifetime income and give your retirement income a boost.
What is the minimum deposit required for IncomePlus?
The minimum deposit is $25,000. Since this product pays out income in amount of 5% (or 4.5% for the Joint Life Payout Option), a significant initial investment is required up-front.
If, for example, an investor with a minimum deposit of $25,000 chooses to take income right away, their annual income would be $1,250 per year or just over $100 per month. Most likely, this is less than the amount most people require for retirement and supplemental retirement income. Potential bonuses and the ability to lock-in market growth make IncomePlus a true retirement income solution.
For investors with less than the minimum investment, smaller deposits can be accumulated in the InvestmentPlus Series within a GIF Select contract and can be switched to IncomePlus once $25,000 has been accumulated.
What is the maximum age that I can make deposits to IncomePlus?
Dec 31st of the year the annuitant reaches age 75 (for the Joint Life Payout Option, neither spouse can be beyond December 31, age 75). If we allowed deposits past this age, you may not be able to fully utilize the income guarantee given the expected shorter timeframe of the payout period.
Why is the “for life” payout offered at age 65?
Manulife had to choose a reasonable age at which it made sense to begin guaranteeing lifetime income. The majority of Canadians retire around age 65. IncomePlus therefore offers lifetime income beginning the 1st of January in the year the annuitant turns age 65.
What options are available to clients taking income from IncomePlus prior to age 65?
Clients who need to take income or unscheduled withdrawals prior to age 65 have access to their IncomePlus investments, however, these withdrawals will impact their future guaranteed income and DSC may apply. In this case, the guarantees will be proportionally reduced and no income bonus is available in any year where there is a withdrawal(s). Clients who know they will need more flexibility for accessing their funds prior to age 65 may want to consider keeping some money in the InvestmentPlus Series or in a separate product. This may also be a good strategy in case of emergencies (unplanned income needs), and also as a means to take advantage of income bonuses in IncomePlus while income is being withdrawn outside of the IncomePlus Series.
What do the IncomePlus guarantees cost?
The IncomePlus Fee is charged separately from fund MERs so it is easy for investors to see what they’re paying for and the protection they’re receiving.
The fee calculation is based on the Guaranteed Withdrawal Benefit Base amount at the end of the previous calendar year, and the risk level of the funds held in the contract over the previous calendar year.
Fund Fee Rates range from 0.35% to 0.85%, depending on the risk level of the Fund.
The IncomePlus Fee is charged at the beginning of each calendar year based on your holdings in IncomePlus in the previous year – there is no fee charged in the first calendar year.
The fee structure makes it excessively expensive, doesn’t it?*
With its bonus structure, reset feature and lifetime income guarantee, IncomePlus provides exceptional value at a very reasonable price.
Does a person with a defined benefit pension plan need this product?
Potentially — it depends on a number of factors including the investor’s individual retirement goals, whether or not the plan is indexed to help protect against inflation, and whether it meets the investor’s needs with respect to the guaranteed portion of their retirement income. An investor should consult an advisor to create the appropriate retirement plan.
Is there anything to watch out for when investing locked-in money into IncomePlus?
It’s important to remember that pension rules stipulate a maximum withdrawal amount for LIF and LRIF plans. During extended periods of flat or declining markets, your maximum allowable withdrawal from these types of plans may fall below your guaranteed income amount. When this happens you may be limited to the legislated maximum in that year, which could delay you from taking full advantage of your income guarantee. You may have additional options in receiving your lifetime guaranteed income under pension jurisdictions that apply maximum income thresholds. Check with your advisor for specific maximum rules that apply to your province.
Will Manulife be around to make good on these guarantees?
Manulife Financial is recognized as one of the strongest companies in the financial services sector.
Manulife has been recognized for its exceptional financial and operational strength with ratings that set it apart both nationally and globally. For more details about the size and strength of Manulife, please visit this web site https://hermes.manulife.com/Canada/wmHomepagesPub.nsf/public/strength_about
In addition, Manulife is a member of Assuris, formerly known as CompCorp, a consumer protection organization that provides coverage for all life insurance companies. Refer to www.assuris.ca for more details.
Which investors should consider IncomePlus?
Investors who are either in their pre-retirement or early retirement phase are vulnerable to Longevity Risk and the Retirement Risk Zone (the 5 to 10 years before and after retirement) when a market downturn has the potential to reduce retirement savings to a level that won’t provide sufficient income and affect an investor’s retirement lifestyle.
Investors who are years away from retirement could benefit from GWB Bonuses offered in IncomePlus: for each calendar year the investor doesn’t make a withdrawal, a 5% bonus is added to their guaranteed income.*
* For all deposits made to IncomePlus in the first calendar year, the income bonus is pro-rated based on the month of the initial deposit.
How would an investor use this product within their portfolio?*
There are three main types of investors who could be ideal candidates for this product:
Conservative investors who require additional growth;
Growth-oriented investors seeking to protect accumulated assets;
Investors with pension plans, defined contribution plans or group RRSPs not looking for immediate income but who are looking to supplement their monthly retirement income.
For conservative investors, the safe but relatively low returns provided by investments such as GICs and bonds may not be enough to keep up with inflation, let alone provide the growth necessary to maintain their lifestyles throughout retirement. For these investors, the ability to participate in the market is a key consideration but market participation can also be intimidating. IncomePlus provides a solution with its income guarantee as income is protected from market downturns while also offering growth potential through resets and bonuses.
For growth-oriented investors seeking to protect their assets, IncomePlus provides access to valuable protection features while maintaining the opportunity for growth. These investors can maintain a balanced portfolio to help manage inflation, secure in the knowledge their income is protected from market downturns.
For investors who have been contributing to a company pension plan and will need income in the near future, IncomePlus offers a guaranteed income stream similar to a traditional defined benefit pension plan. In addition, IncomePlus allows potential growth, liquidity, flexibility and the option to take care of one’s beneficiaries upon death.
Why did Manulife develop GIF Select IncomePlus?
IncomePlus was created by Manulife Investments in response to the major challenges facing Canadian pre-retirement and retirement age investors.
Longevity: will I run out of money?
Withdrawal rate: how much can I safely withdraw from my portfolio?
Inflation: will my income keep up with inflation?
Sequence of Returns: can my portfolio weather a period of negative returns?
The bonus is available each year following the initial deposit to the IncomePlus Series, provided no withdrawals are taken. For all deposits made to the IncomePlus Series in the first calendar year, the income bonus is pro-rated based on the month of the initial deposit. Bonuses are not cash deposits, they increase the basis for calculating guaranteed income.
Exceeding the withdrawal thresholds may have a negative impact on future income payments. The Lifetime Withdrawal Amount becomes available on January 1st of the year the annuitant or the younger of the annuitant and the Joint Life (if applicable) turns age 65. Other conditions may apply.
The Manufacturers Life Insurance Company is the issuer of the Manulife GIF Select insurance contract which offers the IncomePlus, InvestmentPlus and EstatePlus Series and the guarantor of any guarantee provisions therein.
Any amount that is allocated to a segregated fund is invested at the risk of the contract holder and may increase or decrease in value.
