Back To Back Annuity

Back to back annuity refers to when there is a life annuity that has a non-guaranteed period and a guaranteed life insurance policy that are done at the same time.

The same amount that is used to purchase the annuity will be the same face value of the life insurance. This could be done by an uninsurable person with the intention to convert the RRSP into the best choice of annuity and guarantee that upon death, the full value of the annuity would be paid tax free through the life insurance policy to family members.

The Federal tax authorities put a stop in the 1990's to the issuing of standard life rates to rated or uninsurable applicants.

Nowadays you can still insure a life annuity in this manner to provide guaranteed tax free funds to family members. You just have to do the application for the annuity and the application for the life insurance as separate transactions. Usually this is done through two different insurance companies so that there is no suspicion of preferential treatment given to the life insurance application.