As a wave of Canadians approaches retirement, Sun Life Financial Inc. (TSX:SFC) has launched a new product designed to provide these new retirees with guaranteed income for life, along with the potential for investment growth.

The new product, called SunFlex Retirement Income, aims to help retirees turn their savings into a steady income stream that will cover their basic needs, such as food, housing and clothing.

“One of the important risks for retirees is the fact that they could outlive the income stream that they have, and today, a lot of people moving into retirement no longer have strong defined benefit plans that would offer them a guaranteed level of income to a level that would cover the basic needs that they have in retirement,” said Kari Holdsworth, vice president, individual wealth, insurance and investments, Sun Life Financial Canada. “The SunFlex Retirement Income does have a minimum level of paid income that will be paid for as long as the retiree lives.”

The product guarantees a certain level of annual income for clients, and above and beyond that guarantee, clients have the opportunity to earn “potential bonus income”, in the form of market returns that are tied to the performance of certain mutual funds.

Clients can choose up to 10 different mutual funds that they’d like exposure to, from a selection of 14 funds. The available funds are managed by a variety of different fund managers, and range in their risk profile, with some holding as much as 70% of the portfolio in equities.

“[Clients] won’t own units of the fund; instead, their annual income is going to change by the performance of those funds,” Holdsworth said.

“They’re really not taking their money out of the market – they’re leaving it in the market, but with the benefit of a guarantee.”

The product boasts similarities to both guaranteed minimum withdrawal benefits (GMWBs) and traditional payout annuities, but is structured slightly differently, Holdsworth said.

“It’s developed to meet a similar need, but it does have a different value proposition,” she said. “It just depends what the customer’s preferences are.”

Adds Holdsworth: “It’s more specific to an income need, and a very strong product for an advisor to use in meeting that income solution for clients.”

The product is available to clients who are at least 55 years of age, and is designed to begin generating a stream of income within the first year.

For clients who decide that they no longer want any exposure to fluctuating markets after a certain period of time, they can convert the product into a traditional payout annuity.

“They can decide at any time that they want to move into a fully guaranteed level of income,” Holdsworth said.

SunFlex also provides clients with the opportunity to withdraw additional funds for unforeseen needs, and to lock in higher guaranteed income in the future.

SunFlex is available to both independent advisors and Sun Life advisors, and carries both an upfront commission and a trailing commission.