Are There Different Kinds of Deferred Annuities?
Yes. There are two(2) types of deferred annuity: fixed and variable. With a fixed annuity, the insurance company guarantees that your funds will grow at a specified rate for a period of time. Most companies guarantee a specific rate of return for at least the first year. Thereafter, the rate will fluctuate at least once a year consistent with the then-prevailing interest rates. In the case of a variable annuity, your rate of return is determined by the performance of investments you select from mutual funds offered by the insurance company. You have the choice of putting all your money into one fund or many funds. You can usually earn a larger return than with a fixed annuity. However, if your investment choices perform poorly, you original principal may be eroded. Are There Costs Associated With Deferred Annuities? Most companies charge an annual management fee of between one-half (.5) percent to one and one-half (1.5%) percent of total assets. If you invest in a variable annuity you
