How Do You Understand Fixed And Variable Annuities?
Investments can be baffling, and annuities are no exception. Annuities are a life insurance product, but rather than paying out upon your death, an annuity begins to pay out when the owner of the annuity retires, although no earlier than at 59 1/2 years old. Payment can be taken in a lump sum or in monthly, quarterly or annual payments. If you are considering an annuity, you will need to understand the differences between variable- and fixed-rate annuities. Know what a fixed-rate annuity is. Fixed-rate annuities earn a guaranteed fixed interest rate. Certificates of deposit (CDs) also earn and pay out a fixed rate, but fixed-rate annuities often earn a higher rate than CDs. Know what a variable-rate annuity is. Variable-rate annuities pay out according to the performance of various investments in which you have your annuity money invested. You do not personally choose individual stocks and commodities. Rather, you choose a portfolio of investments from an array of portfolios that the i
