What are fixed annuities?
A contract issued by an insurance company to promise to pay income based on a fixed return is known as a Fixed Annuity. Fixed Annuity contracts provide peace of mind to individuals concerned about market returns and are looking to protect an asset. This product is used to provide a guaranteed stream of income in the future. In the case of immediate annuities the income paid in is based on the life of an individual known as the annuitant. Income can pay out immediately or within a year or deferred over time after the initial deposit. The interest rate guarantee is a promise to pay based on the insurer’s financial ability. The amount of interest is usually tied to some underlying bond index. The rate of return for fixed annuities is lower than what is found for variable annuities. Where the rate is guarantee in a Fixed Annuity, Variable Annuities are investment products subject to market risk. The potential for higher market returns is tempered by the risk of losing some or all of the va
