Fixed Annuities Offer Security Plus Flexibility

Insurance companies offer annuities as a retirement planning option through Insurance brokers. In this mode of wealth accumulating investment, investors pay an amount, which is returned by the annuity after a fixed time period. The principal amount is guaranteed with fixed annuities. Annuities allow investors to create safe, tax-deferred retirement savings plans.

Annuities can be structured by varying the duration of the accumulation period, the length of payments and various other factors. One of these options is fixed annuities which provide security to the investor. In the case of fixed annuities, the investor is guaranteed a minimum interest rate for a fixed time period. In addition, there can also be a minimum benefit paid. This makes it predictable for the investor, ensuring the amount of return he will get during the term of the contract.

One option for an individual with fixed annuities is to choose an immediate income annuity. After making a lump sum payment, the investor then receives immediate fixed monthly returns, thus turning a lump sum into a retirement income stream.

You can purchase a fixed annuity either with one lump sum payment or in installments. The traditional fixed annuity offers regular growth that does not rely on external, volatile factors such as stock market values or equity growth funds. Their return is in the form of regular interest payments compounded within the contract or made to the annuity owner.

With tax-deferred annuities, the investor either deposits a lump sum and accumulates interest over time, or makes payments into the annuity, with the returns being paid out after a set period of time. This kind of fixed fixed annuity is often used as a retirement savings plan. Many individuals fail to plan for their income needs in retirement. In many cases a fixed immediate income annuity can fill the gap.

- Curtis McDowell