Fixed Annuities Offer Security Plus Options

Annuities are issued by Insurance companies as a type of investment contract. They use Insurance brokers to offer these contracts to investors, who pay into the annuities. After a set period of time, the investor gets a return on his investment. When the annuity is fixed, the principle is guaranteed. Annuities are a safe way of investing to accumulate wealth, they are tax-friendly and are often used as retirement savings plans.

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.

Several factors are used to structure annuities such as changing the time period of money accumulation, changing the number of income payments and others, etc. A fixed annuity offers security to the investor as the issuing company confirms a minimum interest to the investor for a set period of time beforehand. Often, with fixed annuities, depositors can get a minimum benefit payment as well. Thus, in the case of a fixed annuity, the investor already knows the expected return from the annuity before signing the contract.

Fixed annuities can be paid out in various ways: for one purchased with a lump sum payment, fixed monthly returns can immediatly be paid out to the policy owner. The buyer receives a guaranteed, regular flow of income from his lump sum investment.

Deferred annuities can be a useful tool to add to a retirement portfolio. The investor can choose to deposit a lump sum into the account where it will accumulate interest over time, or make periodic payments into it. After a set amount of time, the interest earnings are paid out. This is a form of fixed annuity.New retirees sometimes neglect to calculate their income requirements after leaving a regular paycheck. An income annuity may be the perfect solution.

- Gary Denison