What are Fixed Annuities?

Have your finances been on your mind recently? Have you thought about how you will plan for your future to help make sure you have a comfortable retirement and maybe leave a legacy for your loved ones?

It’s not always simple to navigate the world of finances. It can also be quite stressful to decide where and when you need to put your hard-earned money. At Grace Advisory, we help our clients discover the answers to these and many other questions about annuities, life insurance and other financial products.
Fixed annuities are one option that our clients have chosen in order to plan for their future. Despite the advantages, many people don’t know what fixed annuities are. If you fit this criteria, we can help. We’ll teach you all about fixed annuities and help you determine if it is a good fit for you.


FIXED ANNUITIES DEFINITION
A fixed annuity is a contract between an insurance company and an individual where the insurance company makes a series of income payments in return for a premium or premiums paid. These payments are based on the total premium paid and the interest credited to the annuity by the company, which is generally a fixed, guaranteed interest rate. The insurance company guarantees both earnings and principal and this guarantee is backed by the financial strength and claims-paying ability of the issuing insurer.


WHAT ARE FIXED ANNUITIES?
An annuity is an insurance policy that’s a contract between a person and a financial institution. The owner of the annuity will be given a lump sum or incremental payments after paying their premium for a predetermined time. With a fixed annuity, the owner receives a locked interest rate for a set length of time. This is great for someone who is not comfortable with market risk exposure. Like with other annuities, fixed annuities' guaranteed returns can help provide protection for your assets against the market, guarantee* income for life, and provide a death benefit to your loved ones.


ADVANTAGES OF FIXED ANNUITIES


Here are some of the advantages of fixed annuities:

  • Predictability: You know exactly what will happen with this kind of investment.
  • Safety: Buying a fixed annuity with a multi-year guarantee and holding it for the entire term is a safe, conservative way to grow your money.
  • Tax deferral: Fixed annuities are tax-deferred, which means this money won’t be taxed until withdrawn.
  • Safe from probate proceedings: If you die while owning a fixed annuity, your money goes straight to the beneficiaries on your contract.
  • Option to annuitize: Like all annuity contracts, a fixed annuity can be converted to a retirement income stream.