Fixed annuities are designed to provide account owners with reliable income at regular intervals. Insurance companies provide access to various types of annuities.
What Is a Fixed Annuity?
A fixed annuity is an insurance contract funded by the account owner with a lump sum payment or a series of payments made over time. The annuity pays a specific guaranteed rate of interest on the account balance.
Fixed annuities provide predictable returns while keeping the principal relatively safe. However, annuities are not federally insured. For this reason, working with a highly rated and reputable insurance company is crucial.
How Does a Fixed Annuity Work?
When the annuitant starts receiving income from the annuity, the insurer calculates the exact amount of the payments based on the owner’s age, the length of time payments will continue, and the account balance.
Payments may continue for a specific number of years or until the annuitant dies, depending on the terms of the annuity. A fixed annuity’s interest earnings are tax-deferred until the account owner starts receiving income from the investment.
Contact Soodsma Insurance Agency LLC to learn more about annuity options and get a quote.