Fixed Annuities, The New Savings Accounts?

To put it in plain speaking, fixed annuities are savings accounts for the insurance world. When you decide to invest in annuities with your insurance agent, you are agreeing to make payments over time which the agent, in turn, invests on your behalf. The fixed annuities you’ve invested in will gain interest over the years and can accumulate in cash value until the predetermined date you have selected to start receiving your pay-out.

There are five main types of fixed annuities. They are listed below with a brief introduction to each:

1. Single-year guarantee fixed annuities – With this type your insurer guarantees to pay you a specific interest rate for one year which they can raise or lower each year after until the contract ends with what are called “renewal rates.” There are a number of different kinds of renewal rates so ask your insurance agent which ones may apply to you, however in most cases the interest rate will consistently lower with each year.

2. Multi-year guarantee fixed annuities – Here your carrier guarantees a specific interest rate for multiple years which cannot be raised or lowered. With this kind you know exactly how much you’re investing and how much interest you’re accumulating so you can ballpark how much your pay off will be.

3. Market value-adjusted fixed annuities – Perhaps the most risky and unpredictable venture, this variety is based on the market which is beyond your control and could lead to higher rates. There are penalties associated with breaking a market-value adjusted fixed annuities contract that you may want to be aware of so ask your agent before purchasing.

4. Pass-through rate fixed annuities – With this your provider receives a percentage of your fixed annuities and you will be paid the remainder of the interest earned.

5. Floating rate fixed annuities – Here the interest rates vary from month to month and collect value according to the fluctuation rates.

Are Fixed Annuities Right For You?

Go online today to talk to compare insurance quotes and talk to an insurance agent about fixed annuities and whether or not they are right for you. Although they can be complicated, it is best to think of fixed annuities much like a savings account in that you invest money into it and it gains value as a result of accruing interest. If this sounds like something you might be interested in then fixed annuities may be a worthwhile investment for you.

For more information about fixed annuities or for insurance quotes from up to 5 local agents, visit InsuranceAgents.com