The Various Types of Fixed Annuities
There are so many types and variations of fixed annuity contracts on the market, it is important to get a feel for your options before you commit to a contract. The fixed annuity can be an effective financial planning tool when used correctly, and provides a number of options for the investor found few other places.
Different types of fixed annuities:
Fixed Immediate Annuity – This fixed annuity type refers to the distribution period of the contract. In an immediate annuity, the contract begins payments to the beneficiary on period after the start date. This means distributions from a monthly annuity begin after one month, and distributions from an annual annuity begin after one year.
Fixed Deferred Annuity – Opposite of the immediate annuity is the fixed deferred annuity contract. This type of annuity defers payments until a future date in time. This can allow for the distributions to begin once the funds are needed in the future, or allows for the annuity owner to sufficient age before taking payments.
Fixed Income Annuity – This fixed annuity type is one of the more common annuity types available on the market. It simply refers to the distributions out of the account being a fixed size. The insurance company calculates the payment based on duration, size of the account, and the interest used for the contract.
Fixed Rate Annuity – Fixed rate annuities are a type of annuity contract in which a fixed interest rate is established for the duration of the contract life. A fixed rate can be useful for those wanting guarantees on the return of the account funds.
Fixed Indexed Annuity – This is specialized type of annuity contract in which the account growth is tied the markets. As opposed to variable annuities, the contract is designed to not decrease during market downswings. During market upswings, the annuity owner enjoys a portion of the growth of the associated market.
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