Fixed Annuity

In a fixed annuity, the insurance company:

• Declares a current rate of interest for a specific time period. Once the time expires the company will set a new rate which may be higher or lower than the original rate.
• Guarantees a minimum interest rate of return which is specified in the contract, and at no time may the current or renewal interest rate fall below it.
• Guarantees the principal.

A Fixed Annuity is like a CD with a dramatically better tax position.  With a CD taxes are owed annually on the interest.  An Annuity defers taxes when you take a distribution.

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