Articles provided by RE-Reston.com

Insurance companies offer annuities as an investment option through Insurance agents. In this mode of wealth accumulating investment, investors pay a premium, which is returned by the annuity after a fixed time period. The principal amount is guaranteed with fixed annuities. Annuities allow investors to create safe, tax-deferred retirement savings plans.

If you decide on fixed annuities, it can either be funded with one lump sum payment or with a series of smaller payments over the course of time. The returns from traditional fixed annuities are guaranteed to increase as they do not depend on increases in the stock market or other equity investments. There is a steady return of interest and also a steady future incom to the policy owner from the annuity.

Annuities can be structured in a number of ways; varying accumulation period, length of income payments and other factors. Investors get the security of a fixed interest rate when they choose a "fixed annuity" option. Issuing insurance companies guarantee a minimum interest rate for a set period of time with a fixed annuity option. Most of the companies also pay a minimum benefit. Since the payout is fixed over a period of time, investors are aware of the expected income over the payout period.

There are options for how fixed annuities are paid out. With immediate payment annuities, the investor makes a lump sum premium deposit and immediately receives fixed monthly income payments. This is a good way for an individual to turn a lump sum into a retirement income stream.

With tax-deferred annuities, the investor either deposits a lump sum and accumulates interest over time, or makes payments into the annuity, with the returns being paid out after a set period of time. This kind of fixed fixed annuity is often used as a retirement savings plan. Many individuals fail to plan for their income needs in retirement. In many cases a fixed immediate income annuity can fill the gap.