Articles provided by RE-Reston.com

Annuities are a form of investment issued by Insurance companies and offered through Insurance brokers. The investor pays into the annuity, and after a set period of time, the annuity pays the investor income. With fixed annuities, the principle is guaranteed. Annuities offer a safe, tax-deferred way to accumulate wealth, and are very popular as retirement savings plans.

Annuities can be structured by varying the duration of the accumulation period, the length of payments and various other factors. One of these options is fixed annuities which provide security to the investor. In the case of fixed annuities, the investor is guaranteed a minimum interest rate for a fixed time period. In addition, there can also be a minimum benefit paid. This makes it predictable for the investor, ensuring the amount of return he will get during the term of the contract.

You can purchase a fixed annuity either with one lump sum payment or in installments. The traditional fixed annuity offers regular growth that does not rely on external, volatile factors such as stock market values or equity growth funds. Their return is in the form of regular interest payments compounded within the policy or made to the annuity owner.

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 returns. 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.