Fixed Annuities: What To Know PDF Print E-mail
Written by John C. Ryan   
Thursday, 07 January 2010 13:47
The advantages, the accumulation rates and interest rates all differ in various fixed annuities. So ensure that you get expert guidance before you select and sign documents for any specific product. You have a variety of annuities to choose from, but get one that suits you best.
by JohnC.Ryan


The advantages, the accumulation rates and interest rates all differ in various fixed annuities. So ensure that you get expert guidance before you select and sign documents for any specific product. You have a variety of annuities to choose from, but get one that suits you best.

One of the most common ways that you try to get information about these annuities is from acquaintances or financial experts; but this is not really the best way to get information about these policies. People's requirements are varied and what you are looking of will not be what your friend or acquaintance might be searching for. Things are constantly changing in today's world.

If your friend put money into an annuity during a high interest rate time, they may have a higher payout than any available in a lower interest environment. Companies also change returns and the company that offered the highest return one week might not be the same just a week later.

Fixed annuities are great assets for those that want security, whether they take an immediate income or simply allow the money to accumulate interest. The steady growth with no risk of principle loss is often a draw for people with an aversion to risk or in their senior years with limited time to recapture any loss in the market.

These fixed annuities provide guarantees akin to banks which have the support of the government. Suppose a company which functions within a state develops a financial crunch, they will take care to see that the policy holders do not incur any losses through selling proportionately pooled sums of money. Now you are aware that the State Guarantee Funds functions in a way similar to the FIDC, which makes fixed annuities extremely secure and the best.

Suppose a friend of yours gives you some suggestions about which company that you should invest in as they provide maximum interest rates, you have to first see whether this annuity is ideally suited to your requirements. Do not forget to find out whether you will be able to procure a sum if some contingency arises. This is an extremely important point to be considered before you opt for the particular policy.

Each annuity has a surrender period. The surrender period is similar to the length of time you lock your funds into a CD. If you remove the funds before the time is over, you pay a penalty. Unlike a CD, however, if you decide to continue the contract after the surrender period, you don't have the hassle of going to the bank and signing up for a new CD. If you miss the window, also unlike a CD, you don't have to wait, it's available to you anytime you choose. It never begins another surrender period.

Some people never need their funds and the length of the surrender period isn't important. Others may need access in case of emergency. In this case, the penalty free amount available is important to them. Still others may need all the funds at a specific time, so the length of the surrender period is excessively important. Always look first at your needs before you invest. An annuity that was good for your friend might not fit your situation.

DISCLAIMER: This article is provided as information only and is not to be taken as financial advice.

John C. Ryan discusses the merits of a fixed annuity as part of a proper retirement investment portfolio. Fixed annuities are a low risk investment, tax deferred as a way to save for retirement.