Lock in a rate of earnings that will remain unaffected by market ups and downs.
Fixed Annuities Life Insurance
A fixed annuity is a type of insurance contract that promises to pay the buyer a specific, guaranteed interest rate on their contributions to the account. By contrast, a variable annuity pays interest that can fluctuate based on the performance of an investment portfolio chosen by the account's owner. Fixed annuities are often used in retirement planning.
The benefits of a fixed annuity include:
Predictable Investment Returns
The rates on fixed annuities are derived from the yield that the life insurance company generates from its investment portfolio, which is invested primarily in high-quality corporate and government bonds. The insurance company is then responsible for paying whatever rate it has promised in the annuity contract.
Guaranteed Minimum Rates
Once the initial guarantee period in the contract expires, the insurer can adjust the rate based on a stated formula or on the yield it is earning on its investment portfolio. As a measure of protection against declining interest rates, fixed annuity contracts typically include a minimum rate guarantee.
Because a fixed annuity is a tax-qualified vehicle, its earnings grow and compound tax deferred; annuity owners are taxed only when they take money from the account, either through occasional withdrawals or as regular income. This tax deferral can make a significant difference in how the account builds up over time, particularly for people in higher tax brackets.
Guaranteed Income Payments
Fixed annuities may be converted into an immediate annuity at any time the owner selects. The annuity will then generate a guaranteed income payout for a specified period of time or for the life of the annuitant.
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Coughlin Insurance Services, Inc.
178 Myrtle Boulevard, Floor 2, Larchmont, NY 10538
Toll Free : (800) 542-0661
Tel: (914) 834-1234 Tel: (212) 593-0200