Fixed Annuities Offer Numerous Options

An annuity may be either immediate or deferred. If income is important now consider an immediate annuity. Immediate annuities are usually purchased with a single premium and they provide income payments that begin immediately. The reason for buying an immediate annuity is to obtain immediate income and to make the insurance company the responsible money manager. The insurance company will assumed fiduciary responsibility for the income and will pay you on your selected time period.

If you are not yet ready for retirement, consider a deferred annuity. Deferred annuities provide income payments that can start many years later. Deferred annuities have an accumulation period, which is the time between when you pay premiums and when income payments start. The main advantage of a deferred annuity is to accumulate money on a tax-deferred basis, which can then provide an income at a later date.

A fixed annuity provides fixed dollar income payments backed by the guarantees in the contract. During the accumulation period of a fixed deferred annuity, your money earns interest rates set by the insurance company spelled out in the annuity contract. Most fixed annuities have a current interest rate and a minimum guaranteed interest rate. The company guarantees that it will pay no less than a minimum rate of interest. Many other contracts will offer a higher fully guaranteed interest rate for the entire length of the contract. You have numerous options in selecting the best annuity for you.

During the payout period, the amount of each income payment to you is generally set when the payments start and will not change. There are options available to the annuitant which can allow for changes based on outside circumstances. See your annuity contract for details of these options.

An equity linked indexed annuity is a type of fixed annuity, but its returns are based upon the performance of an equity market index, such as the Standard & Poor's 500 and the Dow Jones Industrial Average. New products are being released constantly with newer crediting choices and options. Equity linked indexed annuities offer safety and security while not tying your returns to the insurance company. The actual credited interest is set by the outside source.

Regardless of what the annuity offers it is important that the benefits match up to your needs and goals. Make certain you ask questions and it is always a good idea to obtain a second opinion.

Bill Broich helps seniors manage their retirement savings. Visit his website for more information: Free Annuity Booklet.

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