A fixed annuity is a type of investment offered by insurance companies, one in which both principal and interest are guaranteed and backed by the insurance company. There are types of fixed annuities, however, that do not offer guaranteed interest rates, but instead offer higher interest rate potential with the same guaranteed safety of investment funds.
Just like a bank CD (certificate of deposit), a fixed annuity (in it’s most simple form), pays a guaranteed rate of interest for a specified period of time. Unlike a bank CD or money market account, however, a fixed annuity offers the investor tax-deferred interest accumulation, which can amount to a greater savings for the investor. In addition, fixed annuities offer higher rates of interest than bank CD or money market accounts. Annuities may not be the right type of investment for those who are looking for “anytime access,” such as funds in a savings account. They are still a preferable investments for a certain set of investors. These include seniors who are looking for more returns than traditional investments offer, but do not want the associated risk.
How accessible are investment funds (liquidity) in a fixed annuity?
Funds in a fixed annuity are not as accessible as say, a bank savings account; However, most annuity contracts offer accessibility to your money, such as 5 % or 10 % a year, interest only, or principal plus interest. This feature varies widely depending upon the company and the type of policy, but generally speaking, investors are able to access a greater portion of their funds, usually without penalties.
This means that annuities are untouchable by everyone except for the policyholder, including the federal government and those persons who may attach liens against property or investments for finances owed!
Because annuities offer protection against creditors, this may be a suitable savings tool for high risk professionals such as physicians who face malpractice suits. Also to be considered is the fact that traders on the stock market might to use annuities as a way to reduce the tax burden.
There are even more benefits of annuities, such as bypassing probate, triple-compounding, and more. To receive our detailed guide explaining all of the benefits of annuities and how to receive the best current rates, please call (810) 877-2400 to request your complimentary 2018 ANNUITY GUIDE and schedule a one-hour complimentary financial analysis (worth $300).