Fixed Annuities

Fixed annuities are offered because some investors don't like variable investments. Although most investors like the guarantee feature of annuities, some people prefer fixed rates of returns such as those offered in a certificate of deposit. Fixed annuities offer alternatives to variable annuities.

What are the differences between fixed annuities and variable annuities?

Fixed annuities are purely insurance products whereas variable annuities are securities investments. The assets in fixed annuities are commingled with the general assets of the insurance company that issues the fixed annuities. In contrast, the assets in variable annuities are segregated from the assets of the annuity issuer.

That means, if the insurance company goes bankrupt:

• assets in the fixed annuities are also lost
• assets in the variable annuities are not lost.

Because of this, there is a big difference in the safety of your money invested in fixed annuities vs variable annuities. That is why you would only want to invest in fixed annuities issued by the most highly rated companies that you are almost 100% sure will not go under. Check annuity ratings of the fixed annuities you are interested in before purchasing.

Fixed annuity rates

Different fixed annuities offer different fixed annuity rates. Some annuity issuers are able to offer higher fixed annuity rates than others. Before you purchase any fixed annuities you must compare fixed annuity rates because once you get into a fixed annuity, it will be difficult to change later.