Tuesday, November 17, 2009

Fixed Annuities, The New Savings Accounts for your Future?

Fixed annuities are the new savings accounts for the insurance world. When you decide to invest in annuities with your insurance agent, you are agreeing to make payments over time which the agent, in turn, invests on your behalf. The fixed annuities you’ve invested in will gain interest over the years and can accumulate in cash value until the predetermined date you have selected to start receiving your pay-out.

There are five main types of fixed annuities. They are scheduled below with a brief introduction to each:
  1. Single-year guarantee fixed annuitiesWith this type your insurer guarantees to pay you a specific interest rate for one year which they can raise or lower each year after until the contract ends with what are called “renewal rates.”
  2. Multi-year guarantee fixed annuitiesHere your carrier guarantees a specific interest rate for multiple years which cannot be raised or lowered.
  3. Market value-adjusted fixed annuitiesPerhaps the most risky and unpredictable venture, this variety is based on the market which is beyond your control and could lead to higher rates.
  4. Pass-through rate fixed annuities With this your provider receives a percentage of your fixed annuities and you will be paid the remainder of the interest earned.
  5. Floating rate fixed annuitiesHere the interest rates vary from month to month and collect value according to the fluctuation rates.
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