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Fixed Annuity

The fixed annuity is best suited for a conservative investor who wants to know exactly what the rate of return will be on his or her investment.

With a fixed annuity, the premium you pay earns a specified rate of return over a guaranteed period--most often ranging from 1 to 10 years. At the end of the contract term, a new rate is declared, and you may rollover your contract for another specified period.

Both the money you invest and the interest paid out are guaranteed by the claims-paying ability of the insurance company--they are neither government nor FDIC insured.

Characteristics of Both Fixed and Variable Annuities:

  • Growth of investment earnings is tax deferred.

  • Earnings are taxed at your ordinary income tax rate.

  • Money withdrawn before age 59½ may be subject to a 10% premature distribution tax penalty.

  • Death benefit proceeds avoid the costs and delays of probate.

  • Many flexible payout options are available for providing income upon retirement, ranging from a set amount of time or as long as you and/or your spouse live.

  • A free cancellation period--also known as a “free look” period--allowing you to change your mind and cancel the policy within a certain amount of time.

 Immediate Annuity

 Fixed Annuity

 

 Variable Annuity

 

 Variable Annuity Advantages & Disadvantages

 

 

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