Home » Annuities » Types Of Fixed Annuity Products

Types Of Fixed Annuity Products

If you are considering a fixed annuity as a retirement income option, you will

need to learn the different types of fixed annuities on the market today.

Each of them has something specific to offer, and there is a perfect fixed

annuity for everyone. The three main types are immediate, deferred, and

CD-type fixed annuities.


Immediate Fixed Annuities

An immediate fixed annuity is, as the name implies, an annuity that pays out

immediately. This is the best known type of annuity; once you make the

initial premium payment, you will see the monthly payments arrive shortly

thereafter. An immediate fixed annuity is a good choice for anyone who

wants to see a return right away and has a short-term goal in mind. They

are perfect for retirees who want to supplement their retirement income in

the immediate future. Payments will continue until both the amount of the

premium and the interest acquired run out.


Deferred Fixed Annuities

With a deferred fixed annuity, the interest is reinvested rather than being

paid out right away. No payments are made until a later date, usually at the

end of the term. The money is tax-deferred, allowing you to earn interest

instead on money you would have paid taxes on. A deferred fixed annuity is

a good choice for someone who is thinking ahead and foresees the need for

the income, but has not yet arrived at that point. Most deferred annuities do

allow for an early withdrawal at a certain amount without penalties, if



CD-Type Fixed Annuities

This third type of fixed annuities is a blend between a fixed annuity and a

CD. This gives you some of the benefits of a CD with the lower risk involved

in an annuity. Although CDs are sold by financial institutions, CD annuities

are sold by insurance companies much like any other annuity. CD-type

annuities guarantee the rate for the entire term, which differs from a

standard fixed annuity. There are also tax benefits to choosing a CD-annuity

over a classic CD. A CD-annuity is a good choice for a wide variety of



To choose the right fixed annuity, take the time to discuss all of your

retirement income needs with your insurance agent. When you look at the

large picture and your short- and long-term goals, the right fixed annuity

choice will quickly become clear. All of the fixed annuity choices offer you

security and a low-risk way to ensure retirement income.

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