Traditional Fixed Annuities

Traditional fixed annuities are a type of deferred fixed annuity.  There are several features associated with all fixed annuities:  A set term or contract length, an initial guarantee, an initial guarantee period and a minimum guarantee.   How do all of these pieces fit together?  Let’s take a look at an example that will explain all of these parts.  

Example:  You could purchase a 7 year (the contract length or term) fixed annuity with 1 year (guaranteed period) guaranteed rate of 8%(initial guarantee) with a minimum guarantee of 3% (minimum guarantee).  

In this example, you are purchasing a 7 year policy.  In year 1 it will earn the guaranteed rate of 8%, so if you invested $100,000 you would earn $8,000 in the first year and have $108,000 at year end.  In the year two the interest rate is unknown until the start of the second year.  After year one the rate will be set annually on or around the policy anniversary.  The only known factor is that the rate cannot fall below the minimum guarantee of 3%.  
 

Get Quotes For High Interest Fixed Annuities