We purchase a product because it has utility to us. In other words, we only splurge on those items which have the power to satiate our needs. An annuity is also like a commodity that fulfills our desire to live a happy and hassle-free life. This kind of product does not produce an immediate impact on your life but you will surely gain amazing benefits in remote future. Like other varieties, fixed annuity is also a contrainsurance companyct between an annuitant and an insurer. You make a series of investment or pay it at one go depending on your financial strength and objectives. In return, you earn income from the insurance company either for a set period or till your last breath.
“Fixed annuity” has derived its name from the fixed figure of interest rate attached to this variety. As the interest rate is specified in the contract, so the investors get the guaranteed volume of income throughout the payment disbursement period. It is a good choice for those who are not known for their high risk appetite. As the income remains immune to the financial meltdown and buoyancy, so the insurer will always generate the same volume of income to support your needs. As you already know how much to be earned from a fixed annuity scheme, so it is possible to chalk out a proper budget plan much beforehand.
The only disadvantage of this type is you can not reap the benefits if your annuity fund is working well in the market. As the interest rate is not volatile in nature and pegged at a certain level, so there is nil possibility of earning extra in the event of good performance of your investment fund. At the same time, you will not be a loser if the annuity market goes through a tempestuous phase. Fixed annuity makes an ideal choice for those who prefer security to risk.
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