A fixed annuity is a type of insurance contract that provides a guaranteed income stream for a specified period of time or for the life of the annuitant. Here are some key features of a fixed annuity:
1. Fixed Interest Rate: One of the main features of a fixed annuity is that it offers a fixed interest rate for a predetermined period. This means that the annuity holder will receive a fixed amount of interest on their investment, regardless of market fluctuations.
2. Guaranteed Principal: Another important feature of a fixed annuity is the guarantee of the principal amount. This means that the initial investment made by the annuity holder is protected and will not be subject to market risk.
3. Tax-Deferred Growth: Fixed annuities also offer tax-deferred growth, which means that the earnings on the annuity are not taxed until they are withdrawn. This can be advantageous for individuals who are looking to accumulate wealth over time.
4. Regular Income Payments: One of the primary purposes of a fixed annuity is to provide a regular income stream. The annuity holder can choose to receive income payments on a monthly, quarterly, semi-annual, or annual basis, depending on their needs and preferences.
5. Death Benefit: In the event of the annuitant's death, a fixed annuity may also provide a death benefit to the beneficiary. This can help ensure that the annuitant's loved ones receive a portion or all of the remaining annuity value.
It's important to note that the specific features and terms of a fixed annuity can vary depending on the insurance company and the annuity contract. It's recommended to carefully review the terms and conditions of the annuity before making a purchase decision.