What is a Fixed Annuity?
August 31, 2022 | Tom Peterson
With multiple kinds of annuities available, it is important to know how each of them works. Looking at an annuity in its entirety, the common goal is to increase the value of the amount vested and ultimately leave you with even more money. Let us start with the most predictable of the options, a fixed annuity.
Fixed Annuity Offerings:
- Income in retirement
- A fixed rate of return
- Tax-deferred growth
- The potential to leave money to heirs
What is a Fixed Annuity?
With a fixed annuity, you will pay a premium that is invested at a fixed rate – an interest rate. Your investment grows based on a guaranteed rate of return rather than being somewhat unknown, as can be the case with other types of investments. With the stock market being volatile, you can receive a competitive return on your money within a fixed annuity. Traditionally, this type of annuity provides less risk, zero fees, and reliable growth.
The Pay In:
- Deferred – invest money regularly over time in return for a stream of annuity payments at a designated point in your future.
- Immediate – can also be known as single premium, where you pay a lump sum of money in return for a series of payments to you.
When it Comes to the Payout:
Payout options of any annuity can vary; the options below can be combined in many different formats. Stay tuned for our future blog on payouts for more information on the payout options.
- Lump Sum
- For some time; or
- For the rest of your life
What is a Multi-Year Guaranteed Annuity?
Multi-Year Guaranteed Annuity, or MYGA, is a fixed annuity. A MYGA can be looked at as an Immediate annuity, as you will pay in one lump sum, and the sum will be available to you relatively immediately.
This type of annuity has a guaranteed interest rate for a fixed period, commonly ranging from 3-10 years.With this product, there is a tax deferral on your growth until you start to take payments, and a guarantee of investment return.
How Twin City Underwriters Can Help in This Process:
At Twin City Underwriters, Inc. (TCU), we have been helping people make sound insurance decisions for over 50 years. We understand the significance of protecting what is important to you. Our goal is to help individuals and families determine if they are a suitable candidate for an annuity. To make this recommendation, our team will evaluate your financial objectives, current financial situation, and investment or savings horizon.
We have stable, long-term relationships with many leading insurance companies. We use those relationships and our experience to walk you through the process of selecting and applying for a suitable annuity. In addition, we provide ongoing customer service as questions arise and your needs change.
At Twin City Underwriters, we know that individualized attention to a client’s personal situation and needs are especially important, which is why we take the time to understand you and your financial goals. Contact us to schedule an appointment with one of our experienced insurance agents.