fixed annuity

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Fixed Annuity

An annuity that allows the annuitant a fixed return for the life of the annuity. Like any annuity, the annuitant buys into a policy, either with a lump sum or premiums over a period of time. When the annuitant reaches a certain age, or retirement (whichever is greater), he/she begins to receive payments. Typically, the insurance company issuing a fixed annuity invests the premiums in low-risk investment vehicles such as bonds. This results in a smaller likelihood that the insurance company will be unable to make the payments, but also exposes the annuitant to inflation risk. See also: Variable annuity.

fixed annuity

A stream of unchanging payments for a specific period or for an individual's lifetime, depending on the terms of the annuity contract. Fixed annuities are sold by insurance companies to people who desire a fixed income. Also called guaranteed-dollar annuity. Compare variable annuity. See also hybrid annuity.

Fixed annuity.

A fixed annuity is a contract that allows you to accumulate earnings at a fixed rate during a build-up period.

You pay the required premium, either in a lump sum or in installments. The insurance company invests its assets, including your premium, so it will be able to pay the rate of return that it has promised to pay.

At a time you select, usually after you turn 59 1/2, you can choose to convert your account value to retirement income.

Among the alternatives is receiving a fixed amount of income in regular payments for your lifetime or the lifetimes of yourself and a joint annuitant. That's called annuitization. Or, you may select some other payout method.

The contract issuer assumes the risk that you could outlive your life expectancy and therefore collect income over a longer period than it anticipated. You take the risk that the insurance company will be able to meet its obligations to pay.

References in periodicals archive ?
ELM's product development process, involving product review of 13 major insurance companies, found that the insulated separate account feature is rarely seen in individual fixed income annuity contracts, although common in group contracts.
With the newest provisions in place, the ELM(sm) Income Annuity is establishing a benchmark in the industry for innovative fixed income annuity products.
Account A, which had no fixed income annuity component and was made up of U.
Golden added that while Accounts B, C, and D are bolstered by the use of a fixed income annuity, the decision of when to purchase the income annuity -- all at once or gradually over time -- can be crucial in certain market conditions and can vary based on an investor's comfort level.
Select Retirement, an individual, supplemental, immediate fixed income annuity, is issued by Nationwide Life Insurance Company, Columbus, Ohio, a member of Nationwide Financial.
SAN FRANCISCO -- As the first wave of Baby Boomers enters retirement this year, and the need for retirement income solutions becomes increasingly important, Charles Schwab today announced an expansion of its Single Premium Immediate Annuity (SPIA) offer, a fixed income annuity platform that provides choice and flexibility for people seeking ongoing sources of guaranteed income in retirement.
These additions to our existing SPIA platform further diversify our fixed income annuity offering and are consistent with Schwab's overall open architecture approach that enables investors to choose the products that make the most sense for their specific situation.
Select Retirement employs a fixed income annuity issued by Nationwide Life Insurance Company (Nationwide) to provide a distinct way to create guaranteed lifetime income from the Select UMA account.
Higher targets for income or bequests generally also suggest larger allocations to variable annuities with GMWB features or to traditional SWP's -- both of which offer possible equity appreciation that fixed income annuity products do not.
These were developed in conjunction with two major insurance companies, Principal Life Insurance Company, a member of the Principal Financial Group[R] for the fixed income annuity, and Nationwide Life Insurance Company, a member of Nationwide Financial[R], for the indexed annuity.

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