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Fixed Annuities

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Fixed annuities
Contracts in which an insurance company or issuing financial institution pays a fixed dollar amount of money per period.

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.


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Besides developments on the income annuity front, Montminy suggests more insurers are poised to make long term care insurance features available with their fixed annuities, giving contract holders the ability to tap into annuity value to pay for long term care.
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