fixed annuity


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Related to fixed annuity: variable annuity, immediate annuity

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 ?
NAFA's membership represents every aspect of the fixed annuity marketplace covering 85% of fixed annuities sold by independent agents, advisors and brokers.
It will have no impact on RiverSource policyholder contractual provisions and RiverSource will retain account administration and servicing of the fixed annuity policies.
The continued spread compression led to limited new fixed annuity contract sales, continued fixed annuity lapses, and a drop in fixed annuity sales, Ameriprise says.
American Equity Investment Life Insurance is a full-service underwriter of fixed annuity and life insurance products with a primary emphasis on the sale of index and fixed rate annuities.
After strong results in the first three quarters, fixed annuity sales fell 13 percent to $25.7 billion in the fourth quarter.
Fixed annuity sales accounted for $30.7 billion of the total, a 47.2 percent increase from sales of $20.9 billion during the first quarter of last year and an 8.8 percent increase from sales of $28.2 billion during the fourth quarter.
How has the 10-Year Treasury affected fixed annuity rates?
Why, then, will some companies issue fewer fixed annuity policies this year?
However, fixed annuity sales jumped 79% in the fourth quarter of the year and 50% for all of 2008, from $72.8 billion in 2007 to $109.4 billion in 2008.
In its most secure form, the fixed annuity, it addresses the risk that an investor will out-live a lump sum they have accumulated.
A fixed annuity earns a fixed and stated rate of return.