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 ?
While an apples-to-apples comparison isn't exactly possible, there are a few key ways in which a fixed annuity differs from a bond mutual fund:
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.
According to Beacon Research, though fixed annuity sales were down for the quarter, year-to-date fixed annuity sales are up 21.
2 billion of the fixed annuity market during the first quarter, according to IRI.
Sales of book value products, the largest fixed annuity product, grew 84 percent.
For example, a client who wishes to have his or her portfolio (exclusive of the annuity contract) grow over a 10-year period can purchase an immediate 10-year fixed annuity.
A qualified interest is a right to receive fixed annuity payments at least annually (a GRANT), or a right to receive, at least annually, annuity payments that are a fixed percentage of the trust's assets revalued annually on the anniversary of the trust's creation (a GRUNT), or any noncontingent remainder interest if all other interests in the trust are GRANTS or GRUNTS.
The newly formed group, the Fixed Annuity Consumer Choice Campaign, or FACC Campaign, is gathering signatures for a petition to be sent to Labor Secretary Alexander Acosta "urging him to delay implementation" of the fiduciary rule exemptions to July 1, 2019, and "fix the treatment of fixed indexed annuities.