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What is a Fixed Annuity?
A fixed annuity is a fixed-income investment offered by an insurance company. They provide investors with a safe rate of return and a guarantee of principal on a tax-deferred basis. For investors’ peace of mind, fixed annuities are backed primarily by government securities and high-grade corporate bonds. The underlying bond portfolios are managed as part of the insurance company’s general account. Investments can grow with taxes deferred until a withdrawal is made from the policy, at which point taxes are paid on the withdrawn portion.
Benefits of Fixed Annuities
- tax-deferred annuity
- guaranteed rate of return
- potential withdrawal without penalty
- lump sum or periodic payment options