The Key to Get the Best Annuity Plan

In essence, fixed annuities are interest-based annuity plans similar to bank issued CD but geared toward retirement savings. Usually, a lump sum of money is used to lock in an interest rate that ranges from 3% to 10% for a period of 3 to 15 years.

The initial deposit known as premium can range from $5,000 to $1,000,000. Fixes annuity plans are regarded by many as the most low risk annuity plans. They have more liquidity than CD, are tax-deferred and usually provide higher yields than bonds, treasuries, money market accounts or CDs.

Fixed annuity plans uses two types of distribution models, immediate or deferred. Immediate fixed annuities require a lump sum initial payment including interest charges for immediate payouts.

Deferred annuities do not provide payouts until the term ends, compounding interest like average retirement savings account. It is important to conduct your own research by comparing annuity quotes online. By comparing annuity quotes online, you will come across great deals at a price you can afford.

A majority of fixed annuity plans offer a lifetime income option that allows investors to convert the accumulated savings into a guaranteed monthly income for the rest of his or her life. This feature is best for people nearing the retirement age and sets fixed annuity plans apart from other retirement investment plans. Fixed annuities offer attractive features including:

Single Premium: It only takes a one-time payment to purchase fixed annuity. Future investments will require purchasing of a new annuity plan.

Guaranteed Rate: The annuity contract locks in a fixed interest rate for a specified number of years, similar to that of CDs.

Low Risk: It is important to remember that money can be lost if the insurance company becomes insolvent and the invested money exceeds Annuity State Guaranty Limits. Fixed annuity plans are regarded as low risk investment vehicles.

Retirement Payout: Fixed annuity is the best source of secure monthly retirement checks. Investors can retire and have the peace of mind knowing they will get the money they need, allowing steady financial growth.

Solid Returns: Solid returns like the ones provided by fixed annuity plans, are essentially no-risk investments. Fixed annuity offer a 3% to 10% return and is regarded as the better choice than CDs.

Lifetime Income: Investors do not need to worry about outliving their retirement savings because some fixed annuity plans offer an optional lifetime provisions that guarantees regular income for life.

Straightforward Terms: All it takes to receive paychecks is to sign the contract and pay the premium. No micromanagement needed at all.

Unlimited Contributions: Unlike 401 (k) or IRA, policyholders can invest as much as they want and purchase as many annuities as they can afford.

Probate-Free Inheritance: Investors can bequeath money to their loved ones probate-free to avoid estate or death taxes.

Fixed annuity plan holders can expect solid and guaranteed growth from their investments as long as they do not terminate prematurely. On the other hand, the tax-deferral for deferred annuity plan is going to accumulate and compound earning significantly more than CDS, mutual funds and money market accounts

Fixed annuities is available in three types, fixed immediate, fixed deferred and CD-type. Fixed immediate and fixed deferred indicate how much payments are made either in monthly increments or after a specified period of time, which is usually at the end of the contract term. CD types or CD/annuity hybrids works like a regular fixed annuity except for the scope of their guaranteed rate.

The key to get the best annuity plan that will yield high returns is to compare annuity quotes online during times when the interest rates are high. If you can content with longer terms of 10 years or more, you can find annuity plans at great rates. However, note that high-yield plans are not always the best choice. The best annuity plan is the one that provides ample funds, has flexible terms at a price that fits your budget.

Fixed annuity is not without several pitfalls. Just like any other types of annuity plans, fixed annuity does have several drawbacks, including:

1.Strict Withdrawal Procedures
2.Limited Guaranteed Rates
3.Hidden Charges

It is best to compare no less than five annuity quotes online to determine which type of plans fit your needs, preference and budget. Always read the terms and conditions and watch out for certain factors indicated on the contract including the interest charges, rates, terms as well as the dependability of the insurance company itself....

About the Author:
Vivian Li is a contributing writer for, a site that provides great information focused on various annuity products available online.

No. of Times this article has been viewed : 177
Date Published : Mar 31 2011

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