What Is Fixed Annuity? Definition

Why it matters

Fixed annuities appeal to savers who want predictable growth and no stock market risk. The insurer may reset the rate after the first guarantee period, and a minimum rate applies. Early withdrawals can trigger surrender charges, and withdrawals before age 59 and a half may bring a tax penalty. Fixed annuities are not FDIC insured. Guarantees depend on the insurer's strength. State guaranty associations offer limited protection, with limits that vary by state.

Source: investor.gov

Where we use this term

Fixed vs fixed index annuity: how do they work and who do they fit?

Related terms

Annuity: An annuity is a contract with an insurance company in which you pay a lump sum or a series of payments. In return, the insurer agrees to make payments to you, either right away or at a future date.
Multi-Year Guaranteed Annuity (MYGA): A multi-year guaranteed annuity (MYGA) is a fixed deferred annuity that guarantees one interest rate for a set number of years, usually from two to ten. It works like a certificate of deposit issued by an insurer.
Fixed Indexed Annuity (FIA): A fixed indexed annuity (FIA) is an annuity that credits interest based in part on the performance of a market index, with a minimum guarantee. The owner does not invest directly in the index.
Surrender Charge: A surrender charge is a fee an insurer charges if you withdraw more than the allowed amount from an annuity, or cancel the contract, during the surrender period. It is usually a percentage that declines each year.
Deferred Annuity: A deferred annuity is an annuity contract that delays payments until a future date chosen by the owner. Until then, the money can grow during an accumulation phase, tax deferred.

All 241 terms

Why it matters

Where we use this term

Start your climb.