This is an insurance product, where an insurance company makes fixed payments to the annuitant. A fixed annuity is set for a fixed term and remains to be settled till the death of the customer. The company guarantees both the earnings and the principal. It is a fairly good financial instrument for those who are on the lookout for some stability in their income. These financial products could be suitable for those persons who are not fully participating in the regular workforce. The part time workers, small business men, the retired persons are the preferred choice of the insurance companies. Fixed annuities are offered by the insurance companies as contracts over a fixed period of time. The person who owns the annuity – set a amount of income paid at regular intervals.
There is a different kind of annuity contract known as deferred annuity. This type of annuity contract delays the payment of income and installments. It could also be a lump sum till the investor elects to receive it. This type of annuity has two main phases, the savings part and the income part. In the savings part, where you invest the money into the account and when in the income phase the plan is converted into an annuity and the payments are received. Entering the income phase is optional in this phase. In the market of financial investments, products which will make your retirement life secure is in great demand. In this case a fixed annuity will be in great demand since buying one could give you the required safety in your life. It is a solid investment decision which could be relied upon. It attracts a lot of people who are on the lookout for stable retired investment plans. The beauty of this plan is that the bad effect of an economic recession does not fall on this. Both your investment and the interest you will earn will remain secure. If you are not interested to put the money into the bank, invest in the insurance company they will invest your hard earned money in the stock market. Whether you choose the deferred annuity or the fixed one, the difference is the payouts. The fixed one gives immediate payment options and the other is deferred. The original meaning of the word deferred is to hold back, postpone or delay the payment. The payment in this type of annuity is paid at a later date. The payment will be made some time in the future; normally it takes about a year after the buyer purchases the policy. There is a type of personal account for long term savings. If the buyer decides to purchase it early the premium will be invested at a much cheaper rate, during the savings accumulation period. Generally there are two phases in an annuity, the savings and the investment phase. The first part is tax deferred and for the income phase, the buyer can receive regular payments for his lifetime. The policy option normally allows withdrawals both during the savings and the investment phase.Mike Anderson is a business consultant who has good information on fixed annuity and deferred annuity. For more information visit http://www.immediateannuities.com/
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