How Do Fixed Income Annuities Work?

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    Peggy MacePRO
    Most of the U.S.
    Fixed income annuities provide a fixed, guaranteed income stream for a set period of years, or for the rest of your life, per your choice. They are generally purchased with a lump sum near or during retirement age and are annuitized (regular payments paid out to the annuitant) immediately upon purchase of the annuity.

    Answered on May 17, 2013
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    David G. Pipes, CLU®, RICP®PRO
    Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
    A fixed income annuity is a contact with a life insurance company.  In exchange for a sum of money the company promises to pay a monthly income to you for the balance of your life.  The first major variation of this contract is a deferred fixed income annuity.  The difference is that the sum of money is not applied immediately but deferred until a later date.  There are many other variations of an annuity to include payments that are guaranteed for a specified period of time or payments that last through the lifetime of two people.
    Answered on August 20, 2014
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