This type of annuity gets its name because the annual
rate of return is "fixed" by the by the insurance company. And this
rate is reset once a year by the issuing insurance company. All annuities are
tax deferred , which helps you accumulate money faster than other savings vehicles
such as CDs, because the interest earns money tax-deferred.
CD Type Annuities, are a type of fixed annuity, they are issued with a fixed
rate of return that is guaranteed from one year to ten years without annual renewal.
Bonus Type Annuities, are also a type of fixed annuity, that offers an
attractive first year bonus that can in some cases be taken in cash or added to
your initial annuity payment. If you leave the bonus in the annuity it also earns
interest on a tax-deferred basis.
Fixed Annuities are considered low-risk
and are issued by insurance companies. Since the financial strength of the insurance
company is what backs the annuity, it is important that the insurance company
is financially sound. Independent rating companies such as Moody's, A.M.
Best, Standard & Poor's and Fitch are your best source for this financial