There are two types of fixed annuities, the immediate fixed annuity and the deferred fixed annuity. The name gives it away really; the immediate fixed annuity starts paying an income immediately but the deferred fixed term annuity allows the balance of the account to grow for future use. The fixed annuity value is agreed by the insurance company and does not change whereas a variable annuity may alter.
A fixed annuity could be classed as safe due to the fact you will always know the amount of money you have – you will not find that if stocks or shares plummet your annuity will too as it is fixed at the same rate until the end of the contract.
This may mean that you do not get as much as you could, if for example stocks and shares prices goes up through the roof, but it does give you the peace of mind that any drops in stocks and shares will not affect your annuity rates and payments.
When considering the best annuity for your needs, you need to decide if you want to gamble on getting more (with the risk of getting less), or if you are happy to safe and know how much money you will get as a regular pay out.
A fixed annuity is the safer annuity option, but is it the best option for you?