Houston Texas Annuities

Fixed Annuities

Fixed annuities are interest based vehicles similar to bank CD's, but geared specifically towards retirement savings. Typically, a lump sum of cash locks in an interest rate ranging from 3% to 10% for a period of 3 to 15 years. The initial deposit, otherwise called the premium, can range from $5,000 to $1,000,000.

Fixed annuities are very low risk, have more liquidity than CD's are tax-deferred, and typically offer higher yields than bonds, CD's treasuries, or money market accounts.

A fixed annuity uses one of two distribution models: immediate or deferred. Immediate fixed annuities start issuing monthly payments right away, until the initial premium plus interest gets paid out. Deferred annuities don't pay out until the end of their term, compounding interest like a typical retirement savings account.

Most fixed annuities also feature a lifetime income option, allowing you to convert accumulates savings into a guaranteed monthly income for the rest of your life. This feature is highly desirable to many retirees and sets annuities apart from other types of retirement investments.

Fixed Index Annuity

A Fixed Index Annuity is an insured investment that ties your interest rate to the growth of a major stock market index, like the S&P 500. As the S&P 500 rises, the insurance company credits your account with interest, minus the cut it takes for itself. When the S&P 500 falls, the insurance company protects your principle against losses with a low but positive interest rate. This investment vehicle is becoming increasingly attractive as it offers the best features of fixed and variable annuities.

Compared to a fixed annuity, an index annuity offers the same guarantee: you will never come out with less than you came in. But, whereas a fixed annuity sets a constant rate of return, an indexed annuity allows investors to cash in on equity based growth. With an index annuity, investors never know exactly how much their accounts will grow in the coming years, but they take solace in the fact that equities always outperform debt based instruments (like fixed annuities and CD's) in the long term.