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					Fixed Annuity

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342

Summary:
If you are interested in making your money grow over time, you should
know about an investment instrument called fixed annuity. Fixed annuity
is an investment option offered by different insurance companies. There
are several other variations of annuities like...................


Keywords:
annuity, fixed annuity, variable annuity, indexed annuity


Article Body:
If you are interested in making your money grow over time, you should
know about an investment instrument called fixed annuity. Fixed annuity
is an investment option offered by different insurance companies. There
are several other variations of annuities like variable annuity and
indexed annuity but fixed annuity remains one of the most popular choices
for individual investors. Annuity is, essentially, a contract between an
investor and insurance company. The insurance company is governed by the
state and has to follow certain regulations. There is also a tax
deferment component that is governed by the Internal Revenue Code.

So what is the fixed annuity and how does it differ from other types of
investment instruments? The fixed annuity is an investment vehicle that
allows the investor to receive a stream of payments over the life of the
annuity. The main characteristic of the fixed annuity is the fact that
that the interest rate that the investor earns over the life of the
annuity is fixed. This can be considered as an advantage or disadvantage
depending on the situation and current economic conditions. One of the
main reasons why fixed annuity is used is to provide the fixed retirement
income when certain fixed payouts are made on regular basis.

The guaranteed interest rate could be set for a life of the annuity (the
contract term) or for some other fixed period of time. For example, a
fixed annuity could have a fixed interest rate for five years and after
that a new fixed rate is set for the next five-year term. Many interment
professionals would compare fixed annuity to the Certificate of Deposit.
However, annuity is not covered by federal deposit insurance. Another
important fact about annuities is that they usually provide the
opportunity for tax-deferred savings. In other words the taxes are only
paid when the money is taken out, not while they grow.

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