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Individuals who are semi-retired, about to retire, or already retired may choose fixed annuities to help stabilize their income from investments. Fixed annuities are insurance contracts. They offer the person who owns the annuity a set amount of income at regular intervals up to a specified point in time or a specified event, such as the annuity owner’s death. Investing in fixed annuities has both advantages and disadvantages for the investor.
Financial institutions and life insurance companies offer fixed annuities for a lump sum, or for payments on a periodic basis, if the person purchasing the annuity is still working. Money invested in the annuity is guaranteed to earn a fixed rate of return throughout the accumulation phase (while you are still paying into it). During the annuitization phase (when money is being paid out), the balance of your investment, minus payouts, will continue to grow at the same fixed rate.
Fixed annuities can be an attractive investment option for several reasons, including the following:
As with most things, there are also disadvantages to consider when investing in fixed annuities:
If you are uncertain about whether to invest in fixed annuities, our friendly agent can help. We invite you to consult with us about the pros and cons.Filed Under: Life Insurance | Tagged With: Life Insurance