Hyers & Associates

Get a Quote »A fixed annuity most closely resembles a bank certificate of deposit and offers regular interest for a chosen number of years. Other fixed annuities use a floating interest rate that changes each year depending on the economic climate.

Current interest rates and market conditions will usually dictate which type of annuity account is more advantageous, but multi-year fixed accounts where the rates are locked in are most common.

View Current Fixed Annuity Rates

Using a fixed multi year annuity when rates are high, you have the ability to lock in better rates for your investment time horizon. Conversely, when interest rates are low, and may be rising, investing in a floating rate or short term annuity can be beneficial.  You can choose from a wide array of fixed annuities depending on your needs and investment timeline.

Annuities - A Safe and Guaranteed Investment

Fixed annuities are a stable alternative to certificates of deposit, interest-bearing government bonds, corporate bonds, municipal bonds, as well as other stock and bond market instruments. Annuity policies are in demand as they offer tax-deferred growth, safety, flexibility, monthly interest payments, and/or lifetime income options.  Many consumers have started exchanging certificates of deposit and money market funds for annuities to lock in higher rates of return.

Thus, many banks hired licensed insurance agents to offer annuities in order to protect the bank’s deposits. However, banks only offer annuities from a small number of insurance carriers. This lack of diversity can greatly limit your options and reduce your potential for higher returns.  It is best to shop around before investing with your local bank.

Why Invest in an Annuity Policy?

You might purchase an annuity policy for many reasons. In some cases, tax deferred growth is desired. You can defer income taxes for your entire lifetime in a non-qualified annuity. Another popular use is to save for retirement.  You can save for retirement by making systematic contributions to a qualified or non qualified annuity each year.  The principal and earned interest will grow tax deferred and compound daily until retirement is reached.  At that time, you can live off the interest and/or principal through systematic withdrawals.

TSA and 403(b) Retirement Accounts

In other cases, you might invest a portion of your salary each month into a tax sheltered annuity plan or TSA.  Your annuity contributions would be counted as a tax deduction each year.  This would be ideal if you do not have a retirement plan offered by your employer or if you are self-employed.

In fact, many teachers utilize tax sheltered annuity accounts for retirement purposes.  Retirement plans for teachers, public employees, and non-profit groups invest using 403(b) annuity plans.

When the owner retires, the investment accounts can be rolled over into an IRA or other qualified annuity account with ease. This would also allow the owner to establish an account more suited to their post working needs - presumably one with less risk.

After Tax Contributions

Yet another approach is to fund a fixed annuity with excess after tax savings. The contributions are not tax deductible like a qualified plan, but the investment grows tax deferred until income is needed. These annuity types are classified as non-qualified plans and remain subject to penalties if withdrawals are taken before age 59½ - unless certain hardship conditions are met.

However, you are not subject to a required minimum distribution at age 70½ like you would be with a qualified retirement plan. You can fund an after tax annuity in order to create an account that would provide guaranteed interest and income during your retirement years.

Annuity Pensions - Lifetime Income

The ability of  fixed annuities to provide reliable lifetime income is quickly growing in popularity.  Upon retirement or during another time of need, you can withdrawal the principal and earned interest over a set period of time or for a lifetime.  This strategy is referred to as an annuitization and is an option, but not a requirement.

Insurance professionals refer to these accounts as immediate annuities.  It is important to note that you can setup a lifetime income account while also establishing payments for a set period of years.  This is called a period certain and establishes that either you or your beneficiaries receive the entire balance of the investment plus interest.

Corporate Annuities

Individuals are not the only potential annuity investors. A business or corporate entity might purchase an annuity to diversify their investment portfolio. The corporate owners may feel their exposure to stock and bond market instruments is too high and the corporation would benefit from predictable, fixed interest yielding account. In this case the annuity would be setup using the tax identification number of the corporation instead of an individual.

Summary

In summary, fixed rate annuity accounts are ideal if you desire a safe and insured investment. They are designed to be reliable and predictable for investment portfolios during all market cycles. A fixed annuity is suitable for conservative investors who desire either a systematic interest payment or compounding interest returns. Consumers can invest confidently to provide for current needs or for a secure retirement.

Providers

Currently we offer fixed rate annuities from Allianz, American General, Aviva, Equitrust, ING, Investors Insurance, Jackson National Life, Lincoln Financial, Sagicor, Transamerica, Valic, and many others.
Contact us for more information or to open an account today.