When you’re shopping for an annuity, it’s important to understand the different types of accounts that are available. One option is a fixed account, which guarantees a set rate of return on your investment. In this guide, we will explain what a fixed account is and how it works. We’ll also discuss the pros and cons of this type of account, so you can decide if it’s right for you!
What Is An Annuity’s Fixed Account?
A fixed account is one of the most popular types of accounts for people who are looking to invest in a fixed index annuity and variable annuity. This is because a fixed account offers a guaranteed rate of return on your investment. The rate of return will vary depending on the insurer, but it is typically between 1% and 3%.
The Benefits Of The Fixed Account
- The main benefit of the fixed account is that it offers a guaranteed rate of return. This means that you know exactly how much money you will earn on your investment, regardless of what happens in the markets. This can provide peace of mind for investors who are worried about market volatility.
- Another benefit of the fixed account is that it often has a higher interest rate than a savings account. This means that you can earn more money on your investment over time.
Drawbacks Of The Fixed Account
There are a few things to keep in mind with a fixed account.
- First, the rate of return is not guaranteed for the life of the annuity. This means that if interest rates rise, you will not earn more on your investment.
- Additionally, most fixed accounts have withdrawal penalties if you take money out before a certain age (usually 59 ½ or 65).
Bottom Line
Overall, a fixed account is a good option for people who want stability and guaranteed returns. If you are willing to take on some risk, you may be able to earn more money in another type of account. But if safety and security are your top priorities, a fixed account is a great choice.
Do you have any questions about fixed accounts in an annuity? Contact us below and we’ll be happy to answer them!
Request A Quote
Get help from a licensed financial professional. This service is free of charge.