Fixed annuities are vehicles for hoarding retirement savings. Fixed annuities are contracts offered by insurance companies which let you to accumulate funds for retirement. Simply it’s a contract between an annuitant-the person who owns the annuity and an insurance company. Annuitant pays premium to insurance company and in turn insurance company pays certain amount of income at regular intervals until a period has ended or event has occurred.

Fixed annuities are offered only by licensed insurance companies which are permitted to underwrite life insurance and annuities by the state in which annuitant resides. Annuitants can purchase fixed annuities from licensed life insurance agents, financial planners and stock brokers. Fixed annuity is an excellent way of accumulating funds for retirement on a tax-favored basis. Annuitant receives a guaranteed income payable for life or for a period certain such as five, ten or twenty years. A fixed annuity can be purchased with a single premium in which one cash payment establishes the contract. It can also be funded over time with an initial premium plus additional flexible premiums.

Tax deferral, avoidance of probate, and a guaranteed income for Life are chief advantages offered by fixed annuities. Fixed annuities are most popular retirement tools as annuitants are not required to pay income tax on their gains as long as they keep their money with insurance company, it means tax payable on the gain is deferred. This way, annuitants receive interest on your principal, interest on your interest and interest on the taxes Annuitants have to pay income tax only when they decide to withdraw their funds.

Insurance companies also give an option to annuitant to receive a guaranteed income for as long as he/she lives. Fixed annuities offer an assured income for life. The insurance company calculates a guaranteed income payment based on annuitant age, life expectancy and interest rates it will credit.

Probate avoidance is another main advantage enjoyed by fixed annuitants. Probate is a judicial process to establish the validity of a will. It’s a long process, but no such validation is required for fixed annuities and proceeds are directly passed on to beneficiary upon annuitant’s death.

For any help regarding fixed annuities, click here or call an Annuity Specialist at AnnuityForLife.com, 1-888-261-6237