What is a Fixed Annuity?
Your Financial Anchor in a Sea of Volatility.

After exploring the basics of annuities, you know they can provide a reliable income stream. But here's where things get interesting—and where you get to choose your path. What is a fixed annuity: Many people feel overwhelmed by all the different "flavors" of annuities. So, let’s simplify things and focus on the one that prioritizes safety and peace of mind: the fixed annuity.

Think of a fixed annuity as your personal financial anchor. While other investments may rise and fall with the market's unpredictable tides, a fixed annuity holds firm, providing a guaranteed, predictable rate of growth. It's a foundational component for anyone who values stability and doesn't want to lose ground in a downturn.

The Main Types of Annuities

Financial Index Planning

1. The Anchor: Fixed Annuity
How it works:  This is the most straightforward and secure type. When you purchase a fixed annuity, the insurance company guarantees a specific interest rate for a set period, often for multiple years (these are sometimes called Multi-Year Guaranteed Annuities or MYGAs). Your principal and the interest it earns are protected from market losses. It's like a high-yield Certificate of Deposit (CD), but with the added benefit of tax-deferred growth and the ability to convert it into a lifetime income stream later.
Best for:  Clients who want safety above all else. If you lose sleep over market volatility and want a guaranteed return without any surprises, this is your anchor. It's perfect for a portion of your savings that you absolutely cannot afford to lose.

2. The Sailboat: Fixed Indexed Annuity (FIA)
How it works:  This is a hybrid approach. Your money isn't directly in the market, but its growth is linked to the performance of a market index, like the S&P 500. You get some of the market's upside potential, but—and this is key—your principal is protected from losses. There’s a "cap" on your gains, but there is also a "floor" (usually 0%) on your losses.
Best for: Those who want a little more growth potential than a fixed annuity offers but still demand principal protection. You're willing to trade some of the market's potential highs for the peace of mind of avoiding the lows.

Exploring Annuity Options

3. The Speedboat: Variable Annuity
How it works:  With a variable annuity, your money is directly invested in a selection of sub-accounts, similar to mutual funds. The value of your annuity can go up or down with the market. This offers the potential for higher returns but also carries the risk of losing principal.
Best for:  Individuals who are comfortable with market risk and are seeking maximum growth potential, even with the possibility of loss. (Note: Because this product carries market risk, a separate securities license is required to offer it, and I am happy to connect you with trusted professionals at our firm who can assist you with this option.) Let's set up a time that works for you to schedule a free consultation.

Additional Features and Riders

Details of Policy

After covering what is a fixed annuity we can take a look at how annuities can be customized with various "riders" (optional benefits added to the contract, usually for an additional fee) that can enhance their value:

Guaranteed Minimum Withdrawal Benefit (GMWB):  Guarantees a certain level of income for life, even if your account value drops to zero due to market performance or withdrawals.
Death Benefit Riders:  Ensures that your beneficiaries will receive at least a certain amount (your initial premium, or the highest account value reached) if you pass away before annuitizing or before all funds are depleted.
Long-Term Care Riders:  Allows you to access a larger portion of your annuity's value if you need funds for long-term care expenses.
Inflation Protection:  Helps your future income payments keep pace with rising costs of living.
These riders can add significant value and customization, but they do come with additional costs, so it's essential to understand their impact.

What is a Fixed Annuity:
A Quick Look at Important Details

Every financial tool has its own unique features. A fixed annuity is designed for long-term planning, so it’s important to be aware of a few things before you commit:
Liquidity:  These are long-term contracts. If you need to withdraw money early, you may face surrender charges, which are a bit like a penalty for breaking the contract.
Fees:  Fixed annuities generally have lower fees than their variable counterparts, but it's always important to understand all costs and charges.

Finalizing Policies

My Promise to You: Clarity and Confidence

Choosing the right financial tool is a big decision. My philosophy is simple: I don't believe in one-size-fits-all solutions. I believe in helping you understand the options clearly, so you feel confident in your choices.
A fixed annuity isn't about getting rich quick; it’s about securing your wealth and building a reliable foundation for your future. If the idea of guaranteed growth and principal protection sounds like the anchor your financial plan needs, then a fixed annuity is definitely worth exploring.
Let's find the perfect fit for you.
Ready to build a more secure financial future? Let's talk.
Schedule My Consultation today:

  • Assess your personal financial situation and goals.
  • Explain the different annuity types and their associated fees in detail.
  • Determine if an annuity is suitable for your overall financial plan.

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