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Fixed Deferred Annuity

Fixed Deferred Annuities

A fixed deferred annuity (sometimes called a Single Premium Deferred Annuity or SPDA) is the insurance industry’s version of a savings account. It helps you earn interest safely and allows you to postpone the payment of income taxes on your earnings until you begin receiving payments.

A fixed  annuity isn’t subject to stock market fluctuations and can be utilized as a savings vehicle. They are often compared to CD’s because they allow your money to grow safely with low risk and a guaranteed rate of interest.  And even historically, they’ve often exceeded the average rate available on bank CD’s.   And while annuities aren’t backed by FDIC insurance like most bank accounts, they ARE backed by the full faith and credit of some of the largest and most financially stable insurance companies in the world. So, YES, they are SAFE!

What’s more, the interest you earn each year on your annuity is TAX-DEFERRED, which means that, unlike CDs, money market and savings accounts, you don’t pay tax on the interest you earn…until you withdraw the money. 

And, one of the best features of an annuity is that you have the option, at ANY time, to elect a LIFETIME monthly income that you CANNOT outlive. No bank account can do that!

Why consider a Fixed Deferred Annuity?

  • Guaranteed Principal –You can’t lose your money unless the insurance company fails. In the unlikely event this occurs, there is regulatory protection for annuity holders. Your money is safe in a Fixed Deferred Annuity, which can reduce the overall risk of your investment portfolio.
  • Guaranteed Minimum Interest Rate – Your money NEVER earns less than the guaranteed minimum rate.
  • Annual Withdrawals – Most contracts let you withdraw up to 10 percent of the value of the annuity every year with no penalty (if you’re younger than age 59-1/2, however, you may owe an IRS penalty).
  • Death Benefits – If you die while owning the annuity, your money (including the interest you’ve earned up to your death) goes to your beneficiaries
  • Income Option – You can convert the value of a fixed annuity to a guaranteed income stream for a specific number of years or for as long as you (or you and your spouse) are alive
  • Preferred Tax Treatment – You can delay paying taxes on the interest you earn until you begin making withdrawals.
  • Invest as Much as You Want – There are no government-set upper limit on contributions, unlike a 401(k) or IRA. Insurance companies may set their own limits on minimum and maximum contributions.

How about an example?

Let’s imagine that you’ve purchased a 20-year fixed deferred annuity for $100,000. Let’s say the agreement offers 3% interest over the period of the annuity. It is set to begin giving you monthly payments on January 1, 2016. You would receive $554.60/month until the end of the 20 year term on December 31, 2035.

To find out more about this amazing financial product and talk with an experienced professional about which annuity is best for you, call 800-442-9899 or click the Get Started button.  

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