Definition of "Fixed Annuity"

An annuity that earns a fixed, guaranteed rate of return on cash values and provides fixed payments during the payout period, regardless of other economic conditions. This contrasts with a variable annuity, which features accumulation or loss based on the performance of investment funds selected by the contract owner. A tax-deferred annuity that guarantees you will earn stated or declared rates of return during the savings phase. When you convert this money into income payments, you will receive a fixed amount of income on a regular schedule. An insurance contract in which the insurance company guarantees your principal and locks in a rate of return for a fixed period of time. Specifies a fixed rate of interest (usually set annually based on the prevailing market interest rates) that will be paid on the amount invested in the annuity. The insurance company assumes the investment risk. Most Fixed Annuities provide a guaranteed minimum rate of interest of 3% for the life of the contract. If the interest rate falls below a specific rate, a Bailout Provision may apply. An annuity contract in which the premiums you pay are credited with a fixed rate of return by the life insurance company, and the company guarantees a fixed payout every month.

An insurance contract in which the insurance company guarantees your principal and locks in a rate of return for a fixed period of time.