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What is a CD-type fixed annuity?
Posted by admin in Annuity, Fixed Annuities
Fixed annuities with multi-year guarantees (often referred to as CD type annuities are interest-based investments similar to bank CDs. They are usually geared specifically towards retirement savings. A lump-sum deposit of cash locks in a specified interest rate for fixed period usually between 1-10 years. Most have a minimum initial premium deposit of $2,000 to $10,000. Fixed CD-type annuities are virtually no risk, have more liquidity than CDs, are tax-deferred, and typically offer higher yields than bonds, CDs, or treasuries. All fixed annuities have a minimum guarantee backed by the insurance company and insured by the state guaranty fund. You can find information on state guaranty funds in a previous post.
Most fixed CD-Type annuities provide benefits such as interest only or free withdrawals, immediate income payments (referred to as annuitization), nursing home waivers, and many various riders. These benefits provide flexibility and access to funds.
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