A fixed annuity is a contract between you and an insurance company. You deposit a lump sum, and the insurer guarantees a set interest rate for a defined period — typically 2 to 10 years. At the end of the term, your principal plus interest is returned or can be rolled into a new contract. Fixed annuities grow on a tax-deferred basis, meaning you don’t pay taxes on the interest until you withdraw it — making them an attractive alternative to CDs, especially for savers in higher tax brackets.
How Fixed Annuities Work
A fixed annuity is a contract between you and an insurance company. You make a lump-sum payment, and the insurer promises to pay you a guaranteed rate of return — either during the accumulation phase or as income. Fixed annuities have two phases:
🌱 Accumulation Phase
Your money grows inside the annuity at a guaranteed fixed rate. Growth is tax-deferred, meaning you owe no taxes until you take withdrawals. There are no IRS contribution limits for non-qualified annuities.
💰 Distribution Phase
You begin receiving payments — either as a lump sum, systematic withdrawals, or a guaranteed income stream for life or a set period. Payments from non-qualified annuities are partially taxable (earnings only); qualified annuity payments are fully taxable as ordinary income.
Traditional Fixed vs. MYGA
Not all fixed annuities are the same. A Multi-Year Guaranteed Annuity (MYGA) locks in a guaranteed rate for the full term — similar to a CD. A traditional fixed annuity may have a declared rate that resets annually after year one, adding some uncertainty. For most buyers comparing rates today, a MYGA is the preferred structure.
Key Features of Fixed Annuities
Guaranteed Principal
No market risk — your principal is fully protected regardless of what markets do.
Tax-Deferred Growth
Interest compounds without annual taxes — more of your money works for you over time.
Fixed Interest Rate
Rate is set at contract issue for the full term — no surprises or resets mid-contract (with a MYGA).
Higher Rates Than CDs
Fixed annuities typically offer rates above bank CDs with the added benefit of tax deferral.
State Guaranty Protection
Protected by state guaranty associations — typically up to $250,000 per insurer per state.
No Contribution Limits
Unlike IRAs or 401(k)s, non-qualified annuities have no annual contribution limits.
Why Buy a Fixed Annuity?
Tax-Deferred Growth
Interest compounds without annual taxes eating into returns. You defer taxation until withdrawal — allowing more of your money to work for you over time.
Principal Protection
Fixed annuities guarantee your principal against market loss. You lock in a rate and never lose your deposit due to market conditions.
Guaranteed Lifetime Income
Fixed annuities can be annuitized to provide a guaranteed monthly income stream for as long as you live — true longevity insurance.
No Contribution Limits
Unlike IRAs or 401(k)s, non-qualified annuities have no annual contribution limits — ideal for high earners who’ve maxed out other tax-advantaged accounts.
Probate Avoidance
Annuity death benefits pass directly to named beneficiaries outside of probate — fast, private transfer of assets to your heirs.
LTC / Long-Term Care Options
Some fixed annuities include LTC riders that can multiply your account value 2–3x for qualifying long-term care needs.
Types of Annuities We Offer
We work with all major annuity types except variable annuities, which carry market risk and are sold by securities-licensed advisors.
Fixed Annuities
Guaranteed Rate · Principal Protected
A fixed annuity earns a guaranteed interest rate set at contract issue for the duration of the term — similar to a bank CD but with tax-deferred growth and no FDIC cap limits. Principal is fully protected regardless of market conditions.
- Rates typically higher than bank CDs
- Terms of 1–10 years common
- No market risk whatsoever
- Ideal for conservative savers near retirement
Multi-Year Guaranteed Annuities (MYGAs)
CD Alternative · Fixed Rate Lock
A MYGA locks in a guaranteed interest rate for a specified multi-year period (typically 2–10 years), then renews or can be moved penalty-free. Often offering superior rates to bank CDs with the added benefit of tax deferral.
- Compare rates across 30+ carriers easily
- 10% annual penalty-free withdrawal typically allowed
- Rate is locked for full guarantee period
- Popular for IRA rollovers and lump-sum savings
Fixed Indexed Annuities (FIAs)
Index-Linked Growth · 0% Floor
A fixed indexed annuity earns interest based on the performance of a market index (like the S&P 500) — but with a guaranteed floor of 0%, meaning you never lose principal due to a market downturn. Gains are locked in annually.
- Participate in market upside (subject to caps/participation rates)
- Zero-loss guarantee in down markets
- Income riders available for guaranteed lifetime income
- Popular choice for pre-retirees ages 50–65
Single Premium Immediate Annuities (SPIAs)
Lifetime Income · Starts Immediately
A SPIA converts a lump sum into guaranteed monthly income that begins within 30 days of purchase. Payments can be structured for life only, life with period certain, or joint life — a powerful tool for those already in retirement.
- Guaranteed income you cannot outlive
- Payout rates currently near historical highs
- Portion of each payment is tax-free (return of basis)
- Ideal for pension-style income from savings
Deferred Income Annuities (DIAs) / Longevity Annuities
Future Income · Longevity Protection
A DIA lets you purchase future income today at today’s rates. You make a lump-sum deposit now, then begin receiving guaranteed monthly income at a future date you choose — often 5, 10, or 20 years out. A QLAC is a DIA held inside an IRA with special tax advantages.
- Very high payout rates due to deferral period
- QLACs can defer RMDs on up to $200,000
- Excellent hedge against outliving your savings
Hybrid Annuities with LTC Riders
Dual Purpose · Asset Reposition
Hybrid annuity/LTC products allow you to reposition existing savings into a contract that provides both tax-deferred growth and a long-term care benefit — typically multiplying your account value 2–3x for qualifying care costs.
- No ongoing premium payments — single deposit
- LTC benefits are generally income-tax free
- Death benefit returns remaining funds to heirs
- No medical exam in most cases
Ready to Lock In a Guaranteed Rate?
Call us at 1-888-972-0024 or request a quote. We compare fixed annuity rates from all major carriers — at no cost to you.
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