What Are The Differences Between Fixed, Variable and Equity Indexed Annuities?
Fixed and variable annuities differ in the way they generate earnings and also in the amount of risk involved. When you buy a fixed annuity, the insurance company guarantees you an interest rate for an initial period of time. At the end of this initial guarantee period the insurance company will declare a renewal interest rate and another guarantee period. In addition, most fixed annuities have a minimum interest rate that is guaranteed for the life of the contract. In other words, regardless of market conditions, you will never receive less than your guaranteed percentage rate (typically between 3% to 4%). Fixed annuities typically appeal to investors who feel more comfortable knowing exactly how much their money is earning. With a variable annuity, you have added control over your investment dollars. You allocate your funds among a variety of investment options with objectives ranging from aggressive to conservative (insurance companies call these sub-accounts). Your rate of return i
