How does a Fixed Annuity Differ from a Variable Annuity?
A fixed annuity pays a fixed rate of interest. A variable annuity lets you choose from a variety of investment alternatives that may include fixed income or stock types of investments. Variable annuities let you put money away today and defer paying tax on the interest until the future. Variable annuities are usually more expensive than fixed annuities. In addition to the underlying expense ratios of the investment managers, you’ll also pay mortality and expense charges. Although these charges vary a lot among insurance carriers, they can be prohibitive. What Type of Annuity Should You Choose If You Expect to Live a Really Long Time? With average life spans increasing every year, outliving your assets may be a realistic possibility. A fixed immediate annuity can help address this concern because it starts paying out income right away and you can choose to receive payments over the rest of your lifetime. You can also choose to receive payments made over two lifetimes–usually yours and
