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How To Find the Best Fixed Annuities

Finding the best fixed annuities does not have to be a challenge for the average investor looking to shore up his income growth. Finding the “best” would need to be determined from the individual needs of the investor. Annuities are contracts between an individual investor and an insurance company who agree to make payments on that investment at a determined period of time.

Finding the “best” fixed annuities are determined by several factors that include the soundness of the insurance company making the payments, the rate of return being offered, and the amount of fees one has to pay. Since annuities are not backed up by the FDIC, it is important for investors to look at the history and health of the insurance company the purchase is made from. A modest due diligence should be done by reading the prospectus of every investment vehicle the investor places his money. A general prospectus can give you a snapshot of the company and where they place their investments.

Despite not being backed by the federal government, investors should remain confident in the soundness of annuities as many states provide investors some assurances of solvency. In addition, if an insurance company were to ever close – for whatever reason, other insurance companies would step in and buy up the contracts, albeit for a lesser amount they are worth. Thus, the individual investor would always need to stay updated on the companies in which the investment is made with. Each annuity issuing company sends out a quarterly or annual prospectus, detailing the current health of the investments.

Fortunately the industry has a way to regulate itself with a market rating. A market rating of A++ is an exceptional company. A rating of A+ is also very good. Rating can be marked for the ability to pay back an annuity after twenty years. Although there is no way to predict how strong a company will do in twenty years, the ratings give a fair indication of what the fundamentals look like. The higher the rating the more stable the annuity provider would be theoretically be.

The best fixed annuities for investors would deliver optimal interest rates over time for the investor. A fixed annuity is often compared to a certificate of deposit, which grows over the life of the investment. The main difference is that with a fixed annuity, the investor does not have to get a 1099 tax form every year to report to Uncle Sam. This can deliver exceptional savings for the investor every year allowing the money to accrue interest completely tax-free until the initial withdraw is made. A fixed annuity, therefore delivers an outstanding way to increase funds without the burden of taxation.

Some fees may be incurred and it thus wise to be aware of any fees, penalties, or charges when making the decision to invest in an annuity. Many investors find that the best annuities are ones that not only deliver a premium percentage of growth but also a way to invest with confidence in a market is guaranteed to experience downturns. However, an investor might also consider that a lower rated company may be willing to pay a bit more, and thereby delivering a greater short term gain for the investor, even if the long term health may be questionable. It is therefore, always important for the investor to consider the long term health of where there money will be held for the long haul.