Fixed Annuities: Fixed annuities are essentially CD-like investments issued by insurance companies. Like CDs, they pay guaranteed rates of interest, in many cases higher than bank CDs.
Fixed annuities can be deferred or immediate. The deferred variety accumulate regular rates of interest and the immediate kind make fixed payments - determined by your age and size of your annuity - during retirement.
The convenience and predictability of a set payout makes a fixed annuity a popular option for retirees who want a known income stream to supplement their other retirement income.
Fixed Index Annuities: A fixed index annuity (FIA) provides you with the best features of a traditional fixed annuity - a guarantee of principal, & a guaranteed income stream. Unlike most securities or mutual funds where your account balance can fluctuate due to market performance, a premium deposited into a fixed index annuity is guaranteed to never go down due to market downturns. A contract owner of a fixed index annuity participates in market-indexed interest without market-type loss. A fixed index annuity is linked to the performance of a market index like the S&P 500, but without the risk of directly participating in stock or equity investments.