What is a fixed annuity? It’s an insurance contract designed for predictable, principal-protected growth. You deposit a premium, and the insurance company credits a guaranteed interest rate for a set period—without exposure to market losses. For many conservative savers, a fixed annuity can be a simple way to pursue steady growth, potential tax deferral, and clearer terms than many investment-based alternatives.

At Diversified Insurance Brokers, we help clients compare fixed annuity options across carriers and contract designs so you can choose the right term, liquidity features, and renewal flexibility—without guesswork.

What Is a Fixed Annuity?

A fixed annuity is issued by an insurance company. You deposit a premium, and the insurer credits interest based on the contract’s guarantee structure. In most cases, your contract can:

• Protect principal from market losses (no stock market downside risk)
• Credit guaranteed interest (either for a set term or a declared annual rate with a minimum floor)
• Grow tax-deferred for non-qualified money (taxed when you withdraw)
• Offer multiple end-of-term options such as renewal, withdrawal, or moving to a new annuity via 1035 exchange (when eligible)

Types of Fixed Annuities

• MYGA (Multi-Year Guaranteed Annuity): A “term” annuity that locks a guaranteed rate for a specific period (often 2–7 years). Many people use MYGAs as a CD-style alternative inside or outside an IRA.
• Traditional Fixed Annuity: The company declares a rate (often annually) while maintaining a contractual minimum. This can be helpful if you prefer flexibility and aren’t strictly rate-shopping for one specific term.
• Fixed Indexed Annuity (FIA): Principal-protected and interest is credited using an index formula (caps/participation/spreads). It’s not a “fixed rate,” but it’s often compared alongside fixed options for conservative growth planning.

How a Fixed Annuity Works

• Choose a term and guarantee style: Many buyers pick 3-, 5-, or 7-year terms and may build a simple “ladder” so portions mature in different years.
• Interest credits without market losses: The contract credits interest per its terms while shielding principal from stock market declines.
• Understand access rules: Most contracts allow annual free withdrawals (often up to 10%). Withdrawals above that during the surrender period can trigger surrender charges.
• Decide what happens at maturity: Depending on the contract and timing window, you can renew, take withdrawals, move to another annuity, or shift strategies.

Fixed Annuity vs CD vs FIA

When a Fixed Annuity Makes Sense

• Capital preservation: You want predictable growth without market downside.
• Tax planning: You prefer tax deferral on non-qualified interest until withdrawal.
• Time-horizon matching: You can commit funds for a known term and value clarity.
• Conservative retirement allocation: You want a stable “anchor” alongside other strategies.

How to Choose the Best Fixed Annuity

• Term and timing: Match the guarantee period to your goals; consider a ladder for flexibility.
• Liquidity details: Confirm free-withdrawal amounts, surrender schedule, and any MVA features (if applicable).
• Carrier strength and diversification: Many clients prefer strong carriers and avoid concentrating large balances with one insurer.
• Exit options: Know your renewal window and next-step options before you buy.

Preview Income Scenarios

Some clients use a fixed annuity for accumulation and later shift part of the value toward income planning. The tool below can help you explore illustrative scenarios—then we’ll confirm options in your custom quote.