When safety and security is an issue, you might find yourself, like many others, turning to the guaranteed investment of the fixed annuity. While there’s many reasons to choose either a CD or a fixed annuity, the annuity often has features that make it a preferential choice. Many times, you’ll find the rate higher in the annuity and because the product gets preferential tax treatment, the money grows even faster. There are differences in annuities and you’ll need to do some shopping in order to find the best one for your situation.

Of course, the interest rate is normally the first thing most people check but there’s more differences when you compare fixed annuities than just the interest rate. Interest rate or rate of return is a good place to begin, but you need to look further to find the best fixed annuity for your situation.

Each policy has an initial rate guarantee period. The initial rate is often quite attractive but if it doesn’t have a longer lock-in period, you might be stuck with a product paying low rates. Some companies have an extended initial rate guarantee but offer a first year bonus to make the product more attractive. After the initial year, the rate applied to the subsequent years is often much lower.

There’s another guaranteed rate on the product. It’s the minimum guarantee the company pays no matter what the surrounding interest environment becomes. Even if banks pay percent on CDs, if the minimum guarantee is 2 percent, you’ll never receive an interest rate lower than that 2 percent minimum.

Request information on the minimum amount the contract requires and the minimum initial investment. Some companies offer bonus interest rates for larger amounts of money but give a respectable rate for lower investments. Other companies won’t even allow you to open an annuity if you don’t have enough funds for their minimum.

See if you can add more funds and what the minimum addition must be. Once you find how easy the annuity is to manage for both organization and tax benefits, you’ll probably want to add more. Consider this aspect when going into a fixed annuity. You also may find that the older you get, the less complicated it is to have only one or two products.

Surrender charges, like early withdrawal penalties are important when you invest your money. Some companies surrender period is shorter than others are. You might find an annuity that allows you to invest for one year and then remove the funds without penalty. Other products may have charges that last not just your lifetime unless you take annuity payments.

While most annuities allow the beneficiaries to make the decision how they want the proceeds, those products that only allow them to annuitize or face a stiff penalty give them limited access. If you have children that spend money easily and you want this to last, it’s not a bad idea. However, you can get the same results using a spendthrift beneficiary designation for that child and still give other beneficiaries access to a lump sum settlement.

See if you have a right of withdrawal before the surrender period. Almost all annuities allow you to take the interest, but some allow as much as a 10 percent annual withdrawal from the product without a charge. Some of the annuities offer cumulative withdrawals. This means that if you don’t use it, you don’t lose it. Instead, if you don’t take the 10 percent withdrawal the first year, you have 20 percent the second year.

Shop for your annuity as carefully as you would a major appliance, a house or a car. Don’t purchase the first one you see but investigate all the different features of each product to find the best one for your situation.

Christopher Tyler discusses of fixed annuities and other investment options for retirement. As the economy slides into the worst recession in decades more and more investors are looking for safe options to grow their investment for retirement. Come see to learn more about the fixed annuity as a viable investment for retirement.

Annuity insurance is an investment vehicle where an investor makes a lump sum payment, or numerous payments, and in return, receives regular payments at set intervals for their retirement. The insurance company provides annuity investors with a certain sum either for a specified duration or for the entire lifetime of the person.

There are many benefits of annuity insurance. Most notably that investments in annuities are tax deferred until withdrawals are made. Annuity insurance also doesn’t have maximum contributions, like other tax-deferred investments such as your 401k.

The most popular annuity is the fixed annuity. Not coincidentally it is also the safest providing guaranteed return of principle as well as a reasonable interest rate. Investors receive payments at regular intervals during their retirement.

A fixed annuity provides investors with security against the on-going fluctuations of the marketplace. Negative gains are taken out of the equation, leading to a positive, steady cashflow at set intervals for retirement. On top of the security, fixed annuity investors receive tax-deferred interest, at a rate that is often higher than other “safe” investments such as CD’s or low-risk bonds.

There are two kinds of fixed annuities. An Immediate fixed annuity, which implies that the investor starts receiving payments immediately or within a very short period after the principal is deposited. This is commonplace for retirees, as US annuity investors are not able to receive payments (without tax penalty) until the age of 59.5 years old.

The second type of fixed annuity is the deferred fixed annuity where the principal amount is left to mature for a certain period of time in a non-taxable form and the interest earned is obtained on the completion of the given period.

By now, you may be thinking a fixed annuity would be a smart investment, and they are the right choice for many people. However, you should always consider all the facts. They are not right for everyone. Before considering a fixed annuity always consider your financial needs and requirements. A drawback of annuities is that they penalize investors for early withdrawals. If you ever need to withdraw your money from an annuity, you are able to do so, but if done before the age of 59.5, you will be penalized by the IRS and likely the insurance company as well.

A fixed annuity can be right for many people’s retirement, however, it’s not right for everyone. Always consider all the implications before making a major long-term financial decision.

John C. Ryan authors content regarding annuity insurance, attempting to provide individuals with the info they need to assess their fixed, variable, and index annuity options.