What is the definition of Fixed Annuity?

A Fixed Annuity is a type of annuity that provides a guaranteed rate of return.

A fixed annuity is also called an equal or flat annuity. This is because during the payment phase, the annuity will pay a guaranteed fixed amount depending on the schedule of the annuity.

With this kind of annuity, the annuitant can have the confidence that he will receive a fixed amount every time. This makes the fixed annuity more stable than the variable annuity, since the interest in variable annuities may be lower if the market performs badly. However, the fixed annuity as the disadvantage that it is less flexible than a variable annuity, in the event that there are improvements in market rates.

To decide, it really depends on the prospective annuitant's priorities - to have stable payments or to maximize the income (but will have to face the risk of lower interest).

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