Fixed Annuities
A fixed annuity is an insurance contract that credits a guaranteed rate of interest and protects principal from market loss.
Money grows tax deferred during the accumulation phase, and later you can take withdrawals or convert the value to an income stream, including options designed to last for life.
Guarantees depend on the claims-paying ability of the issuing insurer.
How A Traditional Fixed Annuity Works
You fund the contract with a single premium or a series of payments. The insurer declares an interest rate for the current year, then reviews and resets it each anniversary. Each contract also includes a minimum guaranteed rate, so interest will never fall below that level. Many policies allow limited penalty-free withdrawals each year, with additional withdrawals subject to surrender charges during the early years.
Renewal Rates & Why They Matter
After any first-year enhancement, the renewal rate becomes the driver of growth. Renewal rates can rise or fall with market conditions and are not guaranteed above the contract minimum.
Evaluating an insurer’s renewal practices, financial strength, and competitiveness helps set expectations. Our team compares carriers and shows how different renewal histories can affect long-term results.
Fixed Annuity vs. MYGA
A traditional fixed annuity resets its rate each year. A multi-year guarantee annuity (MYGA) locks the rate for a set term, often three to ten years. If you want certainty on the crediting rate for several years, a MYGA may fit.
If you prefer the potential for higher credited rates in a rising-rate environment, an annually resetting fixed annuity may be appealing.
Costs, Liquidity, & Taxes
Fixed annuities typically have no explicit annual policy fee, but most include a surrender period that limits liquidity.
Withdrawals above the free amount during this period can incur charges and a market value adjustment.
Earnings are taxed as ordinary income when withdrawn, and distributions before age 59½ may be subject to a federal penalty. Contract terms vary by insurer.
Benefits At A Glance
- Principal protection with a guaranteed minimum interest rate
- Tax-deferred growth during the accumulation phase
- Options to create predictable income, including lifetime payouts
- Flexibility to choose start date and payment period
- Beneficiary provisions that can pass remaining value to heirs
Considerations Before You Buy
- Renewal rates are not guaranteed above the minimum
- Liquidity is limited by surrender schedules and withdrawal rules
- Earnings are taxed as ordinary income when withdrawn
- Insurer strength and renewal practices matter to long-term results
Is A Fixed Annuity Right For You?
Fixed annuities can suit conservative savers who want steady growth and a clear path to income without market exposure.
They work best when paired with a broader plan that accounts for cash needs, taxes, and beneficiary goals. If multi-year rate certainty is a priority, compare MYGAs alongside traditional fixed annuities to see which structure fits your timeline.
Turn Savings Into Predictable Income With Matador
Start with a short consultation. We will learn your goals, review liquidity needs, compare traditional fixed annuities and MYGAs from leading carriers, and outline next steps you can follow with confidence.