The fixed annuity is one of the most misunderstood investment products on the market. Most people have heard of them, but few really understand what they really are. The fact of the matter is that the fixed annuity has been over-complicated and over-sold in recent years, causing a great deal of skepticism of the product.

One of the best ways to determine if a fixed annuity is right for you is to begin to understand how the product works. It is like any other financial product, it is designed to benefit more than just you in the transaction. The goal of this sort of product should be a mutually beneficial situation where you are pleased with your return and the company offering the product is pleased with their return.

The basis of the contract is that you agree to pay the insurance company either a lump sum payment or a series of premium payments in exchanged for a future monthly or yearly benefit. The insurance company agrees to take your money, provide you with a predetermined interest or growth rate, and then distribute your money back to your in the future. These distributions are typically spread out over a number of years, and may even be set up to continue for the lifetime of the annuitant.

When it comes down to it, this is one of the major fixed annuity advantages. This insurance product is a quite safe way to ensure that you receive a monthly income payment for the remainder of your lifetime, providing you an opportunity to not outlive your income. Granted, you money will likely have diminishing value as time progresses, so this is not a meet all end all type of arrangement. When you couple this investment with other financial products, you can begin to place together an effective, safe, and beneficial financial plan for retirement.