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Insurance companies issue annuities, a form of investment that is generally offered via Insurance agents. Once an investor pays into the annuity, the annuity earns interest for a set period of time. With fixed annuities, the principal invested is guaranteed. They are a safe, popular and tax-deferred way to increase your wealth.

There are several ways to structure annuities, varying the duration of the accumulation period, the length of payments, and other factors. One option is fixed annuities, which offer security to the investor. With fixed annuities, the issuing company guarantees a minimum interest rate to the owner for a set period of time. Often, there is a minimum benefit paid out as well. This way, the investor knows exactly what income to expect for the entire duration of the contract.

One option for an individual with fixed annuities is to choose an immediate income annuity. After making a lump sum payment, the owner then receives immediate fixed monthly returns, thus turning a lump sum into a retirement income stream.

You can purchase a fixed annuity either with one lump sum payment or in installments. The traditional fixed annuity offers regular growth that does not rely on external, volatile factors such as stock market values or equity growth funds. Their return is in the form of regular interest payments compounded within the policy or made to the annuity owner.

With tax-deferred annuities, the investor either deposits a lump sum and accumulates interest over time, or makes payments into the annuity, with the returns being paid out after a set period of time. This kind of fixed fixed annuity is often used as a retirement savings plan. Many individuals fail to plan for their income needs in retirement. In many cases a fixed immediate income annuity can fill the gap.

- Curtis McDowell