How to Set Up a Fixed Period Annuity

Many annuities (contracts between you and an insurance company) are set up to provide income for the lifetime of the annuitant. A fixed period annuity enables the contracting party to provide income for a pre-determined number of years and the annuitant may select an annuity with a guaranteed-minimum interest rate. Such an annuity will never drop in value, regardless of how the market affects the investments of the contracting company.

Difficulty: Moderately Easy

Instructions

Set Up a Fixed Period Annuity

1. Use a fixed period annuity to provide you with income for a specific amount of time. For example, you may use this type of annuity if you have retired earlier than the time your pension will begin.

2. Choose a fixed payment annuity when you want to ensure the stability of your savings. This type of fixed period annuity is not vulnerable to market fluctuations and you are guaranteed a certain payment.

3. Consider the variable payment option for higher returns. These annuities are dependent on how well the investments of the insurance company perform.

4. Take comfort in knowing that when you set up a fixed period annuity, your payments can be made to your family or beneficiary in the event of your death.

5. Keep in mind that the amount you will receive is dependent on the premiums paid, the number of years premiums are paid and the number of years you want to receive payments.

6. Find out more information about the role of annuities in retirement. Visit Amazon.com to obtain "Getting Started in a Financially Secure Retirement" by Henry K. Hebeler (see Resources below).

7. If your employer offers annuities as part of your retirement package, see your benefits administrator for all available products and necessary paperwork.

8. Ask about paying your premiums through automatic deductions from your paycheck if you are still employed. This will help keep you on track with paying premiums on a consistent basis.

Tips & Warnings

• The best way to ensure you meet all of your retirement needs is to sit down with investment and tax professionals and create an investment program that maximizes your hard-earned savings. This should include other investment instruments in addition to annuities.
• Always set up your annuity with a death benefit. If you fail to do so and you die before you have started receiving payments, your premiums will revert to the insurance company and your heirs will receive nothing.
• In most cases, you cannot withdraw this type of annuity before turning 59 1/2 without tax consequences. Ask your insurance representative for more information.

Resources

• Reading on Fixed Period Annuities