Four Alternatives to Variable Annuities

Fixed annuities guarantee a minimum rate of interest during the time your account is growing. They are also very low risk in that you are not directly affected by market fluctuations, compared with variable annuities, which can be risky depending on the underlying mutual funds you select.

The insurance company providing the fixed annuity also guarantees that the periodic payments will be a set amount per dollar in your account. These periodic payments may last for a definite period, such as 20 years, or an indefinite period, such as your lifetime or the lifetime of you and your spouse.

If you're not a fan of actively managing your own investments, fixed annuities have a definite advantage. The guaranteed minimum annual returns give you peace of mind, and provided you're with a strong insurer, your deferred investment is going to grow each year.