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Annuities are issued by Insurance companies as a type of investment contract. They use Insurance agents to offer these contracts to investors, who pay into the annuities. After a set period of time, the investor gets a return on his investment. When the annuity is fixed, the principle is guaranteed. Annuities are a safe way of investing to accumulate wealth, they are tax-friendly and are often used as retirement savings plans.

Several factors are used to structure annuities such as changing the time period of money accumulation, changing the number of income payments and others, etc. A fixed annuity offers security to the investor as the issuing company confirms a minimum interest to the investor for a set period of time beforehand. Often, with fixed annuities, owners can get a minimum benefit payment as well. Thus, in the case of a fixed annuity, the investor already knows the expected interest from the annuity before signing the contract.

A fixed annuity offers you a predictable rate of growth for your investments, and guaranteed future cash flow. You won't experience the swings in value that you would see if you put the same money into the equity markets. And, you have the choice to make one single upfront payment, or to make fixed payments over time.

Fixed annuities can be paid out in various ways: for one purchased with a lump sum payment, fixed monthly income can immediatly be paid out to the investor. The buyer receives a guaranteed, regular flow of income from his lump sum investment.

With deferred payment annuities, investors have an option of either depositing a lump sum which accumulates interest over time, or make payments into their annuities, with the maturity value being paid out after a fixed time. This is a form of investment which is popularly used as a retirement savings plan to fill the income gap created after leaving regular employment.