With a fixed deferred annuities you to invest a lump sum and possibly add premiums on a savings arrangement with your insurer that will guarantee you a considerable interest return in the long term. This investment is very popular among conservative investors because of the security it offers. The investment is considered safe mainly because it is managed by sizable finical institutions as insurance companies. As long as the company has a strong financial rating, your investment should be safe. It is difficult for a strongly rated insurance company to collapse given the scrutiny they are often put under.
The return on these investments is also typically among the best for long term savings. This is because the money is often put into long term bonds that offer stronger rates than many other similar long term investments like certificates of deposits. The rate of return will generally fluctuate based on market conditions but experience has shown that the return on this annuity is fairly consistent. Another good benefit is that you can defer paying taxes on your earnings until when you withdraw the money. You can keep accumulating interest for years without it adding to your tax bill.
Contributions can also be as high as you can afford to make it. This is great for investors who find that their contract is very favorable and secure. You can keep adding to this account and derive even more returns. Because of the security of this kind of investment, it provides you with a suitable means of managing the risk on your investment portfolio. Not only is it low risk, but also helps to diversify your choice of investments. Make sure to however read the contract document fully and understand it before you agree to this investment. If you desire to start withdrawing part of your investment within a few years, make sure the proviso is included.