Fixed Annuities are a type of insurance contract where an insurance company makes a series of guaranteed payments in exchange for a sum of money at the outset of the contract; some fixed annuities will provide for a payment plan over time to build up the annuity lump sum. Guarantees are backed by the claims paying ability of the issuer. This type of investment instrument can help stabilize investment income, defer taxes on investment earnings, and is often part of a financial strategy for retirees or those contemplating retirement. Because of the guaranteed income stream provided by the fixed annuity, the insurance company, rather than the insured (annuity owner), takes the investment risk. Some withdrawals or distributions may be subject to surrender charges, as well as ordinary income tax at any age during the specified term of the contract. If withdrawals are made prior to age 59 , a 10% early withdrawal federal tax penalty may apply.

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