Like all deferred annuities, fixed annuities help you accumulate money for retirement through the power of tax-deferred compound interest. They can also help you protect assets once you reach retirement or leave a financial legacy to your heirs. They derive their name from the fact that you can earn an annually renewable (reset by the insurance company once a year) "fixed" rate of return on the money you invest. A special class of fixed annuities, called CD Type Annuities, guarantee interest rates for up to 10 years without annual renewal. Fixed annuities provide opportunity for tax-deferred growth in non-stock market money instruments - such as government bonds and corporate bonds.

Although they are considered a low-risk investment, fixed annuities are issued by insurance companies and are not insured by the U.S. government. They are backed in their entirety by the financial strength of the issuing insurance company, regardless of the amount. Before purchasing an annuity however, you should make sure the issuing insurance company is financially sound. You can determine financial stability by requesting the findings of independent rating companies such as Moody's, A.M. Best, Standard & Poor's and Fitch.