Annuity Type 3: Interest Rate Annuities

I’ve saved one of the best types of annuities until last – the interest rate annuity. This type of annuity provides safety of principal and a specified interest rate. I believe that interest rate annuities represent one of the best opportunities for people who want to earn interest while keeping their money safe.

In most interest rate annuities, you simply put your money in and earn interest. At the end of the term, you have access to your principal and interest without penalties. If you wish, most interest rate annuities will allow you to take your interest out each month as income. Some interest rate annuities have other flexible features as well. Many will allow you take a portion of your principal each year without penalties or will waive early surrender charges in certain circumstances such as a nursing home stay.

Interest rate annuities come in two general types. One has a rate which can change. The other locks in your interest rate for the entire term. Let’s take a closer look at each type.