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As a market leader in annuities, Allianz Life Insurance Company of North America (Allianz), we want consumers who are considering our products to be fully informed and knowledgeable.
Here's how a fixed annuity works
An annuity is a contract between a contract owner and a life insurance company. The annuity's value is backed by the financial strength and claims-paying ability of the issuing insurance company.
As the contract owner, you pay a premium to the insurance company. In exchange for your premium, the insurance company promises to make payments to you at some point in the future. You may also receive the benefits as outlined below.
You should not buy an annuity for short-term purposes. You generally have to keep your premium in the annuity for a specified period of time (with the exception of immediate annuities) to avoid the assessment of penalties, such as surrender charges.
Fixed annuities offer important benefits
- Guarantees to principal. With a fixed annuity, your contract includes guarantees that help protect against loss.
- Interest rate guarantees. For fixed and fixed index annuities, there are contractual guarantees that interest will never fall below a minimum guaranteed rate.
- Guaranteed retirement income. When the deferral period specified in your contract is fulfilled, you have the option to start taking annuity payments, including options guaranteed to continue for your lifetime, freeing you from the risk of outliving your income.
- Tax-deferred accumulation. You pay no ordinary income taxes on any earned interest until you withdraw your funds. Over time, tax-deferred accumulation can have a positive impact on your retirement reserves.
- Death benefit protection. In the event you die before you begin taking annuity payments, the proceeds of your annuity will go to the beneficiary/beneficiaries you have named. You may also choose annuity payments with a guaranteed period for a death benefit to be paid.
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