What is a fixed annuity?

A fixed annuity is the simplest kind of annuity. You give an insurance company money, and they guarantee a set interest rate and predictable payments, much like a CD that can pay you for life. There is no market risk, so a stock drop will not shrink your value. The tradeoffs are lower growth potential, surrender charges if you pull money out early, and the fact that the guarantee is only as strong as the insurer behind it. For people who want dependable income, it can be a comfortable fit.