A fixed annuity is a contract sold by insurance companies that guarantees a fixed payment, either for the annuitant’s life or for a predetermined period of time.
As with any annuity, an individual pays a mandatory premium on a fixed annuity, either all at once or in payments that the insurance company then invests. At a certain age, the annuitant begins to receive payments. Retributions within the annuity are tax-deferred until withdrawal. A penalty is applied if the assets are taken out of the account before retirement or the predetermined date.