Why Fixed-Rate Annuities Pay More than Bank CDs
Fixed-rate annuities act much like bank certificates of deposit but usually pay much higher rates than CDs of the same term.
How can insurers afford to do that? After all, both banks and insurers pay a set rate. Before we answer that question, let’s cover the basics of how each works.
A very popular type of fixed annuity,, pays a guaranteed rate of interest for a period of two to 10 years. There’s no sales charge. This is why they’re often referred to as “CD-type annuities,” but there are key differences between them and CDs.
