What Do Fixed Annuities Invest In?

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    David RacichPRO
    Fountain Hills, Arizona
    Annuity companies generally have investment portfolios dominated by investment grade government and corporate bonds. The company keep a some of the portfolio earnings and then credit a fixed interest rate over a fixed period of time like 5 years to the policy owner. The surrender charges protect the company from "disintermediation" the mismatch of portfolio returns and interest policy crediting from policy owners who elect to surrender the policy before the contract terms are over.
    Answered on July 14, 2013
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