I believe they are better than CD’s for several reasons. 1) the interest your earn on a CD which is typically minimal is a taxable event. the interest you earn on a fixed annuity is tax-deferred. 2) since a fixed annuity is an insurance product, it avoids probate. your beneficiary receives the money within 5-7 days upon receipt of a death certificate. it’s uncontestable. 3) many of the annuities allow you to withdraw up to 10% a year without penalty if you are 59 1/2 or older. you also don’t have to “annuitize” your payments, but you can let your money grow with compound interest. 4) CD’s are FDIC which has been a bit suspect in it’s ability to provide the safety it use to provide 5) AIG failed because it invested it’s money in real estate and the mortgage industry. 6) each state guarantees the insurance company operating in it’s state up to a certain amount per transaction. Also, insurance companies are insured by insurance associations that guarantee their transactions. plus, the feds audit them every 90 days to make sure they have the minimal amount of reserves to protect their account holders should they all withdraw their money at once 7) also, check the interest rate history of the insurance company regarding the interest rates they have paid through the years. is it on par with what was going on in the market at the time?

In order to get a decent rate on a CD, you have to tie up your money for years. It you touch it, you are penalized heavily. if interest rates increase…you only what the interest rate agreed upon at the time you opened the CD.

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Very nice point about the insurance company credit rating and stability.

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