CD Annuities: Frequently Asked Questions & Investment Guide

CD annuities are a type of investment that many retirees like to get involved in. However, there is some confusion about this type of investment. Here are a few frequently asked questions about CD annuities.

How Are They Different from Traditional Annuities?

The CD annuity is different from a regular annuity because it guarantees a rate of interest for the entire life of the investment. With a traditional annuity, it will guarantee only the rate of return for part of the annuity term.

How Do They Differ from CDs?

The CD annuity has some features that are different from regular CDs'. The CD is an investment that is FDIC-insured, which provides you with more security. With the CD annuity, you are buying a product from an insurance company that is not FDIC-insured.

How Long Do They Last?

The length of a CD annuity will vary depending on the company that issues it and the particular program you are investing in. In most cases, you will find CD annuities that last anywhere from one to 10 years.

Can You Withdraw Interest?

With the CD annuity, there is a provision that will allow you to withdraw the monthly interest the receive. The only problem with this scenario is that you have to pay a 10 percent penalty to the IRS.