Listen to a Business English Dialogue About Fixed annuity
Ava: Hi Charlotte, have you ever heard of a fixed annuity?
Charlotte: No, I haven’t. What is it?
Ava: It’s a type of investment where you pay a lump sum or periodic payments to an insurance company, and in return, they guarantee to pay you a fixed amount of income at regular intervals, usually monthly, for a set period of time.
Charlotte: Oh, that sounds interesting. How does it differ from other types of annuities?
Ava: Well, unlike variable annuities where the payout can vary based on the performance of underlying investments, in a fixed annuity, the payout remains constant regardless of market fluctuations.
Charlotte: I see. So, it offers more stability in terms of income?
Ava: Exactly. It’s often chosen by people who want a predictable stream of income in retirement without worrying about market risks.
Charlotte: Are there any downsides to fixed annuities?
Ava: One downside is that the returns might not keep pace with inflation over the long term, so the purchasing power of your income could decrease over time.
Charlotte: That makes sense. Is there a minimum investment required to start a fixed annuity?
Ava: Yes, typically insurance companies require a minimum initial investment, which can vary depending on the company and the type of annuity.
Charlotte: And how long does the annuity last?
Ava: It depends on the terms of the contract you choose. It could be for a specific number of years or for the rest of your life.
Charlotte: Thanks for explaining, Ava. Fixed annuities sound like a good option for someone looking for stable retirement income.
Ava: You’re welcome, Charlotte. They can be a valuable part of a retirement planning strategy for many people.