What Are Fixed Annuities? 
A Fixed Annuity is a general term for an Annuity with a fixed interest rate , as opposed to a variable rate dependent on the stock market . The most typically referred to annuity when someone says `` fixed annuity '' , is a Fixed Deferred Annuity . This gives a compounding interest rate for a specific period of time . Most Fixed Deferred Annuities are able to be annuitized after the first or second year . Annuitizing a Fixed Deferred Annuity means to set up a yearly stream of income based on your life expectancy . Another type of Fixed Annuity is a Fixed Immediate Annuity . Instead of the ability to defer Annuitization , the contract immediately starts to pay a lifetime income stream . There are also Fixed Period Certain Annuities which pay an income stream for a specific number of years . And Fixed indexed Annuities , which guarantee a minimum interest rate , while crediting a limited interest rate based on the gains of a market index . 