What is the minimum guaranteed rate of return typically associated with fixed annuities?

The minimum guaranteed rate of return for fixed annuities is typically set at around 2%. This means that regardless of market conditions, the insurance company guarantees that the annuity will earn at least this interest rate, providing a level of security for the policyholder.

While it might seem that options like 4%, 6%, or 8% could be plausible given the varying interest rates seen in the market historically, fixed annuities are designed to offer a conservative and stable return. The insurance companies consider factors such as the risk of investment and the guarantees they offer, which leads them to establish a lower rate that ensures they can meet their obligations to policyholders over time. Thus, a 2% minimum return reflects a realistic and commonly accepted figure in the industry.