When safety and security is an issue, you might find yourself, like many others, turning to the guaranteed investment of the fixed annuity. While there's many reasons to choose either a CD or a fixed annuity, the annuity often has features that make it a preferential choice. Many times, you'll find the rate higher in the annuity and because the product gets preferential tax treatment, the money grows even faster. There are differences in annuities and you'll need to do some shopping in order to find the best one for your situation.

When safety and security is an issue, you might find yourself, like many others, turning to the guaranteed investment of the fixed annuity. While there's many reasons to choose either a CD or a fixed annuity, the annuity often has features that make it a preferential choice. Many times, you'll find the rate higher in the annuity and because the product gets preferential tax treatment, the money grows even faster. There are differences in annuities and you'll need to do some shopping in order to find the best one for your situation.

It's not always obvious things that make one specific fixed annuity better than another one is. Interest rate or rate of return, of course is one indicator but there are other more specific items to look at also.

One example is the length of time the company guarantees the initial rate of return. Sometimes the first year rate contains a bonus rate, after that first year, the annuity rate drops down to a much lower rate, sometimes not competitive with other fixed annuities.

There's another guaranteed rate on the product. It's the minimum guarantee the company pays no matter what the surrounding interest environment becomes. Even if banks pay percent on CDs, if the minimum guarantee is 2 percent, you'll never receive an interest rate lower than that 2 percent minimum.

Request information on the minimum amount the contract requires and the minimum initial investment. Some companies offer bonus interest rates for larger amounts of money but give a respectable rate for lower investments. Other companies won't even allow you to open an annuity if you don't have enough funds for their minimum.

The ability to add more funds is also important. Many people find that they like the easy carefree annuities, particularly as they age and want less complication in their finances. They often want to add additional funds. The ability to add to a fixed annuity and the minimum additions become important in this case.

Surrender charges, like early withdrawal penalties are important when you invest your money. Some companies surrender period is shorter than others are. You might find an annuity that allows you to invest for one year and then remove the funds without penalty. Other products may have charges that last not just your lifetime unless you take annuity payments.

While most annuities allow the beneficiaries to make the decision how they want the proceeds, those products that only allow them to annuitize or face a stiff penalty give them limited access. If you have children that spend money easily and you want this to last, it's not a bad idea. However, you can get the same results using a spendthrift beneficiary designation for that child and still give other beneficiaries access to a lump sum settlement.

See if you have a right of withdrawal before the surrender period. Almost all annuities allow you to take the interest, but some allow as much as a 10 percent annual withdrawal from the product without a charge. Some of the annuities offer cumulative withdrawals. This means that if you don't use it, you don't lose it. Instead, if you don't take the 10 percent withdrawal the first year, you have 20 percent the second year.

Shopping for an annuity is the same as any other major purchase. It requires that you shop carefully and look for features that are important for you. Even though you may talk to an insurance agent and look at the products he offers, check around for other products to see if his are the best for your situation.