"What are CD-type annuities?": The term "CD-type annuity" is used commonly to refer to a fixed-interest annuity whose interest rate guarantee and term expire at the same time. Because a CD-type annuity allows an investor to earn a locked-in interest rate with the full return of principal at the end of the term, it is often referred to as a "CD-type" annuity. A CD-type annuity is not bank deposit and therefore does not participate in the FDIC insurance program. A CD-type annuity is a fixed-interest asset issued by a legal reserve life insurance company. Michael Dallas recommends that you choose high-quality companies that are rated at least A- Excellent by A.M. Best. The companies appearing on this list are all highly rated companies.

• Safety of Principal

At the maturity of your CD-type annuity, your principal plus any accrued interest is available to you without penalty.

• Guaranteed Interest Rate

From the first day, you know the rate of interest that your CD-type annuity will earn. Your interest is locked-in for the entire term.

• Excellent Rates

A CD-type annuity often pays a very attractive interest rate compared to other fixed interest vehicles. That makes a CD-type annuity one of the best alternatives for retirees who want safety of principal, a locked-in interest rate, and a high level of safety.

• Very Secure

Your CD-type annuity has a very high level of safety. A CD-type annuity is issued by a legal reserve life insurance company which maintain reserves equal to the withdrawal value of your annuity policy. Furthermore, most states require additional levels of capital surplus to further increase your security.

There are several rating companies that evaluate the financial quality of each annuity company. Michael Dallas recomends that retirees choose a high-quality CD-type annuity (those rated at least A- Excellent by A.M. Best).