Fixed Annuity

A fixed annuity provides a guaranteed rate of interest during the accumulation period and a guaranteed (“fixed”) amount of income when the contract is annuitized. With a fixed annuity, the insurance company is responsible for investing the premium payments and therefore assumes investment risk. The insurance company is obligated to provide guaranteed annuity payments regardless of whether their investments have generated an adequate rate of return. With a fixed annuity: 1) the money can go in as a single premium payment or a series of payments; 2) the money is invested at a fixed or guaranteed rate, and; 3) payments are at a fixed rate and can begin immediately or at some future date.

27 Percent Year Over Year Decline in Annuity Sales

U.S. annuity sales declined 27 percent during the first quarter of 2010. Combined sales of variable and fixed annuities during the first three months of 2010 were $47.4 billion. This compares to $64.4 billion during the first quarter of 2009. Fixed annuity sales declined 15 percent to $16 billion.
Key Phrases: 

Do fixed annuity rates generally track the federal prime rate, the Treasury bond rate, or some other financial metric?

Great question.

In a nutshell, keep an eye on 30 year U.S. mortgage rates.

Moshe Milevsky does a great job addressing this question in paper he co-authored last spring titled "The Annuity Duration Puzzle".