A Certificate of Deposit Annuity (CD Annuity) is a financial instrument that has features of both a traditional CD and an annuity. Life insurance policyholders can use CD annuities as a way of making money or setting themselves up for retirement.
CD annuities are like Certificates of Deposit insofar as there are penalties for cancelling them and they offer a fixed interest rate for a certain amount of time. They are, however, like annuities in that they offer fixed payments after the policyholder has paid into them for a certain amount of time.
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