Funding Agreement
Updated: 06 November 2024
What Does Funding Agreement Mean?
A funding agreement is an investment vehicle in which an individual pays a lump sum to the seller in exchange for a fixed return. Funding agreements are generally considered low-risk investments, which is why they are commonly purchased by pensions, mutual funds, and other similar entities.
Insuranceopedia Explains Funding Agreement
Funding agreements are essentially a way for investors to earn money without taking on significant risks. They are somewhat similar to certificates of deposit (CDs) and annuities. However, because funding agreements are typically low-risk and designed to provide steady, safe returns, they tend to offer only modest investment gains. As a result, they are often used more for preserving wealth than for seeking substantial growth.
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