Traditional Fixed Annuity provides an interest rate that is guaranteed one year at a time, but with an ongoing minimum guaranteed rate as well.  A lot of times, this strategy has some sort of upfront bonus to enhance the first year return number and also allows you to add money to the policy at any time.

Upside: Traditional Fixed Annuities normally track rising or falling interest rates, which can be a positive when it is time to renew or lock in the annual rate on your annuity anniversary date.  This is a good strategy to guarantee a fixed rate every year, and have a good chance of locking in any upswing in rates as well.  Also, when compared to a Fixed Indexed Annuity (FIA), Traditional Fixed Annuities typically have a higher contractual minimum guarantee.  In addition, this is one of the few fixed rate strategies that allows you to add money to the policy after the contract has been issued and still benefit from the contractually guaranteed rate.

Downside: When interest rates are low, Traditional Fixed Annuities are not very attractive and many carriers stop offering them during those low rate periods.  However, as rates move up, you will see this strategy come back into favor.

For the person looking for fixed rate guarantees, a Traditional Fixed Annuity is a good strategy to lock in a rate annually and be able to benefit from rising interest rates as well.  I really like these products as a unique and flexible addition to any fixed allocation part of a portfolio.