Fixed annuity rates change often, and the highest number you see advertised is not always the best fit. What matters is how the whole contract works. Here is how to compare them with clear eyes.
What drives annuity rates
Rates generally move with the broader interest-rate environment and vary by the insurance company, the length of the guarantee period, and the features included. A longer guarantee period often comes with a higher rate, in exchange for keeping your money in place longer.
Look past the headline number
Two contracts with similar rates can work very differently. Before comparing rates alone, check:
- The surrender period and any charges for early withdrawals.
- How much you can take out each year without a charge.
- Whether the rate is guaranteed for the full term or only an introductory period.
- The financial strength rating of the insurance company.
Fixed versus fixed indexed
A fixed annuity credits a set, declared rate. A fixed indexed annuity credits interest based partly on a market index, with limits on gains and protection from index losses. They serve different comfort levels, and some people hold both.
Why quotes differ from person to person
Your age, state, premium amount, and the options you choose all affect what a contract offers. That is why any rate you see advertised is a starting point, not a promise of what you will be offered.
The bottom line
The best rate is the one attached to a contract whose terms, surrender period, and company strength fit your plans. Compare the whole picture, not just the number.
Learn about annuitiesThis article is for educational purposes only and is not tax, legal, or investment advice. Insurance and annuity products are not deposits, not FDIC insured, and not guaranteed by any bank. Guarantees are backed solely by the financial strength and claims-paying ability of the issuing insurer. Product features vary by insurer and state.
