Annuities: a way to turn savings into income, with trade-offs to understand first.
An annuity is a contract with an insurance company. You pay money in, either all at once or over time, and the contract can provide income later, often for retirement. Different types work very differently, so it pays to understand the terms, costs, and limits before you decide.
What an annuity is
With an annuity, you give an insurance carrier a lump sum or a series of payments. In return, the contract describes how your money is credited and how and when it can be paid back to you, either as withdrawals or as a stream of income. Some contracts can provide income for a set number of years, and some for life.
Annuities are meant to be long-term. They are generally not a place for money you may need soon.
Common types
Fixed annuities credit interest at a rate set by the contract for a stated period. Fixed indexed annuities credit interest based in part on a market index, subject to limits such as caps and participation rates, and are not invested in the market. Income annuities (immediate or deferred) convert a lump sum into scheduled income payments.
Variable annuities are a different product that involve securities, and they require a securities license. We do not offer variable annuities.
Surrender charges, fees, and riders
Most annuities have a surrender period, often several years, during which withdrawals above a set amount trigger a surrender charge. Some contracts also have fees, and optional riders, such as income riders, usually add a cost. Read the contract and disclosure documents, and ask how each fee and limit works before you buy.
Taxes
Earnings inside an annuity are generally tax-deferred until withdrawn, and withdrawals of earnings are taxed as ordinary income. Withdrawals before age 59½ may also face a federal tax penalty. Rules depend on your situation and how the annuity is funded, so talk to a tax professional.
Licensing and suitability
Selling annuities requires a separate license and carrier appointment, and many states require agents to complete annuity training and to make sure a recommendation is in your best interest based on your goals, finances, and needs. Before discussing a specific product, we confirm that an appropriately licensed and appointed agent is available in your state.
How getting an annuity works with us.
We're an independent agency, so we compare options from multiple carriers instead of pushing one company's product.
Talk through your goals
When you may want income, how much savings you are considering, and how much you need to keep accessible. A short form or call is the start.
Review options and disclosures
An agent licensed and appointed for annuities in your state compares contracts from multiple carriers and walks you through surrender periods, fees, and limits.
Decide on your timeline
If an annuity fits, we help with the paperwork. If it does not, we will tell you. There is no pressure to buy.
Annuities questions, answered plainly.
What is an annuity?
An annuity is a contract with an insurance company. You pay in a lump sum or a series of payments, and the contract describes how your money is credited and how it can be paid out later, including as income.
What is the difference between a fixed and a fixed indexed annuity?
A fixed annuity credits interest at a rate set by the contract for a stated period. A fixed indexed annuity credits interest based in part on a market index, subject to limits such as caps and participation rates. Neither is invested directly in the stock market.
What is a surrender charge?
Many annuities charge a fee if you withdraw more than a set amount during the first several years of the contract, called the surrender period. The schedule is listed in the contract. Ask about it before you buy.
Can I lose money in an annuity?
It depends on the contract. Surrender charges, fees, rider costs, and taxes can reduce what you receive, especially if you withdraw early. Review the contract and disclosure documents with your agent.
Are annuities FDIC insured?
No. Annuities are insurance contracts, not bank deposits. Any guarantees are backed by the claims-paying ability of the issuing insurance carrier.
Who can sell me an annuity?
Only an agent who holds the required insurance license and is appointed with the carrier in your state. Many states also require annuity-specific training. Variable annuities additionally require a securities license.
Not sure this is the right fit? Take our 4-question coverage guide.
Coverage is issued by the insurance carrier and is subject to underwriting approval. Policy features, riders, and availability vary by carrier, product, and state, and not every product is available in every state. This page is general education, not tax, legal, or financial advice, and it is not an offer of insurance. Annuities are insurance contracts issued by the insurance carrier. They are not bank deposits, are not FDIC insured, and are not guaranteed by any bank or government agency. Any guarantees are backed by the claims-paying ability of the issuing carrier. Annuities are offered only by agents who hold the required license and carrier appointment in your state. Withdrawals may be subject to surrender charges, and withdrawals before age 59½ may be subject to a federal tax penalty.
See what an annuity could look like for you.
Free quotes, no obligation. A licensed agent will walk you through the options and the trade-offs.