What Is an Annuity?
An annuity is a financial contract issued by an insurance company.
You contribute money to the contract, and in return, the insurer may provide income immediately or at a future date.
Depending on the annuity, payments may continue for a fixed number of years, for your lifetime or for the lifetime of you and another person.
Why Consider an Annuity?
Compare Common Types of Annuities
Annuities can provide different combinations of guarantees, income and growth potential. The table below compares common annuity types and how they generally work.
| Annuity Type | Growth / Return | Investment Risk | Income | Common Use |
|---|---|---|---|---|
| Immediate Annuity | Not primarily designed for accumulation | Generally lower investment risk | Income begins shortly after purchase | Turning a lump sum into scheduled income |
| Fixed Annuity | Fixed or minimum guaranteed interest rate | Generally lower | Can provide guaranteed payments | Principal protection and predictable growth |
| Fixed Indexed Annuity | Interest linked partly to an index | Generally limited downside under contract terms | Income options vary by contract | Some index-linked growth with insurance guarantees |
| Registered Index-Linked Annuity | Linked partly to an index | Can lose money within contract limits | Income options vary | More growth potential with some downside exposure |
| Variable Annuity | Depends on selected investment options | Market losses are possible | Can later be converted to income | Tax-deferred market-based growth potential |
Source: U.S. Securities and Exchange Commission — Investor.gov — View official annuity information
Annuity features, guarantees, fees, surrender periods and investment risks vary by contract and insurance company. Guarantees depend on the claims-paying ability of the insurer.
Explore Annuity Types
Annuity Rates
Annuity rates can vary based on the product type, interest-rate environment, age, premium amount and insurer.
Your rate may depend on factors such as:
- Age
- Deposit amount
- Annuity type
- Interest rates
- Income start date
- Payment option
- Guarantee period
- Insurer
Current MYGA Annuity Rates by Term
Compare current Multi-Year Guaranteed Annuity (MYGA) rate benchmarks across common guarantee periods. Rates update automatically from AnnuityRatesHQ’s public annuity-rate index.
| MYGA Term | Comparable MYGA Rate Benchmark | Rate Observations |
|---|---|---|
| 2-Year | 5.04% | 10 |
| 3-Year | 5.95% | 10 |
| 4-Year | 5.66% | 10 |
| 5-Year | 6.22% | 10 |
| 6-Year | 5.87% | 10 |
| 7-Year | 6.18% | 10 |
| 10-Year | 6.18% | 10 |
Rates updated:
October 8, 2026
Update frequency:
Daily
Automatic refresh:
This table checks for updated annuity-rate data every 6 hours.
Rate type:
MYGA comparable rate benchmark
Source:
Rate data: AnnuityRatesHQ Annuity Rate Index
These are market benchmark rates, not guaranteed quotes for a specific consumer. Available rates vary by insurer, state, premium, issue age and contract terms. Annuity guarantees depend on the claims-paying ability of the issuing insurer and are not FDIC insured.
Immediate vs. Deferred Annuities
Immediate and deferred annuities differ mainly in when income begins. Immediate annuities typically start payments within one year, while deferred annuities allow money to accumulate tax-deferred before income begins.
| Feature | Immediate Annuity | Deferred Annuity |
|---|---|---|
| When Income Begins | Typically within one year of purchase | At a future date chosen under the contract |
| How It Is Funded | Usually purchased with a single lump-sum payment | May be funded with a lump sum or flexible contributions over time |
| Accumulation Phase | Generally little or no accumulation period | Includes an accumulation period before income begins |
| Tax-Deferred Growth | Limited accumulation period | Earnings generally grow tax-deferred until withdrawn |
| Primary Purpose | Generate income soon after purchase | Build value for future income |
| Common Use | Retirees seeking income now | People planning for income later |
Source: U.S. Securities and Exchange Commission — Investor.gov — View official annuity information
Annuity terms, payout options, fees, surrender charges and guarantees vary by insurance company and contract. Guarantees depend on the claims-paying ability of the insurer.
Single-Life vs. Joint-Life Annuities
Single-life annuities generally provide income for one person’s lifetime, while joint-life annuities are designed to continue payments while either covered person is alive. Joint-life payouts are typically lower because payments may last longer. FINRA notes that single-life payments stop at death unless another feature such as period-certain protection is selected, while joint-and-survivor options can continue a percentage of income to the survivor.
| Feature | Single-Life Annuity | Joint-Life Annuity |
|---|---|---|
| Who Is Covered | One annuitant | Two covered individuals, commonly spouses |
| How Long Income Can Continue | Generally for the annuitant’s lifetime | Generally continues while either covered person is alive |
| Starting Monthly Income | Typically higher than a comparable joint-life payout | Typically lower because payments may continue longer |
| After First Death | Payments generally stop unless a guarantee feature applies | Payments can continue to the surviving annuitant |
| Survivor Payment | Not applicable unless another payout feature is selected | May continue at 100%, 75%, 66 2/3%, 50% or another contract percentage |
| Beneficiary Protection | May be added through period-certain or refund features | May include survivor income and, depending on contract, additional guarantees |
| Common Use | Maximizing lifetime income for one person | Providing lifetime income protection for a couple |
Source: FINRA and U.S. Securities and Exchange Commission — Investor.gov — View official annuity information
Actual payout amounts and survivor percentages vary by insurer, contract, age, interest rates and selected guarantee options. Guarantees depend on the claims-paying ability of the insurer.
What Can Affect Annuity Rates and Income?
Annuity Guarantee Periods & Refund Options
Annuity payout options can change what happens if the annuitant dies early. Some options maximize lifetime income, while others provide continued payments or a refund to beneficiaries.
| Payout Option | Starting Income | What Happens at Death | Common Use |
|---|---|---|---|
| Life Only | Generally highest starting lifetime income | Payments usually stop at death | Maximizing lifetime income |
| Life With 5-Year Certain | Usually slightly lower than life-only | If death occurs within 5 years, remaining guaranteed payments continue to beneficiary | Short beneficiary protection |
| Life With 10-Year Certain | Usually lower than life-only | If death occurs within 10 years, remaining guaranteed payments continue to beneficiary | Balancing lifetime income and beneficiary protection |
| Life With 15-Year Certain | Generally lower than shorter guarantee periods | If death occurs within 15 years, remaining guaranteed payments continue to beneficiary | Longer guaranteed payment protection |
| Cash Refund | Usually lower than life-only | Beneficiary may receive the remaining difference between premium paid and payments already received | Preserving unused principal for beneficiaries |
| Installment Refund | Usually lower than life-only | Remaining guaranteed value may continue to beneficiary through installments | Beneficiary protection through continued payments |
Source: U.S. Securities and Exchange Commission — Investor.gov — View official annuity information
Payout options, guarantee periods and refund features vary by insurance company and contract. Adding beneficiary protection generally reduces the starting income compared with a comparable life-only annuity.
Who May Consider an Annuity?
Benefits and Things to Consider
Annuities vs. Other Retirement Income Sources
Common Annuity Questions
Related Retirement Option
Ready to Explore Annuities?
Compare annuity types, rates and income options to see how they may fit into your retirement strategy.