A fixed annuity has no explicit price tag and no annual fee. You buy one by depositing a lump sum, typically $10,000 to $100,000, and the insurer guarantees a fixed interest rate for a set term. There are no annual contract fees, no management fees, and no mortality & expense charges like you would find on a variable annuity. The insurer makes its money on the spread between what it earns on your premium and what it credits to your account, so your real “cost” is the gap between those two rates, never a check you write each year. This guide breaks down every cost component buyers ask about: minimum premium, surrender charges, commissions, optional rider fees, and the hidden costs unique to fixed and indexed annuities.
Do Fixed Annuities Have Fees in 2026?
No. Traditional fixed annuities and multi-year guaranteed annuities (MYGAs) do not charge explicit fees. There is no annual contract fee, no asset management fee, and no mortality & expense (M&E) charge. The interest rate you are quoted is the net rate you actually receive, every year, for the entire guarantee period.
This is the single biggest difference between fixed and variable annuities. A variable annuity can carry 2% to 3.5% in annual internal fees once you stack M&E charges, fund expenses, and rider costs. A 5-year MYGA paying 5.50% pays 5.50%. There is no fee drag. The one exception is optional income riders on fixed index annuities, a different product category covered below.
How Much Money Do You Need to Buy a Fixed Annuity?
Most fixed annuity carriers require a minimum premium of $10,000 to $25,000. A handful accept as little as $5,000. On the high end, some MYGAs require $100,000 or more in exchange for a premium-bonus rate tier.
| Carrier | Minimum Premium | Maximum (Without Approval) |
|---|---|---|
| Oceanview Harbourview MYGA | $10,000 | $1,000,000 |
| Ibexis MYGA Plus | $10,000 | $1,000,000 |
| American Equity GuaranteeShield | $10,000 | $1,500,000 |
| F&G Guarantee Platinum | $20,000 | $1,000,000 |
| MassMutual Stable Voyage | $10,000 | $1,000,000 |
| North American Guarantee Choice | $10,000 | $1,000,000 |
Deposits above the standard maximum require carrier underwriting approval but are routinely accepted for buyers funding a retirement account rollover. Compare current fixed annuity rates to see today’s minimums and yields side by side.
How Are Agents Paid, and Does It Cost You?
A licensed agent earns a commission directly from the insurance company, paid as a percentage of the premium you deposit. You do not pay this commission out of pocket. It does not come out of your account value, and it is not added to your premium. Typical fixed annuity commissions in 2026 fall in this range:
- 3-year MYGA: 1.0% to 1.5% of premium
- 5-year MYGA: 2.0% to 2.75% of premium
- 7-year MYGA: 2.75% to 3.5% of premium
- 10-year MYGA: 3.5% to 5.0% of premium
- Fixed index annuity (FIA): 5% to 7% of premium
If you deposit $100,000 into a 5-year MYGA, the carrier pays your agent roughly $2,000 to $2,750. Your account balance still starts at $100,000, earns the quoted rate from day one, and matures at the full guaranteed value. The commission is funded from the insurer’s investment spread, not from your deposit. The trade-off shows up only if you surrender early, because surrender charges let the insurer recover the commission it already paid. See how annuity surrender charges work for the full mechanics.
What Is the Actual “Cost” of a Fixed Annuity?
If there are no fees, where does the insurer make its money? The answer is the investment spread. When you deposit $100,000 into a 5-year MYGA paying 5.50%, the insurer invests that money in a portfolio of investment-grade corporate bonds, structured securities, and private credit earning roughly 6.5% to 7%. The insurer keeps the 1% to 1.5% spread to cover overhead, commissions, reserves, and profit.
That spread is the fundamental “cost” of any fixed annuity: the gap between what your money could theoretically earn on its own and what the carrier credits to your account. For comparison, in mid-2026:
- A 5-year Treasury bond yields roughly 4.2%
- A top-rated 5-year MYGA yields roughly 5.5%
- A 5-year FDIC-insured bank CD yields roughly 4.4%
The MYGA actually delivers a higher net yield than either alternative because insurers invest in longer-duration assets with modestly more credit risk and pass most of that excess yield through to the policyholder. The “cost” of using an annuity instead of buying bonds directly is paid by the spread, but the consumer outcome is usually a higher net yield.
Do Fixed Index Annuities Cost More Than Fixed Annuities?
Yes, in two ways. First, fixed index annuities (FIAs) have no explicit annual fee on the base contract, but they cap your participation in the underlying index. That cap or participation rate is effectively the “price” of having principal protection. Second, FIAs with optional income riders charge an annual rider fee, typically 0.95% to 1.25% of the income value, deducted each year from the account value.
For an FIA buyer who wants the lifetime income guarantee, that 1% rider fee is the cost of buying a personal pension. For a buyer who only wants index-linked growth without lifetime income, declining the rider leaves your only “cost” as the cap or participation limit on your index credits. See our fixed index annuity guide for product-level detail.
How Do Fixed Annuity Costs Compare to CDs and Variable Annuities?
To make the cost question concrete, here is how the three most common safe-money options compare in 2026.
| Product | Annual Fees | Typical 5-Year Yield | Liquidity |
|---|---|---|---|
| 5-Year MYGA | None | 5.25-5.65% | 10% free annual withdrawal; surrender charges otherwise |
| 5-Year Bank CD | None (early-withdrawal penalty) | 4.20-4.50% | 6-month interest penalty for early withdrawal |
| Variable Annuity | 2.0-3.5% per year | Market-dependent | Surrender charges plus ongoing fees |
| FIA with Income Rider | 0.95-1.25% rider fee | Index-linked, capped | 10% free annual; surrender charges 7-10 years |
The MYGA is the lowest-cost annuity product available. On a pure fee-versus-yield basis, it beats CDs and variable annuities for any buyer who can commit the money for the full term. Compare current fixed annuity rates against today’s top CDs in one view.
What Hidden Costs Should You Watch For?
Fixed annuities are among the most transparent retirement income products available, but a few cost-adjacent items occasionally surprise buyers.
- Surrender charges. If you withdraw more than the free withdrawal amount (typically 10% per year) during the surrender period, you pay a declining percentage penalty. A 5-year MYGA might charge 7% in year one, dropping to 1% by year five. It is not a fee, but it is a real cost if your plans change. Read the full surrender charge guide.
- Market value adjustment (MVA). Many MYGAs include an MVA clause that adjusts your surrender value based on interest rate changes. If rates have risen since you bought, an early surrender costs more; if rates have fallen, the MVA can actually increase your payout.
- Premium taxes. A handful of states (California, Nevada, Maine, South Dakota, West Virginia, Wyoming) charge a small premium tax on annuity purchases, typically 0.5% to 3.5%, paid by the carrier but sometimes affecting the rate offered.
- Income rider fees. Optional only. Common on FIAs, almost never on MYGAs. Decline the rider if you do not need lifetime income.
- Ordinary income tax on gains. Annuity earnings grow tax-deferred but are taxed at ordinary income rates on withdrawal, not the lower capital gains rate. This is the largest “hidden cost” for non-qualified buyers in high tax brackets. See how annuities are taxed.
Are Fixed Annuities Worth the Cost?
For most buyers seeking guaranteed yield with no market risk and no annual fee, fixed annuities offer the cleanest cost structure of any retirement income product. A 5-year MYGA paying 5.50% net of all fees delivers a guaranteed yield that is hard to match anywhere else in the safe-money space, especially with a similar guarantee period.
The honest answer to “what does a fixed annuity cost” is: nothing you can see, and a spread you cannot. The relevant question is not “what does it cost,” but “what does it net pay me compared to my alternatives.” On that metric, top-rated MYGAs in 2026 win against CDs, Treasuries, and money market funds across almost every term length. My Annuity Store has placed over $1 billion in annuities, the majority of them MYGAs purchased specifically for their zero-fee structure and competitive net yield. Compare today’s rates from 90+ top annuity companies, then request a quote without committing.
Frequently Asked Questions About Fixed Annuity Costs
How much does a fixed annuity cost per year?
A traditional fixed annuity (MYGA) costs zero per year in explicit fees. There is no annual contract fee, no management fee, and no mortality & expense charge. The quoted interest rate is the net rate you receive. Fixed index annuities with optional income riders are the exception, charging roughly 0.95% to 1.25% per year on the income value.
What is the minimum to buy a fixed annuity?
Most carriers require $10,000 to $25,000 as a minimum premium. A few accept as little as $5,000. Maximum premiums without underwriting approval typically range from $500,000 to $1,500,000 depending on the carrier.
Are there commissions on fixed annuities?
Yes, but you do not pay them directly. The insurance company pays the agent a commission of roughly 1% to 5% of premium, depending on product type and term length. It is paid from the insurer’s investment spread, not deducted from your deposit.
Why is a fixed annuity cheaper than a variable annuity?
Fixed annuities invest in a general fund of bonds and credit assets managed by the insurer, with no individual subaccounts, no investment options to select, and no mortality & expense risk to insure against. Variable annuities have all of those elements plus separate-account fund expenses, which is why their all-in cost typically runs 2% to 3.5% per year.
Do fixed annuities have any out-of-pocket cost at purchase?
No. For the vast majority of buyers there is no out-of-pocket cost at purchase. You deposit your premium, the carrier issues the contract, and the rate they quoted is what you receive. The costs to watch for later are surrender charges if you withdraw early, market value adjustments on early surrender, and ordinary income tax on gains. None of those are out-of-pocket at purchase, but they are real long-term costs.
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