Currently, Oceanview Life and Annuity Company has the best fixed annuity rate at 4.30%; available at a 6-year fixed annuity.
So what companies have the highest annuity rates? Below are today’s best-fixed annuity rates by term for 2-year to 10-year annuities.
|2 Years||Oceanview||Harbourview 2||A-||2.85%|
|3 Years||Sagicor||Milestone 3||A-||3.50%|
|4 Years||Sagicor||Milestone 4||A-||3.70%|
|5 Years||Sentinel Security||Personal Choice||B++||4.05%|
|6 Years||Oceanview||Harbourview 6||A-||4.30%|
|7 Years||Sentinel Security||Personal Choice||B++||4.10%|
|8 Years||Oxford Life||Multi-Select||A||3.80%|
|9 Years||Oxford Life||Multi-Select||A||3.65%|
|10 Years||Atlantic Coast Life||Safe Haven||B++||4.15%|
*NOTE: Click on the insurer or annuity product name for more details.
Best 3 Year Fixed Annuity Rates
The best 3 year guaranteed annuity rate is 3.50%. Below are the current highest 3 year fixed annuity rates for May 2022.
Best 5 Year Fixed Annuity Rates
Today’s best 5 year fixed annuity rate is 4.05% as of May 16th, 2022.
|5 Years||Sentinel Security||Personal Choice||B++||None||4.05%|
|5 Years||Atlantic Coast Life||Safe Haven 5||B++||None||4.05%|
|5 Years||Sagicor||Milestone MYGA||A-||None | 10%||3.85%|
|5 Years||Americo Financial||Platinum Assure 5||A||10%||3.75%|
|5 Years||Fidelity & Guaranty||Guarantee-Platinum 5||A-||Interest||3.70%|
Best 7 Year Fixed Annuity Rates
The best 7 year fixed annuity rate is 4.10% as of May 16th, 2022.
Best 10 Year Fixed Annuity Rates
The highest guaranteed 10 year fixed annuity rate is 4.15% as of May 16th, 2022.
Understanding Annuity Rates
Annuity rates are important because they represent the rate of return you will receive the money you invest in an annuity contract.
Fixed Annuity Rates
Money in a fixed deferred annuity earns interest determined by an annuity rate set by the insurance company. A fixed annuity rate is guaranteed for the initial surrender period. After your initial surrender period is over you will have the option to access the newly declared rate, transfer to a new annuity, or withdraw your cash value.
Variable Annuity Rates
Variable annuities earn investment returns based on the performance of the investment portfolios, known as “subaccounts,” where you choose to put your money. The return earned in a variable annuity isn’t guaranteed.
The value of the subaccounts you choose could go up or down. If they go up, you could make money. But, if the value of these subaccounts goes down, you could lose money. Also, income payments to you could be less than you expected.
Single-Premium Immediate Annuity Rates
Single premium immediate annuities begin to make income payments immediately. When you annuitize you give convert your asset to income steam and give up control of your money completely.
For this reason, SPIAs are not very popular, according to the Secure Retirement Institute, immediate annuities were only 2.29% of all annuity sales during the first 9 months of 2021.
|Type of Annuity/|
|Maintain Control of Asset||Yes||Yes||Yes||No||No|
|Cost of Living Adjustments (COLA)||Yes||Yes||No||Yes||Yes|
Are Annuities Better Than a CD?
- Both pay a guaranteed rate for a set number of years
- Both provide principal protection
- Both typically allow free withdrawals of interest
- Both provide full account value lump-sum death benefit
- Fixed Annuities grow tax-deferred
- Fixed Annuities can provide guaranteed lifetime income
- CDs are FDIC Insured
- Fixed Annuities are guaranteed by the claims-paying ability of the issuing life insurance company and State Guaranty Associations
CD vs Fixed Annuity Comparison Chart
|Issued By||Insurance Companies||Banks|
|Investment Amount||$2,000 - $1,000,000||Essentially Any Amount|
|Investment Term||2 years - 10 years||3 months - 5 years|
|Interest Rates (APY)||Varies by product but usually higher than CDs.||Varies by bank, term and investment amount.|
|Liquidity||Usually, 10% annually or interest earned.||Almost always accumulated interest.|
|Guarantees||Backed by Insurance Company & State Guaranty Associations.||Backed by the FDIC.|
|Death Benefit||May avoid probate.||Probate process required.|
The Federal Reserve and Interest Rates
Current annuity rates often mirror interest rates available in bonds. When bond rates increase, annuity rates usually go up as well. That’s because insurance companies invest most of their general account in fixed income securities, such as high grade bonds.
The Federal Reserve signaled it would begin steadily raising interest rates in mid-March, its latest step toward removing stimulus to bring down inflation.
The Federal Reserve is expected to start raising interest rates next month and not slow down until well into 2023, though the slope of the increases might be a bit gentler.
Annuity rates tend to move in the same direction as 10 Year Treasuries because insurance companies invest a large portion of their general account in high-quality bonds.
Data last week showed U.S. consumer prices rose at their fastest pace since the early 1980s, fueling market speculation for a hefty 50-basis-point hike from the Fed’s March 15-16 meeting.¹
Fed Chairman Jerome Powell said Wednesday that the central bank was ready to raise rates at its March 15-16 meeting and could continue to lift them faster than it did during the past decade.
“This is going to be a year in which we move steadily away from the very highly accommodative monetary policy that we put in place to deal with the economic effects of the pandemic,” he said at a news conference following a Fed policy meeting.²
If that holds true annuity rates may continue to rise throughout 2022.
Best Fixed Annuity Companies
The below table lists the 10 Best Fixed Annuity Companies by Individual U.S. Sales.
|Insurance Company||A.M. Best|
|Global Atlantic Financial Group||A||75||$4,684,876|
|New York Life||A++||100||$9,863,105|
|Massachusetts Mutual Life||A++||98||$3,854,866|
|Principal Financial Group||A||91||$2,844,881|
|Western Southern Group||A+||96||$2,468,257|
Today's Best Fixed Annuities
What is a Fixed Annuity?
With a deferred fixed annuity, the life insurance company guarantees both the rate of return (the annuity rate) and the payout to the investor. Although the word “fixed” might suggest otherwise, the interest rate on a fixed annuity can change over time.
The fixed annuity contract will explain whether, how, and when this can happen. Three-year fixed annuity rates are fixed for the initial 3-year contract period and a new interest rate is declared at the end of the 3 years.
You’ll have an option to withdraw your funds, transfer to a new investment vehicle or accept the new declared rate.
Source: “Learn to Invest, Investment Types, Annuities, Fixed Annuities.” Financial Industry Regulatory Authority (FINRA). Visit FINRA’s Fixed Annuities Webpage
Pros and Cons of Fixed Annuities
- Guaranteed Annuity Rates
- Grow Tax-Deferred
- Principal Protection
- You can exchange your fixed annuity for a new one via a 1035 Exchange
- The most simple type of annuity
- Usually provide some liquidity
- Low investment minimums
- Full account value passes directly to the beneficiary at death
- Withdrawals before age 59½ may have a 10% IRS penalty
- Offer limited lifetime Income Options
- Surrender charges for excess withdrawals during the initial surrender period
- Fixed annuities don’t offer a rate of returns as high as the stock market
- Limited Liquidity
- Annuity rates may not keep up with inflation
How Are Annuities Taxed?
Under current federal law, annuities receive special tax treatment. Income tax on annuities is deferred, which means you don’t pay taxes on the interest your annuity earns until you withdraw it from your annuity. Tax-deferred accumulation is not the same as tax-free accumulation.
An advantage of tax deferral is that the tax bracket you are in when you receive annuity income payments may be lower than the one you are in during the accumulation period.
You will also be earning interest on the amount you would have paid in taxes during the accumulation period.
Most states’ tax laws on annuities follow federal law. You should consult a professional tax advisor to discuss your individual tax situation.
Roth IRA Annuity Taxation
If you buy an annuity using a Roth or Roth 401(k) you likely will not pay federal income tax at all.
Qualified Annuity Taxation
Any annuity purchased with qualified funds, like a 401(k) or IRA, is considered a qualified annuity. Qualified funds are monies that you have never paid taxes on such as a traditional IRA or a traditional 401(k).
When you begin to make withdraws from a qualified annuity you will pay normal federal income taxes.
Non-Qualified Annuity Taxation
A non-qualified annuity is an annuity purchased with after tax-dollars such as money from savings, checking accounts, or a personal brokerage account. You will only pay tax on your earnings with you withdraw your money.
Frequently Asked Questions
Fixed annuities are not FDIC insured. Instead, they are insured by the claims paying ability of the issuing life insurance company and by State Guaranty Associations.
A 5 year fixed annuity is an annuity contract with a five year surrender charge schedule (CDSC). When you purchase a 5 year fixed annuity the interest rate is guaranteed for the initial 5 year contract period and you agree to keep the annuity for the 5 year contract term.
“Buyers Guide for Deferred Annuities: Fixed Annuities 2013.” © 1999, 2007, 2013 National Association of Insurance Commissioners.