Best Annuity Rates for 7 Years
The best 7-year fixed annuity rate is 6.60% simple interest offered by Knighthead Life Insurance Company.
| Term | Insurer | Company Details | Annuity | Rate | AM Best | Apply |
|---|---|---|---|---|---|---|
| 7 Years | 
| Knighthead Life | Staysail Annuity | 6.65% Simple | A- | Apply |
| 7 Years | 
| Revol One | DirectGrowth | 6.00% | B++ | Apply |
| 7 Years | 
| Mountain Life | Alpine Horizon | 5.75% | B+ | Apply |
| 7 Years | 
| Ibexis | MYGA Plus | 5.80% Simple | A- | Apply |
| 7 Years | 
| AMERICO | Platinum Assure | 5.50% | A | Apply |
*NOTE: Click on the insurer or annuity product name for more details. You can find fixed index annuity rates here if you are looking for them instead.
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Understanding Annuity Rates
It is important to understand there are different types of annuities and the rate of return varies by type. Fixed annuities provide a fixed rate for a guaranteed period of time; usually the longer you invest the higher your rate will be.
Earn interest based on the performance of a stock market index offering more upside potential along with downside protection.
Fixed annuities interest rates are set by the insurance company and guaranteed for the initial contract term.
Earn interest based on the performance of a stock market index offering more upside potential along with downside protection.
Earn investment returns based on the performance of “subaccounts." You can lose money in a variable annuity.
Annuities vs CDs
Fixed annuities work very much like a certificate of deposit (CD) but are typically higher than CD rates. Below are some of the similarities between the two:
- 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/ Annuity Comparison Chart
| FEATURES | FIXED ANNUITY | CD |
|---|---|---|
| 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. | Varies by bank, term and investment amount. |
| Liquidity | Usually, 10% annually or interest earned. | Almost always accumulated interest. |
| Guarantees | Backed by Insurer & 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 the interest rates available in bonds. When bond rates increase, annuity rates usually go up as well.
Annuity rates are influenced by 10 Year Treasury rates because insurance companies invest a lot of their money in high-quality 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.
Last week’s data showed that US consumer prices are rising at the fastest pace since the early 1980s. This has led to speculation that the Federal Reserve will raise interest rates by 0.5% at its next meeting.
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.
If that holds true annuity rates will likely continue to go up throughout 2022.
Today's Best Fixed Annuities
Best Fixed Annuity Companies
The table below the details 10 best U.S. fixed annuity companies by sales. When buying a deferred annuity, factor in the life insurance company’s financial ratings.
What is a 7 Year Fixed Annuity?
Fixed annuities offer a guaranteed rate of return for a set period of time. For example, when you buy a 7-year annuity your interest rate is guaranteed for the length of the contract but a new rate is declared at the end of the annuity.
The fixed annuity contract will explain whether, how, and when this can happen. Although the word “fixed” might suggest otherwise, the interest rate on a fixed annuity can change over time.
Are Annuities Taxed?
The interest you earn in an annuity grows tax-deferred which means you don’t have to pay taxes on your earnings until you take it out of the annuity. Generally speaking, annuities are taxed using the LIFO (last in first out) method at your ordinary income tax rate.
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
A Roth IRA annuity is treated like an ordinary Roth IRA and you will not pay taxes.
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 that is not purchased with tax-advantaged funds, such as from a 401(k) or IRA. You will only pay tax on your earnings with you withdraw your money.
Fixed Annuity Pros and Cons
Pros
- 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 your loved ones at death
Cons
- 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 equity-type returns
- Limited Liquidity
- Annuity rates may not keep up with inflation
