Fixed Annuity Rates

(Everything you need to know about fixed annuity rates)

Written by Tom Senkus
Written by Tom Senkus

As a writer and research for over two decades, Tom Senkus shares his expertise on such topics as financial planning, insurance, telecommunications, and more. His work has been featured in over 150 publications.

Fixed Annuity Rates

You may already know a thing or two about fixed annuities and the good investment they can be when it comes to retirement planning. But the success of a fixed annuity comes down to its locked-in rates of return and the details of your insurer’s policy. 

This guide will walk you through the ins and outs of fixed annuities, their current rates, and where to get the best rates. As with any big financial investment for your retirement, it’s important to speak with a trusted advisor like an independent insurance agent

They can help you make informed decisions on rates and clarify any fine print so you know exactly how your fixed annuity provides financial security in your retirement years. But first, it's time to find out more about the current fixed annuity rates and how they affect your annuity.

How Do Fixed Annuity Rates Work?

Fixed annuities' primary usage is to protect accumulated wealth, taking advantage of tax-deferred growth on savings outside of qualified retirement plans, such as 401(k) accounts. Once an individual reaches the age to retire, a deferred fixed annuity can be "annuitized", which just means that the policyholder and/or beneficiaries receive lifetime monthly income.

When buying a fixed annuity, the insurance carrier will guarantee a certain interest rate for a set period of time, typically five years or more. Once the rate-guarantee period elapses, the insurer will continue to pay interest on the fixed annuity based on what the company is currently earning on its investments. 

The easiest way to think of a fixed annuity is that they’re similar to a bank certificate of deposit, or COD. This means that if you need to withdraw any money from the fixed annuity before a predetermined period, you will be responsible for paying a surrender charge. 

Annuity Rate Example

Fixed Annuities vs. Fixed-Indexed Annuities

In short, all fixed annuities are contracts between individuals and insurance companies that help provide a nice, steady stream of income for a set amount of time. The individual, also called an annuitant, must first provide the company with a lump-sum amount to earn interest on, which may even be tax-deductible depending on how the money was transferred to the annuity.

It should be noted there are two similar sounding types of annuities, fixed and fixed-indexed annuities. Here’s the difference:

  • Fixed annuities earn interest at a rate set by the insurance company.
  • Fixed-indexed annuities earn returns based on the performance of the stock market.

Let's talk more about those rates.


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Which Company Has the Best Current Fixed Annuity Rates?

So, who has the best rates? The following table shows a fixed annuity rate comparison between some of the best insurers out there, and all organized by varying lengths of terms:

Top 2019 Fixed Annuities: 10-Year Term

Company Rate Earnings on a
$100,000 Investment
Atlantic Coast Life Insurance Company 4.30% $52,344
Sentinel Security Life 4.20% $50,896
American National 3.75% $44,498
Oxford Life 3.65% $43,118
Delaware Life 3.55% $41,743
AIG 3.50% $41,060

Top 2019 Fixed Annuities: 7-Year Term

Company Rate Earnings on a
$100,000 Investment
Atlantic Coast Life Insurance Company 4.19% $33,306
Sentinel Security Life 4.10% $32,481
Fidelity & Guaranty Life 4.00% $31,593
Phoenix (Nassau Re) 3.95% $31,151
Sagicor Life 3.85% $30,270
Liberty Bankers Life 3.80% $29,832

Top 2019 Fixed Annuities: 5-Year Term

Company Rate Earnings on a
$100,000 Investment
Equitable Life 4.10% $22,251
Atlantic Coast Life 4.00% $21,665
Sentinel Security Life 4.00% $21,665
Equitable Life 4.00% $21,665
Phoenix (Nassau Re) 3.85% $20,790
Sagicor Life 3.75% $20,210

Top 2019 Fixed Annuities: 3-Year Term

Company Rate Earnings on a
$100,000 Investment
Liberty Bankers Life 3.10% $9,591
Sagicor Life 3.05% $9,432
Brighthouse Financial 3.00% $9,273
The Standard 3.00% $9,273
Delaware Life 3.00% $9,273
Guggenheim 3.00% $9,273

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2020 Fixed Annuity Rates

So you've just seen the best-fixed annuity rates for 2019. But, what about the next phase, in 2020? 

Market Predictions

First, you should know that annuity rates do fluctuate often. And experts agree that due to the high-performing market, insurers may adjust annuity rates for 2020 to accommodate a large number of individuals reaching retirement age.  This has been highlighted in a report “Fixed Annuity Distribution In 2020" by Jack Marrion, the president of St. Louis-based Advantage Compendium Ltd. 

While the report was created in 2010, most of the data has been accurately predicted. Considering that 74.1 million people are currently between ages 55 and 75 who make up the Baby Boomer generation, insurers will adjust rates to entice investors and offer policies that meet this demographic's needs, such as retirement income, adaptable policies, and more. 

Better Yields than Other Investments

The table below highlights that fixed annuities are some of the best performing investment vehicles in 2020 when compared to similar investments:

Investment Type 3-Year Term 5-Year Term
Certificate of Deposit (CD) 2.40% 2.30%
US Treasury Bond 1.61% 1.62%
Fixed Annuity (Insurer rated B or higher by A.M. Best) 2.70% 3.90%
Fixed Annuity (Insurer rated A or higher by A.M. Best) 2.20% 3.10%

As you can see, fixed annuities perform better than CDs and treasury bonds, and in some cases, 2% more — a significant difference that can mean excellent returns. 

To find the best-fixed annuity rates and the right company that's all in line with your financial strategy, you need an independent insurance agent. 

Independent insurance agents offer unparalleled assistance in selecting the right policy and insurer without being tied to a specific company. Instead, independent insurance agents offer their fiduciary responsibility to ensure that your money is invested wisely.

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