Best annuity companies in 2024
Annuities are often purchased to help secure a reliable stream of income in retirement. Life insurance companies are the primary provider of annuities. Each company on our list offers a variety of annuity products, each with unique features and benefits.
With so many options out there, the challenge lies in determining the most reputable life insurance companies offering annuity products that meet your retirement needs.
Bankrate is here to serve as your guide on this journey. Our reviews are grounded in research and a commitment to clarity. With a keen eye on the pulse of the industry, we’ve sifted through the many annuity companies out there, evaluating them against multiple criteria, from customer satisfaction and financial stability to the range of product options.
How Bankrate picked the top annuity companies
To find the best annuity companies, Bankrate’s editorial team started by researching the largest annuity providers on the market. We analyzed life insurance company ratings, including customer satisfaction scores and financial strength ratings from trusted, unbiased sources, including J.D. Power and AM Best.
Methodology
Bankrate selected the best annuity companies based on the following criteria, and only included providers with products available to regular investors (not financial professionals). All of the best companies have:
- A+ or A++ rating from AM Best
- High customer satisfaction scores from J.D. Power
- In the top 20 biggest U.S.-based annuity companies by total amount of annuities sold.
We also examined the number of riders available, general accessibility, the different types of annuities available and rates of return in order to make our picks.
Best annuity companies in 2024
Shopping for an annuity can be intimidating, but Bankrate is here to make the process easier.
When studying the largest annuity providers, ask yourself some key questions to help compare your options. Does one company offer a wide range of annuity types, as well as riders to personalize your contract, compared to another? What are the annual fees and what rate of return can you expect?
From there, you can compare companies’ financial strength ratings and customer service scores from trusted third-party agencies, such as AM Best and J.D. Power, for an unbiased view of which providers may excel in these areas and give you the best experience.
Allianz Life of North America
Allianz is a strong performer in the world of fixed index annuities, and consumers are flocking to the company for these products. The company sold more fixed index annuities than any other provider in 2023, with over $1.1 billion in sales, according to a ranking by LIMRA, the largest life insurance trade association in the U.S.
Allianz offers nine different fixed index annuity products, and several feature no annual fee. They have neat features on some products, including Index Lock, which lets you lock in an index value at any point during the crediting period. The financial strength of this annuity company is also strong: Allianz received an A+ rating from AM Best, the largest and oldest independent insurance analyst in the U.S.
Pros:
- Large selection of fixed index annuities.
- Offers Index Lock allowing you to lock in an index value.
- Very accessible website, easy to find rates and details about products.
Cons
- Longer than average surrender period (10 years) on some annuities.
- Only offers two types of annuities.
- Doesn’t sell fixed annuities with a guaranteed return.
MassMutual
MassMutual earned high marks from J.D. Power for customer service, driven in large part by its easy-to-use website and app, which help customers understand what they’ve bought. It holds a stellar A++ rating from AM Best along with high marks from other top rating agencies, like Moody’s and Fitch, demonstrating the company’s strong financial strength. It also ranked second in fixed annuity sales in 2023, according to LIMRA, and the second most in total annuity sales.
Founded in 1851, MassMutual is a trusted and well-known name in the industry, and ranks as one of the largest financial services firms in the United States. Through its wholly-owned subsidiary, MassMutual Ascend, the company offers a range of annuity products, including fixed, index and immediate annuity options.
Pros:
- Good variety of annuity products.
- Very strong financial health.
Cons:
- Can be difficult to find rates and details on their website.
- You need to schedule a call with a company representative to get more information about products.
New York Life
New York Life is one of the largest life insurance companies in the world, and it holds the highest (A++) rating from AM Best for its strong financial strength. It also earns consistently high marks for customer satisfaction from J.D. Power.
The life insurance giant offers a wide range of annuity products, including fixed deferred, income and variable annuities. Where New York Life really shines is its easy-to-use side-by-side weekly annuity rate comparison chart, where you can see current rates on its most popular annuity products. It also advertises competitive fixed and guaranteed interest rates on its products.
Pros:
- Low minimum premiums ($10,000 and up).
- High financial strength and customer service ratings.
- Easy to find weekly annuity rates on its website.
Cons:
- Doesn’t offer index annuities.
- Variable annuities can only be purchased through financial professionals.
Nationwide
Nationwide really stands out for its range of variable annuity options, with several advertising total annual fees of 1.3 percent or less, which is lower than other variable annuities on the market. It also ranked in the top 10 companies with the highest overall annuity sales in 2023, according to LIMRA.
Nationwide offers a user-friendly mobile app, streamlined online portal and a network of independent agents across the U.S. Combine those features with an A+ financial strength rating from AM Best and the second-highest ranking life insurance and annuity provider satisfaction rate according to J.D. Power, and Nationwide could be a great choice for an annuity provider.
Pros:
- Low annual fees on several variable annuities.
- Over 150 sub-account investment options for variable annuities.
- Can withdraw up to 10 percent per year without penalty for several products.
Cons:
- Many of its non-variable annuities are only available to investment professionals.
Prudential
Founded in 1875, Prudential is a leading financial services company with a long history. It offers six different types of annuities to consumers, including fixed, index and variable options, giving customers a bit more flexibility than some of its competitors. Prudential’s products offer useful benefits to clients, such as the ability to withdraw 10 percent per year from its Wealth Guard single premium fixed annuity product.
Prudential offers numerous rider options, easy-to-use online tools and live agent support. They maintain an A+ credit rating from AM Best, due in large part to the company’s strong balance sheet. So, customers can be confident they’re picking an annuity company with a good reputation as well as strong financial health.
Pros:
- Wide range of annuity types available.
- Competitive variable annuity fees.
Cons:
- Three out of the nine annuities offered are only available to investment advisors and marketing organizations.
Pacific Life
Like many of the names on this list, Pacific Life is an insurance behemoth with over 150 years in the business and a stellar A+ rating from AM Best. The company also scores highly with customers.
While its fixed annuity minimum premiums tend to be higher than most competitors on this list ($25,000), Pacific Life provides a wide range of options, including fixed, immediate, index and variable annuities. Its Pacific Choice variable annuity advertises a five-year withdrawal period, which is a little more generous than the industry standard of seven years.
Pros:
- Strong financial stability and customer service ratings.
- Easy to access annuity information on its website.
Cons:
- Higher minimum premiums.
- Not available in all 50 states.
What is an annuity?
In its simplest form, an annuity is a contract between you and a life insurance company. You pay upfront or over time to receive a consistent income stream, usually in retirement. That income can last your entire retirement or a certain number of years. Annuities are tax-deferred, so you won’t owe income tax on earnings until you begin receiving payments.
Annuity contracts are highly customizable. Riders are optional features that can provide added benefits or coverage to an annuity contract, such as a death benefit to your heirs.
Certain annuities also offer the flexibility of disbursing funds under specific circumstances during your lifetime, such as following your admission to a nursing home or after the diagnosis of a terminal illness.
Annuities can be a valuable tool for retirement planning, providing a steady income stream to supplement other sources of retirement income, such as Social Security or pensions. However, they also come with fees and restrictions, and the complexity of some annuity products means they may not be suitable for everyone.
Your annuity payouts are backed by the issuing insurance company’s financial strength. Annuities are not regulated or insured by a federal agency, such as the FDIC. Instead, if an insurer goes bust and is unable to continue making annuity payments, a state insurance guaranty association will step in to pay customer claims up to state limits. (Most states provide coverage of up to at least $250,000 for each annuity.)
While it’s rare for a life insurance company to go bankrupt, it does happen. It can take weeks or months to receive a payout from a state insurance guaranty association after an insurer becomes insolvent, and there are limits on how much the association will cover.
That’s why picking a life insurance company with excellent financial ratings and a long history of paying claims to customers is so important.
Different types of annuities
There are five basic types of annuities. Three of those types — fixed, indexed and variable — describe the annuity’s rate of return. The other two types — immediate and deferred — describe when annuity payouts begin.
It’s important to note that life insurance companies can get quite creative with the specific names they use for their annuity products. For example, an indexed annuity can also be called a fixed indexed or equity indexed annuity. Pay attention to how the rate of return is calculated on the product and how payments are structured if you come across a type of annuity you’re unfamiliar with.
Fixed
A fixed annuity is the simplest kind of annuity. It offers a guaranteed rate of return on your investment and will pay out over a specified period of time. These annuities share some similarities with certificates of deposit (CDs), another conservative investment that imposes penalties on early withdrawals. Like CDs, the rate of return on fixed annuities is more attractive in higher interest rate environments.
Fixed annuities can be advantageous because the rate of return is clearly outlined in your contract. On the other hand, inflation will eat into your purchasing power over time.
Indexed
Fixed index annuities earn an interest rate linked to a stock market index, such as the S&P 500, without putting your money into the actual index. These products also offer principal protection from negative returns.
If the index has a strong year, you’ll receive some interest added to your annuity’s contract value. If the index has a negative year, there is no index interest added, but your annuity contract does not lose value. However, insurers put limits and restrictions on an indexed annuity’s upside potential, so you’ll never earn as much as you would by purchasing an index fund directly.
Variable
A variable annuity’s rate of return is based on the performance of underlying investments, similar to mutual funds, that invest in stocks, bonds or a mix of both. How much you receive depends on the performance of the investments, though some variable annuities offer a guaranteed minimum income benefit.
Variable annuities offer the potential for more growth than fixed and indexed options, but they don’t offer the same principal protection. Contracts for variable annuities also tend to be more complex and carry higher fees
Deferred
With a deferred annuity, you agree to start your payouts at some point in the future. This option can be used to make a series of payments to the insurer over time, instead of funding your annuity with a single lump-sum.
Since deferred annuities simply describe when payouts begin, the term is often paired with a different type of annuity to describe the product’s rate of return, such as a deferred variable annuity or a deferred indexed annuity.
Immediate
An immediate annuity allows you to convert a lump sum of money into a stream of guaranteed income payments that begin soon after you sign your contract, usually within 30 days.
Unlike deferred annuities that allow you to spread out your premiums over time, an immediate annuity requires a large lump sum deposit to achieve any substantial level of immediate income.
How to choose the right annuity company for you
When you’re ready to buy an annuity, it’s important to do your research and shop around to ensure you find a company that meets your needs.
Here are some things to look for when choosing the best annuity company for you.
- Review customer satisfaction ratings: You can visit the J.D. Power website or check the insurer reviews in this article to compare each insurance company’s customer satisfaction ratings.
- Assess financial stability: We recommend looking at a company’s financial strength rating from a third-party agency such as AM Best, Standard & Poor’s (S&P) or Moody’s. Remember, annuities are often structured to provide you a source of income for years, sometimes the rest of your life. You want the assurance that your company is financially healthy and has a long history of stability.
- Look at customer reviews: Research the company’s customer service reputation by reading customer reviews and checking ratings from consumer advocacy organizations. Consider how responsive and helpful the company’s representatives are when answering your questions and addressing concerns.
- Get multiple annuity quotes: Each annuity company offers different rates, riders, fees and features. By gathering multiple quotes, you can explore a broader range of products and select the one that best suits your needs. Having multiple quotes may also give you some negotiating power with annuity providers as you shop around.
- Seek professional help: It’s always a smart move to speak with a financial advisor prior to buying an annuity. Some insurance agents and brokers call themselves financial advisors, though they receive a commission from the products they sell you. A fee-only fiduciary, on the other hand, can provide you with an unbiased professional opinion on the annuity companies you’re considering and the terms they offer you.
How much does an annuity cost?
When discussing the cost of annuity, it’s important to consider two things:
- The premium(s) you pay the insurer to fund the contract.
- Ongoing annual fees and charges.
Many annuity companies have relatively low minimum premiums, often as low as $2,500 to $5,000 for some types of fixed annuities and around $10,000 to $15,000 for variable annuities.
However, you’ll generally need significantly more than that if your goal is to achieve any substantial level of income — especially lifetime income — in retirement.
This may mean funding an annuity contract with $100,000 or more. Many annuity providers advertise maximum deposits of $1 to $3 million.
Different types of annuities also have different funding requirements. For example, deferred annuities allow for smaller initial investments than immediate annuities because the funds are typically invested and grow over time before income payments begin.
How old you are when payouts begin also plays a factor. Someone who is 65 years old is going to need a larger initial investment if they want to secure sufficient lifetime payouts than an 85-year-old.
Annuity fees and penalties
Aside from the minimum amount needed to purchase an annuity, there are also ongoing fees and penalties to consider.
Annuity fees can vary widely. Variable annuities, for example, may charge 1.4 percent a year or more in administrative fees, mortality expenses and investment fund expenses. Meanwhile, a type of fixed annuity called a multi-year guaranteed annuity shares similarities with a bank CD, and typically doesn’t have any annual fees.
There’s also commissions to consider. Since an annuity is an insurance contract, a salesperson or broker will get a cut of either your principal or return. This amount varies by company and annuity type.
Riders, or optional features added to an annuity contract, also increase the annual cost. This might include a cost-of-living adjustment rider, which automatically increases your income payments to keep pace with inflation, or a death benefit rider to provide money for a beneficiary if you pass away before income payouts begin.
Nearly all annuities charge surrender fees for withdrawing money during the first five to 10 years of the contract. The fee tends to be highest in the beginning and gradually decreases each year. Some companies allow you to withdraw a certain amount penalty-free each year, usually up to 10 percent.
Since annuities are designed to be long-term investments for retirement, the IRS also levies a 10 percent early withdrawal penalty if you take out money prior to age 59½,. This is similar to the IRS early withdrawal fee on 401(k)s and IRAs.
Frequently asked questions
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Annuities can be a valuable tool for retirement planning, but they aren’t a one-size-fits-all solution. The guaranteed income stream they offer is attractive, especially for those nearing retirement. However, the trade-off is lower growth potential and limitations on accessing your money.
If you have a low risk tolerance and securing a steady income stream is important to you, an annuity could be a good option. But if you have a long time horizon and are comfortable with some market risk, you might explore other investment options that offer the potential for higher growth. It can be wise to consult with a financial advisor to see if an annuity fits into your overall retirement strategy.
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It depends on the type of annuity and the terms of your contract. Some annuities stop payouts when the owner dies. Others may offer a death benefit. If a death benefit isn’t a standard part of the annuity, you can buy a death benefit rider specifically for this purpose, at an added cost.
There are also joint-life annuities, which are designed for couples and guarantee payments to the surviving spouse for their lifetime after the first spouse dies.
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While annuities are designed to offer safety and stability, there are certain situations where you might lose money. If you choose a variable annuity, your money’s growth is tied to the investments you choose. So if the market performs poorly, you could lose some of your principal. Certain riders can mitigate this risk, such as guaranteed minimum value riders, but they come with additional costs.
The other way you might lose money with an annuity is through surrender charges. Annuities often impose surrender charges if you withdraw money before a certain period. These early withdrawal penalties can be significant and eat into your contract value.
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The surrender period usually lasts the first five to 10 years of your contract and dictates the penalty for withdrawing money early from an annuity. The earlier in the contract term you withdraw, the bigger the penalty. The penalty amount typically reduces over time, and usually drops off completely after eight to 10 years.
However, even after your surrender period ends, you may still get penalized by the insurance company for withdrawing more than 10 percent of your annuity’s contract value in any given year.
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