Annuities are commonly purchased to ensure a steady income stream during retirement, with life insurance companies being the main providers. Each company featured on our list offers a range of annuity products, each with its own unique features and benefits.
Choosing the right life insurance company for your annuity needs can be challenging due to the variety of options available. Bankrate is here to help guide you through this process with our well-researched and transparent reviews. We have evaluated numerous annuity companies based on factors such as customer satisfaction, financial stability, and product options.
How Bankrate selected the top annuity companies
To identify the best annuity companies, Bankrate’s editorial team conducted thorough research on the largest annuity providers in the market. We considered ratings from reputable sources like J.D. Power and AM Best, focusing on customer satisfaction scores and financial strength ratings.
Methodology
Bankrate’s selection of the best annuity companies was based on specific criteria, including products accessible to regular investors, A+ or A++ ratings from AM Best, high customer satisfaction scores from J.D. Power, and inclusion in the top 20 U.S.-based annuity companies by total annuities sold.
We also evaluated factors such as the availability of riders, product diversity, accessibility, and rates of return to make informed recommendations.
Best annuity companies in 2024
Shopping for an annuity can be overwhelming, but Bankrate aims to simplify the process for you.
When comparing the largest annuity providers, consider key factors such as the range of annuity types, available riders, annual fees, and expected rate of return. Additionally, review financial strength ratings and customer service scores from trusted agencies like AM Best and J.D. Power to gauge the overall performance of each provider.
Allianz Life of North America
Allianz is a top performer in fixed index annuities, attracting consumers with its diverse product offerings. The company leads in fixed index annuity sales and boasts strong financial stability, with an A+ rating from AM Best.
Pros:
- Wide selection of fixed index annuities.
- Special features like Index Lock for locking in index values.
- User-friendly website with detailed product information.
Cons:
- Longer surrender periods on some annuities.
- Limited variety of annuity types.
- No fixed annuities with guaranteed returns.
MassMutual
MassMutual excels in customer service, earning high marks from J.D. Power. With a strong A++ rating from AM Best, the company offers a range of annuity options through its subsidiary, MassMutual Ascend.
Pros:
- Diverse range of annuity products.
- Robust financial health.
Cons:
- Challenging to find product details on the website.
- Requires scheduling a call for additional information.
New York Life
New York Life, a prominent insurance company, stands out for its wide array of annuity products. With high ratings for financial strength and customer satisfaction, the company offers competitive rates and a user-friendly rate comparison chart.
Pros:
- Low minimum premiums.
- Strong financial strength and customer service.
- Easy access to current annuity rates.
Cons:
- Doesn’t offer index annuities.
- Variable annuities require a financial professional.
Nationwide
Nationwide is known for its range of variable annuity options with low annual fees. The company’s user-friendly platform, strong financial backing, and positive customer satisfaction ratings make it a reliable choice for annuities.
Pros:
- Competitive annual fees on variable annuities.
- Wide selection of sub-account investment options.
- Flexible withdrawal options.
Cons:
- Non-variable annuities may be limited to investment professionals.
Prudential
Established in 1875, Prudential is a well-respected financial services company with a rich history. Prudential provides customers with a range of six different annuity options, including fixed, index, and variable choices, allowing for more flexibility compared to other companies. One of their products, the Wealth Guard single premium fixed annuity, allows for a 10 percent withdrawal per year. Prudential also offers various rider options, online tools, and live agent support, maintaining an A+ credit rating from AM Best. This strong financial health and reputation make Prudential a reliable choice for customers.
Pros:
– Wide variety of annuity types available.
– Competitive fees for variable annuities.
Cons:
– Three out of the nine annuities are only accessible to investment advisors and marketing organizations.
Pacific Life, another reputable insurance company with over 150 years of experience and an A+ rating from AM Best, offers fixed, immediate, index, and variable annuities. While their fixed annuity minimum premiums are higher than some competitors, Pacific Life provides a range of options. Their Pacific Choice variable annuity allows for a five-year withdrawal period, which is more generous than the industry standard.
Pros:
– Strong financial stability and customer service ratings.
– Easy access to annuity information on their website.
Cons:
– Higher minimum premiums.
– Not available in all 50 states.
An annuity is a contract between an individual and a life insurance company, providing a consistent income stream, typically in retirement. Annuities are customizable, with optional features like riders that offer additional benefits. They can be a valuable tool for retirement planning, offering a steady income stream to supplement other retirement income sources. However, annuities come with fees and restrictions, so they may not be suitable for everyone.
There are five basic types of annuities: fixed, indexed, variable, immediate, and deferred. Fixed annuities offer a guaranteed rate of return, indexed annuities earn interest linked to stock market indexes, and variable annuities are based on the performance of underlying investments. Deferred annuities allow for payouts to begin in the future. It’s essential to choose a reputable insurance company with strong financial ratings to ensure the security of your annuity payments.
This option allows you to make a series of payments to the insurer over time, rather than funding your annuity with a single lump sum.
Deferred annuities refer to when payouts begin and are often paired with different types of annuities to describe the product’s rate of return, such as deferred variable annuities or deferred indexed annuities.
Immediate
An immediate annuity converts a lump sum of money into guaranteed income payments that start soon after signing the contract, usually within 30 days.
Unlike deferred annuities that allow for spreading out premiums over time, an immediate annuity requires a large lump sum deposit to generate substantial immediate income.
How to choose the right annuity company for you
When purchasing an annuity, it’s essential to research and compare companies to find one that meets your needs.
Here are key factors to consider when selecting the best annuity company for you:
- Review customer satisfaction ratings: Compare customer satisfaction ratings on websites like J.D. Power or insurer reviews in this article.
- Assess financial stability: Look at a company’s financial strength rating from agencies like AM Best, Standard & Poor’s, or Moody’s to ensure long-term stability.
- Read customer reviews: Check customer service reputation through reviews and ratings from consumer advocacy organizations.
- Get multiple annuity quotes: Gather quotes from different companies to explore various products and find the best fit.
- Seek professional advice: Consult with a fee-only fiduciary for unbiased guidance on annuity companies and terms.
How much does an annuity cost?
When considering annuity costs, think about the premiums paid to the insurer and ongoing annual fees.
- Premiums: Minimum premiums can be relatively low, but substantial funds are needed for significant income in retirement.
- Ongoing fees: Variable based on annuity type, such as administrative fees or commissions.
Various annuities have different funding requirements, with deferred annuities allowing for smaller initial investments than immediate annuities.
Additional costs to consider include rider fees, surrender fees, and IRS penalties for early withdrawals.
Annuity fees and penalties
Annuity fees can range widely, with variable annuities typically charging higher fees than fixed annuities.
Commissions, surrender fees, and optional rider fees can also impact annual costs.
IRS penalties apply for early withdrawals before age 59½, similar to 401(k) and IRA penalties.
Frequently asked questions
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Annuities can be a valuable tool for retirement planning, offering a guaranteed income stream. However, they may not suit everyone’s investment needs, as they limit access to funds and have lower growth potential.
Consider your risk tolerance and long-term goals when deciding if an annuity is right for you. Explore other investment options if you seek higher growth potential and are comfortable with market risks.
Consider seeking advice from a financial planner to determine if incorporating an annuity aligns with your overall retirement plan. It’s essential to explore various options and consult with a professional to make informed decisions about your financial future. following sentence: “The quick brown fox jumps over the lazy dog.”
“The lazy dog is jumped over by the quick brown fox.”
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