Annuity Product Comparison

Choosing an annuity isn’t about finding “the best” product overall; it’s about finding the one that best fits your goals, timeline and risk comfort.

Fixed, fixed index, variable and income annuities all trade off growth potential, guarantees, flexibility and cost in different ways.

The right choice depends on what you want your annuity to do for you:

• protect principal
• provide income now
• grow savings for later
• support family
• long-term-care needs

This guide walks through how to compare annuity options step by step and shows which types typically match common retirement objectives.

How To Compare Annuities

When you compare annuities, you’re really comparing benefits, trade-offs and fit. A good process starts with your goals, then moves to features and finally to individual products.

Key things to think about include:

• What you want the annuity to accomplish
• When you need income to start
• How much risk you’re willing to take in exchange for growth
• How important flexibility and access to your money are
• What fees, riders and guarantees you’re paying for

A knowledgeable advisor can help you weigh these factors, but having a clear framework makes those conversations much more productive.

Start With Your Objectives

Before you compare product features, get clear on why you’re considering an annuity.

Common objectives include:

• Protecting your premium while earning more than a traditional savings account
• Creating income that you cannot outlive
• Leaving money to a spouse or heirs in a tax-efficient way
• Helping cover potential long-term-care costs

The same person can have more than one goal, but usually one is primary. That primary goal should guide which types you focus on.

If your top concern is guaranteed income starting in the next year, an immediate or deferred income annuity may be a better comparison set than variable annuities, which are designed more for growth and flexibility.

Comparing Major Annuity Types

Once you know what you want the annuity to do, it’s easier to compare the main categories.

Fixed Annuities (Including MYGAs)

Fixed annuities credit a guaranteed interest rate for a set period. They are built on conservative investments and are designed to protect principal and provide predictable growth.

They tend to be straightforward, with fewer moving parts and relatively low ongoing costs. This makes them a strong fit for conservative savers who primarily want stability and guaranteed income.

Example: You invest $100,000 in a five-year fixed annuity at 5%. You know in advance how much your account will grow each year and can plan income or future rollovers accordingly.

Fixed Index Annuities

Fixed index annuities (FIAs) sit between fixed and variable annuities. Your return is linked to an index, such as the S&P 500, but your contract protects you from market losses.

You trade some upside (because of caps, spreads or participation rates) for downside protection. FIAs are often used by people who want more growth potential than a traditional fixed annuity but are uncomfortable with full market risk.

Example: You invest $100,000 in a fixed index annuity tied to the S&P 500. In a year, when the index rises 8%, and your annuity has a 5% cap, your account is credited 5%. If the index falls, your annuity credits 0% instead of a loss, so your principal is protected while still giving you the chance to earn interest in strong market years.

Variable Annuities

Variable annuities invest in market-based subaccounts similar to mutual funds. Your account value can rise or fall with the market, and there is no built-in floor against losses (unless you add riders).

These annuities may be appropriate for investors with higher risk tolerance who are seeking long-term growth and are willing to pay additional fees for optional income or death-benefit guarantees.

Variable annuities usually have the highest total fees, including mortality and expense charges, fund expenses and rider costs, in exchange for growth and guarantee combinations you can’t get in simpler products.

Example: You invest $100,000 in a variable annuity and choose market-based subaccounts. If the market rises, your account value can grow; if it falls, your account can lose value because there’s no built-in protection. Adding optional riders can provide guaranteed income or death benefits, but they increase your overall fees.

Income Annuities: Immediate vs. Deferred

Income annuities convert a lump sum into a predictable stream of payments.

• Immediate income annuities begin paying within about a year of purchase.
• Deferred income annuities start income later, often 5–20 years down the road.

These products work well for people who want simple, pension-like checks without managing investments themselves.

Example: A 67-year-old who wants an additional $1,000 per month for life might use a portion of retirement savings to buy an immediate income annuity that sends that payment every month, no matter what happens in the markets.

Other Factors To Compare

Even within the same category, contracts from different insurers can vary a lot.

When you’re down to a shortlist of similar annuities, it helps to compare:

Rates and crediting methods: Guaranteed rates, caps, participation rates and renewal terms

Fees and riders: Administrative costs, income riders, death-benefit riders and their pricing

Surrender period and liquidity: How long your money is locked up and what penalty-free access you have

Issuer strength: Financial strength ratings of the insurance company providing the annuity

As you review these features, focus on how each one supports — or doesn’t support — the objective you identified at the beginning.

Comparing Two Fixed Index Annuities

Both contracts tie growth to the S&P 500 and have the same surrender period.

• Annuity A offers a 7% cap with no fee
• Annuity B offers a 9% cap but charges a 1% annual fee for an income rider

If your main goal is pure accumulation, Annuity A may be more attractive. If your main goal is guaranteed lifetime income, Annuity B’s rider could justify the extra cost. The “better” annuity depends on which benefit matters more to you.

Getting Help Comparing Specific Products

Because annuities can blend multiple features — such as being fixed or variable, immediate or deferred, or offering optional riders — it’s normal to feel overwhelmed when trying to compare them. A licensed annuity specialist or fee-based financial planner can help translate your goals into the types of annuities that make the most sense for you.

A good advisor will walk through your risk tolerance, income needs and timeline, then help you narrow the field to products that match those priorities. They can also compare rates, guarantees and rider options from different providers, explain the trade-offs in plain language and make sure you understand both the benefits and the costs before you commit to a contract. The goal isn’t to choose the most complex annuity — it’s to choose one whose guarantees and flexibility support your actual retirement plan.

Frequently Asked Questions About Comparing Annuities