Who Sells Annuities and Where Can You Buy One?

Annuities are contracts between an individual and an insurance company. In exchange for a lump sum or series of payments, the insurance company guarantees regular payments, either immediately or in the future. Before you can buy an annuity, though, you first need to know who sells annuities. Thankfully, there is some flexibility, as annuities can typically be purchased from banks, brokers and insurance companies. However, where you buy an annuity may depend on the type of annuity you are buying and the level of long-term stability you need.

Consider working with a financial advisor to see who sells annuities and if they are the right fit for you. 

Where Can You Buy an Annuity?

The decision on where to buy an annuity is a significant one. It depends on your understanding of the types of annuities available and the reputation of the sellers. 

Before you can explore who sells annuities, you first need to understand which kind you need and the various payout options. 

• Fixed annuities: Fixed annuities offer guaranteed income. For example, Jane would purchase a fixed annuity delivering a lifetime payout of $1,000 per month, starting at a specific time.
• Variable annuities: Variable annuities are linked to the performance of an investment portfolio. For example, if Tom invests in a variable annuity, his payouts may fluctuate, depending on the performance of the linked stock investments.
• Immediate and deferred annuities: Immediate annuities begin payments immediately, while deferred annuities start payments at a later date. So, if you buy an immediate annuity, you’ll start receiving payouts right away. Payments from a deferred annuity won’t start until years or decades in the future.

Annuities can be purchased through various channels, including banks, brokers and insurance companies. However, online marketplaces have emerged as popular platforms in recent years. These marketplaces offer a variety of annuity products from multiple insurance companies, making it easy to compare different annuities and then choose the best fit for your financial goals. 

How to Determine Where to Buy an Annuity

It technically does not matter where you buy an annuity from, as long as you understand the amount of risk you are taking on. When choosing where to buy an annuity, carefully consider the seller’s reputation and their investment track record to determine whether buying an annuity from them would be a safe investment. 

Annuity Ratings Agencies

These rating agencies provide insight into a seller’s financial stability and performance. 

A.M. Best
Standard & Poor’s
Moody’s
Fitch Ratings
National Association of Insurance Commissioners (NAIC)
Insurance Information Institute

Additionally, customer feedback from SmartAsset annuity reviews and the Better Business Bureau can give you a better idea about customer experience, reliability and customer service.

To find the best annuity for you, take into account your unique financial goals and risk tolerance. You can enlist a financial advisor for professional advice, or you can do your own research on who sells annuities. 

Tips for Buying an Annuity

Buying an annuity on your own can be time-consuming and overwhelming if you do not know where to look. These tips can help get you started. 

• Do your research: When buying an annuity, it’s essential to research available types, ratings and reviews to compare your options. 
• Use a comparison tool: Annuity comparison tools on websites like ImmediateAnnuities.com can provide a comprehensive overview of available products, helping you make an informed decision. 
• Seek professional guidance: Consulting with a financial advisor can be invaluable. They can assess your unique financial situation, advise on the type of annuity that best fits your goals and guide you through the buying process. This professional can also explain any potential annuity risks and help you understand the fine print of the annuity contract.
• Know the type of annuity you want: Before looking for the right partner, determine which type of annuity works best for you. Your choice may limit your options for an annuity provider. 
• Ask about fees: Make sure you understand annuity fees early on in the process so you are not surprised later.

Moreover, be aware of the risks associated with buying an annuity from the wrong place, such as financial losses from high fees and the potential for fraud. Always verify the seller’s credentials, and don’t forget the annuity contract is a legally binding agreement, so it’s important to be sure of your choice.

Understanding Annuity Fees and Charges

Annuities can be a useful tool for generating retirement income, but they often come with fees that can significantly affect your returns over time. Knowing exactly how much you need to buy an annuity and how those costs compare across providers can help you make a more informed purchase.

Surrender Charges and Withdrawal Penalties

Most annuities include a surrender period. During this period, you’ll pay a penalty for withdrawing more than a set percentage of your contract value. These surrender charges often start high, sometimes as much as 7% in the first year,¹ and gradually decrease over time. If you think you may need access to your money sooner, be sure the surrender schedule fits your liquidity needs.

Mortality and Expense (M&E) Risk Charges

Variable annuities typically include M&E charges that compensate the insurer for insurance-related risks and administrative costs. These are expressed as an annual percentage of your account value, typically around 1.25%.² Over time, these fees can take a noticeable bite out of your earnings.

Administrative and Investment Management Fees

Administrative fees cover the insurance broker’s ongoing account maintenance costs, while investment management fees apply if your annuity is tied to sub-accounts or investment portfolios. These costs are in addition to any mutual fund or index fund expense ratios, so it’s imperative that you account for the total combined fee. While administrative fees are typically around 0.3% of the value of the annuity, commissions can range from 1% to 8%, depending on the type of product.³

How to Compare Fee Structures Across Providers

Fee structures can vary widely between insurers, even for similar annuity products. Request a breakdown of all costs in writing so you can do an apples-to-apples comparison between providers. Lower fees can help you keep more of your returns, but be sure you are not sacrificing valuable features or financial strength for a lower price.

Can I Buy an Annuity With My 401(k)?

Some employer-sponsored plans, including 401(k)s and 403(b)s, now allow participants to allocate part of their balance toward an annuity. This option gives workers the ability to convert a portion of their retirement savings into a stream of guaranteed income when they leave the workforce. Purchasing an annuity inside a tax-advantaged account can simplify the process, since contributions are already sheltered from taxes until withdrawal.

However, there are distinctions to keep in mind. Annuities purchased through a qualified retirement plan do not provide additional tax deferral beyond what the account already offers, which may reduce their relative advantage compared with buying them outside a retirement account.

Plan options may also be more limited than what you would find on the open market, restricting your ability to shop for the most competitive features or rates. Still, for employees who want predictable lifetime income and prefer the convenience of managing everything within their workplace plan, this pathway can be an appealing choice.

Bottom Line 

Buying an annuity is a significant financial decision requiring careful consideration and research. Take the time to reflect on your financial goals and determine whether they align with your annuity choice. By understanding the types of annuities available, evaluating the sellers and utilizing resources like rating agencies and annuity comparison tools, you can work toward future financial stability. Knowing who sells annuities can help you find the best annuity company and product that fits your needs from a seller you trust.

A financial advisor can help you create the right retirement plan for annuities so you can enjoy guaranteed income.

Tips for Investing

• Deciding the right balance when investing for retirement can be difficult if you don’t have the necessary experience. That’s where the help of a professional, like a financial advisor, can come in handy. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now. 
• When making your investment choices, you can see what various portfolio breakdowns might do to your long-term investment prospects with SmartAsset’s free asset allocation calculator.

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