What Is an Annuity?
An annuity is a contract with an insurance company. You pay a lump sum or a series of payments, and the insurer agrees to grow that money, pay it back to you as income, or both.
Types of Annuities
- Fixed annuity (MYGA): Earns a guaranteed interest rate for a set number of years. Learn about fixed annuities.
- Fixed indexed annuity: Credits interest based partly on a market index, with a floor that protects your principal from index losses.
- Immediate income annuity: Turns a lump sum into income that starts within about a year.
- Deferred income annuity: You buy now and income starts years later, which usually means larger payments.
- Variable annuity: Invested in market subaccounts and regulated as a security. Golden Shield Life Insurance focuses on fixed and fixed indexed annuities.
What Is a Fixed Annuity?
A fixed annuity is an insurance contract that pays interest at a guaranteed rate for a specified period. It allows your money to grow without direct exposure to stock market losses.
A multi-year guaranteed annuity, also known as a MYGA, typically offers a fixed interest rate for several years. These products are commonly used for retirement savings and predictable interest earnings.
Benefits of Fixed Annuities
- Guaranteed Interest Rates: Your interest rate is locked in for the guaranteed period.
- Tax-Deferred Growth: Earnings generally accumulate without annual income taxes until withdrawn.
- Principal Protection: Contractual protection against direct stock market losses.
- Predictable Returns: Calculate potential growth based on the guaranteed rate.
- Flexible Terms: Choose from available contract lengths.
- Retirement Income: Some contracts offer lifetime or scheduled income options.
- Beneficiary Benefits: Available death benefits may transfer contract value to your beneficiaries.
Guarantees are backed by the issuing insurance company's claims-paying ability.
How Do Annuities Work?
Annuities work by allowing you to deposit money into an insurance contract that earns interest or provides retirement income.
With a fixed annuity, the process is straightforward.
Choose Your Investment Amount
Start with $25,000 or more using our annuity calculator. Compare how different deposits affect your potential earnings.
Compare Interest Rates and Terms
Select a guaranteed interest period that fits your plans. Different insurance companies offer different rates, terms, and withdrawal options.
Earn Interest Over Time
Your savings accumulate interest according to the contract. Many fixed annuities offer compound interest, allowing your earnings to generate additional interest.
Decide What Happens at the End
When the guarantee period ends, you can review the contract's options for withdrawing funds, renewing, or selecting an available income arrangement.
You choose the amount and investment period. The insurance contract determines the guaranteed rate and available benefits.
What Is the Downside of an Annuity?
The biggest downside is access. An annuity is built for money you will not need for several years, and taking out more than the contract allows can cost you.
- Surrender charges: Withdrawals above the free amount during the surrender period can trigger a charge, and some contracts add a market value adjustment.
- Money is tied up: Most fixed annuities lock your deposit for the full guarantee period, often 3 to 10 years.
- Taxes when you withdraw: Interest is taxed as ordinary income when you take it out, and withdrawals before age 59½ may add a 10% federal tax penalty.
- Inflation: A fixed payment buys less over time unless the contract includes an increasing income option.
- Not FDIC insured: Guarantees depend on the insurance company's financial strength, so the insurer's rating matters.
- Income annuities give up flexibility: Once lifetime income starts, the deposit usually cannot be withdrawn as a lump sum.
Are Annuities a Good Investment?
They can be, for the right money. Fixed annuities fit people who want predictable interest, tax-deferred growth, and protection from direct stock market losses on savings they will not need right away.
They often earn higher guaranteed rates than bank CDs and savings accounts. They are a poor fit for emergency savings or money you may need in the next few years.
Fixed Annuity vs CD
Fixed annuity compared with a bank CD| Feature | Fixed annuity | Bank CD |
|---|
| Interest Rate | Contractually guaranteed | Fixed for CD term |
|---|
| Tax-Deferred Growth | Generally yes | Generally no |
|---|
| Principal Protection | Insurer guarantee | FDIC coverage within limits |
|---|
| Early Withdrawal | Possible surrender charges | Possible withdrawal penalty |
|---|
| Retirement Income Options | Available | Not standard |
|---|
Fixed annuities work especially well when you have savings you will not need right away and want to earn a predictable rate over several years.
However, accessing money early can result in surrender charges or market value adjustments. Annuities are not FDIC insured.
Best Annuity Companies: Compare Rates and Benefits
The best annuity company isn't necessarily the one advertising the highest interest rate. Financial strength, contractual guarantees, withdrawal flexibility, and available benefits also matter.
Compare these five-year fixed annuity products from our November 2026 reference sheet.
Five-year fixed annuity examples, November 10, 2026| Insurance company | Example rate | Financial strength rating |
|---|
| Revol One Financial | 6.35% | B++ |
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| Sagicor Life | 6.20% | A |
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| Axonic Insurance | 6.15% | A- |
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| Athene | 6.05% | A+ |
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| Global Atlantic | 6.00% | A |
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| Protective Life | 6.00% | A+ |
|---|
Rates and financial strength ratings are historical reference information and should be verified before purchase. Eligibility, minimum deposits, and withdrawal provisions vary.
Can You Withdraw Money From a Fixed Annuity?
Yes. Many fixed annuities provide withdrawal options before the guarantee period ends.
Depending on the contract, you may have access to annual interest earnings or a percentage of your account value. Some products offer optional benefits related to nursing home confinement, terminal illness, or enhanced death benefits.
Certain options can affect the interest rate you receive. Withdrawals beyond permitted amounts may trigger surrender charges.
Compare the guaranteed interest rate and access to your money together before selecting a contract.
AM Best Annuity Company Ratings Explained
An insurance company's financial strength matters just as much as the interest rate it offers. AM Best evaluates insurers based on their financial condition and ability to meet obligations, including annuity guarantees and retirement income payments.
What Do AM Best Ratings Mean?
AM Best financial strength ratings| AM Best rating | Financial strength |
|---|
| A++ / A+ | Superior |
|---|
| A / A- | Excellent |
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| B++ / B+ | Good |
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| B / B- | Fair |
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| C++ / C+ | Marginal |
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How Are Insurance Companies Rated?
AM Best evaluates an insurance company's financial reserves, profitability, business performance, and risk management to determine its financial strength rating.
Does a Higher Rating Mean a Safer Annuity?
A higher AM Best rating indicates a stronger assessment of an insurer's financial ability to meet its obligations. However, no rating eliminates financial risk.
For example, an annuity offering 6.35% from a B++ rated insurer may earn more than one offering 6.00% from an A+ rated insurer, but the A+ company has the stronger financial strength rating.
Compare annuity rates, company ratings, and contract benefits together before choosing where to invest your money.
Annuity FAQs
What is an annuity?
An annuity is an insurance contract designed to accumulate savings, provide retirement income, or both. Fixed annuities offer contractual interest guarantees.
What is a fixed annuity?
A fixed annuity earns interest at rates set by the issuing insurance company. A MYGA guarantees a fixed rate for a specified period.
How do annuities work?
You deposit money into an insurance contract, earn interest according to its terms, and later choose from available withdrawal, renewal, or income options.
What are annuity rates today?
On our November 10, 2026 Georgia rate sheet, the highest fixed annuity rates ranged from 5.15% for a 2-year guarantee to 6.35% for 5-year and 10-year guarantees. Rates change often and depend on the deposit amount, company, and state.
How are fixed annuity rates determined?
Insurance companies set rates based on investment conditions, contract length, product features, deposit amounts, and company pricing.
How do I find the highest annuity rates?
Compare fixed annuity quotes from multiple insurance companies using the same investment amount and contract length. Review withdrawal features and financial strength alongside the rate.
How much interest can a fixed annuity earn?
A $100,000 annuity earning 6.35% annually would accumulate approximately $36,047 in interest over five years, assuming compound interest and no withdrawals or charges.
How much does a $100,000 annuity pay per month?
Based on the lifetime income illustrations on this page, a $100,000 annuity bought at age 65 could pay about $665 a month for life if income starts right away, or about $1,601 a month if income starts 10 years later. At age 60 the immediate amount is about $600 a month, and at age 70 it is about $718.
How much will a $300,000 annuity pay per month?
Using the same illustrations scaled to a $300,000 deposit, lifetime income starting right away could be about $1,800 a month at age 60, $1,995 at age 65, and $2,153 at age 70. Waiting 10 years to start income at age 65 could raise it to about $4,804 a month. Actual amounts come from an insurer quote.
What is the downside of an annuity?
Your money is tied up for years, withdrawals above the free amount can trigger surrender charges, interest is taxed as ordinary income when withdrawn, fixed payments lose buying power to inflation, and annuities are not FDIC insured.
Who should not buy an annuity?
An annuity is usually a poor fit if you may need the money within the next few years, do not yet have an emergency fund, carry high-interest debt, or would be putting in most of your savings. People who want full market growth or need easy access to their cash are often better served elsewhere.
When should I consider an annuity?
Consider an annuity when you have savings you will not need for several years and want a guaranteed rate, or when you are nearing retirement and want income you cannot outlive. Many people look at annuities in their 50s and 60s, after building an emergency fund and maxing out workplace retirement plans.
Who provides annuities?
Annuities are issued by life insurance companies. They are sold through licensed insurance agents and brokers, banks, and financial advisors. An independent broker like Golden Shield Life Insurance compares annuities from multiple insurance companies instead of offering only one.
What are the different types of annuities?
The main types are fixed annuities (including MYGAs), fixed indexed annuities, immediate income annuities, deferred income annuities, and variable annuities. Fixed and fixed indexed annuities protect your principal from market losses, while variable annuities are invested in the market.
Are annuities a good investment?
They can be, for the right money. Fixed annuities suit savings you will not need for several years when you want guaranteed interest, predictable growth, and tax deferral. They are not a good place for emergency funds.
Are fixed annuities guaranteed?
Fixed annuities provide contractual guarantees supported by the issuing insurance company's financial strength and claims-paying ability.
Can you lose money in a fixed annuity?
Fixed annuities protect against direct stock market losses, but early withdrawals, surrender charges, and certain adjustments can reduce the amount received.
Are annuities FDIC insured?
No. Fixed annuities are insurance products and are not FDIC insured. Limited protections may be available through state guaranty associations.
Aaron Polk
Aaron Polk founded Golden Shield Life Insurance after a 2007 accident showed him how fast a steady life can change. A former national medical underwriter, he is a licensed independent agent in Atlanta who compares 130+ carriers to find coverage that fits.
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