Best Annuity Companies Of 2026

Best Annuity Companies of 2026 Comparison: Best Annuity Companies We compared annuity companies based on their external ratings, minimum investment, product offerings, licensure, complaints, direct premiums sold and capital ratio. Comparison: Annuity Company Financial Strength Ratings We compared annuity companies based on their financial strength ratings, as annuities are long-term investments and it's critical that they honor commitments, like guaranteed lifetime income. Comparison: Annuity Company Minimum Investment & Availability We compared the minimum investment for an annuity at these companies, as well as where each company's annuities are available in the U.S. Comparison: Annuity Company Product Offerings We compared what products each annuity company provides, including the types of annuities and whether they offer immediate or deferred contracts. Consumer Sentiment Index for Best Annuity Companies Forbes Advisor collects consumer sentiment by collecting customer feedback across the internet, using the Consumer Sentiment Index (CSI). This is how real customers described their opinion of the best annuity companies. How Annuities Work An annuity is a contract between you and an insurance company. The type of annuity you choose determines the exact nature of the investment, but generally, an annuity involves you making a payment or series of payments to the company. Then, you receive your contributions and earnings as an income stream. Annuities can be an effective way to secure a future income once you retire. Here are a few pros of annuities: Predictable income. Annuities can provide predictable income payments that are guaranteed for a set period or even the rest of your life. If you choose a joint or spousal annuity option, payments may continue for the lifetime of your spouse or another beneficiary. But this also depends on the specific terms of your contract. Tax-deferred growth. The money stashed in an annuity grows on a tax-deferred basis. That means you don't pay taxes on earnings until you receive annuity payments. Generally, annuity income is taxed at the ordinary level. Death taxes. Depending on the type of annuity you choose, you may be able to name the beneficiary to receive the benefits if you pass away. But this depends on the annuity. Life-only income options, or single-life annuities, only guarantee income for the lifetime of one person. So, make sure you understand the terms of your annuity policy. Common Types of Annuities Fixed Annuity A fixed annuity provides guaranteed income payments based on a set timeline. When you sign up, you will select how many years you want the fixed annuity to last. A typical length is between three to 10 years. The insurance company then guarantees to pay you the annuity interest rate over this period. A fixed annuity could pay you more if the annuity investments earn higher returns. That said, during less profitable years, you might receive at least a guaranteed amount. In other words, there's a guaranteed annual minimal income from a fixed annuity that's not contingent on market performance. Variable Annuity A variable annuity allows you to invest in subaccounts like mutual funds while deferring taxes on your earnings. The growth of the balance you receive depends on the investment performance, though insurers can guarantee a minimum return. But a word of caution, variable annuities typically come with higher fees, and you might be limited when it comes to an early withdrawal. Fixed Index Annuity A fixed index annuity follows the performance of a specific stock market index, like the S&P 500. If the index goes up, then you'll earn more. That said, if the index's performance is weak, then you'll earn less. Fixed index annuities also set a limit on your highest possible gain and loss. It's worth noting that participation rate limits how much you can gain when the index is up. A downside: Stock dividends are usually excluded. Typically, there's also a price floor included, which can act to curb losses. Example of annuity index. With a fixed index annuity contract, it might say you earn a maximum of 8% in a good year, no matter how well the underlying index does. That said, the fixed index annuity could protect you against losses, with a worst-case scenario of a 0% return during market downturns. Income Annuity Income annuities can guarantee a steady income in the future, for a set period or even for life. They can be part of a retirement income strategy and offer tax-deferred growth until benefits begin. How To Choose an Annuity Company Before you purchase an annuity, first think about your goals, timeline and the level of risk you're comfortable with. This will help you narrow down the type of annuity product that will best serve your needs. Working with a broker or financial advisor who represents several insurance companies can help you compare your options and find the best policy for your age, goals and income needs. Aaron Brask, a fiduciary investment advisor and adjunct professor at the University of Florida, recommended working with an independent agent who can provide you with quotes from dozens of insurance companies. This way, you'll be able to compare multiple products and see what makes the most sense for your financial situation. In Forbes Advisor's review process, we placed emphasis on A.M. Best and S&P Global ratings along with Comdex scores. These ratings help you gain an overall picture of an annuity company's financial strength and potential to meet their long-term obligations. That way, you feel a little bit more confident in choosing your annuity provider. Additionally, you should seek out a professional who understands the mechanics of different annuity products, specifically the ones you're considering. Brask recommends avoiding agents with market performances that sound too good to be true. "In most cases, they are trying to sell products that offer various combinations of upfront bonuses and guaranteed performance," he said. Overall, you'll want to pick an annuity company that shows high financial strength and positive consumer ratings from a licensed agent who doesn't present a conflict of interest. Ideally, this agent can show you details on a variety of different annuity products. How to Buy an Annuity Buying an annuity involves selecting a product through a brokerage firm, insurance company, bank, financial advisor or agent. First, you'll need to determine the type of annuity. From defining your goals, you'll need to figure out the type of annuity (e.g., fixed, fixed-income, variable, income) that suits your financial goals. Once you have decided, then you'll need to look for an annuity company that provides that type of product. The next steps generally entail completing an application and then funding the annuity. Funding the annuity might be from a qualified transfer from either a retirement account, such as an individual retirement account (IRA) or 401(k), lump sum payments or periodic contributions.