Annuities can be a solid way to secure guaranteed income in retirement. However, they remain notoriously complex, particularly when it comes to comparing fees.
Unlike ETFs or mutual funds, where fees are publicly available and easy to compare, annuities are murky. There’s no widely used, public-facing comparison engine you can use to compare annuities apples to apples — especially across types and providers. That makes it tough to know whether you’re getting a fair deal.
But with the right strategy, you can cut through the noise and zero in on annuities that fit your goals and won’t hit your budget with hidden costs. Here’s how to do it.
How to find the best annuities with low fees
Understanding annuities and comparing them effectively can be difficult. Many different types of annuities exist, and each comes with its own set of rules, fees and benefits.
Unlike other financial products, there’s no one-stop-shop for comparing annuities in a clear, side-by-side format. But by following some key tips, you can make the process simpler and more transparent.
1. Work with a financial advisor
This is one of the fastest and most effective ways to get clarity on what you’re buying — assuming you find a good advisor to work with. Many fee-only financial professionals have access to software platforms like Cannex or Morningstar Annuity Intelligence that aren’t available to the general public.
“I use proprietary software and I also have relationships with insurance companies where I can compare not just the annuity itself but fees, too,” says Nicholas Bunio, CFP and owner of Bunio Consulting. “But there’s not really any tool like that available to the public.”
Good advisors will also evaluate whether an annuity even makes sense for your situation in the first place. They can help you decide between a fixed annuity, an index annuity, a variable annuity or something else entirely. And they’ll tell you when it’s smarter to avoid annuities altogether.
“Personally, I would hire a financial advisor,” says Bunio. “I would not get an annuity on your own.”
One caveat: Not all advisors are fans of annuities. Even certified financial planners (CFPs) vary wildly in their opinions. Some flat-out avoid them. So if you’re considering working with an advisor, ask upfront whether they handle annuities, how knowledgeable they are about the products and how they’re compensated.
Compare advisors: Bankrate’s list of the best financial advisors
2. Work with an insurance agent or broker
Licensed insurance agents can help you comparison shop across multiple carriers if they’re independent. Some agents are “captive,” meaning they only sell products from one company, like New York Life or MassMutual. Others are affiliated with large broker-dealers and can access dozens of insurers.
“While the CFP designation comes with some foundational knowledge on annuities, I find many CFPs to be under-educated on annuities,” says Michael Baker, CFP and founding member of Vertex Capital Advisors.
He explains that even if you’re working with a CFP, that individual still needs to be licensed in order to sell annuities.
“A great question for consumers to ask anyone discussing annuities is ‘What type of annuities are you licensed to sell?’” says Baker. “They’ll need either an insurance license for fixed, fixed index or income contracts, or a securities license to write variable or RILA contracts.”
An experienced broker knows which carriers have competitive rates, which products come with the lowest fees and how different contract riders affect overall cost.
That said, agents often earn commissions based on the products they sell, which can sometimes introduce conflicts of interest. So make sure the agent’s recommendations align with your best interests.
3. Get a free quote from IncomeSolutions
If you’re looking specifically for an income annuity — either a single-premium immediate annuity (SPIA) or a deferred income annuity — IncomeSolutions.com is a solid place to start. It’s an online marketplace where you can compare side-by-side quotes from major insurers without entering a phone number.
The platform incorporates a flat, one-time fee of 2 percent for retail buyers. This fee is clearly disclosed during the transaction process, ensuring there are no hidden costs.
But again, IncomeSolutions only works if you’re shopping for income annuities. (Income annuities prioritize converting a lump sum into regular payments, potentially for life.) If you’re eyeing a variable, indexed or some other type of annuity, this site won’t help you.
4. Compare quotes on your own
If you prefer to take a DIY approach, you can compare quotes independently. This process can be more time-consuming but it’s an option if you’re prepared to invest the effort.
Start by visiting the websites of the best annuity companies, such as MassMutual, Pacific Life, Lincoln Financial, Gainbridge, Nationwide and Allianz.
On their product pages, you’ll find information on the different types of annuities they offer. You can often download brochures or prospectuses with details on each product’s features and fee structures.
Next, examine the fee structures outlined in these documents. Look for the “Fees and Expenses” section in the brochure or prospectus. Pay attention to various types of charges, as well as fees for any optional riders or benefits, such as a guaranteed income rider or death benefit.
It’s also important to consider surrender charges. These penalties are applied if you withdraw funds from the annuity before a specified period, often the first six to eight years of the contract. Some annuities allow you to take out a percentage of your money each year — usually 10 percent — without penalty, but you should always be clear about the terms before you commit.
If the online materials seem insufficient, don’t hesitate to call the insurance company directly and request a “full illustration” or a sample contract. A complete illustration will display all fees, both base and optional, along with surrender charge details and hypothetical scenarios illustrating how fees may impact your returns over time.
What to look for when comparing annuities
Before you compare fees, you need to know what kind of annuity you’re looking at. Here’s a quick breakdown.
Fixed annuities: Pays a guaranteed interest rate for a set period. No annual fees. Best for low-risk tolerance.
Indexed annuities: Returns of indexed annuities are tied to a market index like the S&P 500. Typically caps your returns and protects against downside loss.
Variable annuities: Invests in sub-accounts similar to mutual funds. Higher risk, higher potential returns — and much higher fees.
If your priority is low fees, fixed and multi-year guaranteed annuities (MYGA) are your best bets.
“Fixed annuities and fixed index annuities don’t really have any fees unless you add some type of rider,” says Bunio.
Companies like Gainbridge offer straightforward products with no annual fees — just a penalty if you withdraw early.
On the other hand, variable annuities typically charge between 2 and 3 percent annually, but some no-frills options (like those from Nationwide) come in under 1.5 percent.
Bunio also mentioned RILAs, or registered index-linked annuities, which are deferred annuities tied to a market index like the S&P 500. They offer higher returns than indexed annuities but come with some downside risk, though not as much risk as a variable annuity.
“Those don’t really have fees either,” says Bunio, though he acknowledges that some advisors may charge a small fee in order to make changes to the indexes within the annuity.
“But that’s more of an asset under management fees, not an insurance company fee,” he says. “And some advisors don’t charge that fee at all.”
Key things to consider when comparing annuities
Fees: What are the annual charges? Do they increase over time?
Surrender charges: How long is the penalty period if you need to access your money? What percentage will you be charged?
Insurer financial strength: Choose a highly rated insurance company with a rating of A or better from rating agencies like AM Best or Standard & Poor’s.
Interest rate or index performance cap: For fixed or indexed annuities, this determines how much you can actually earn.
One last thing to watch out for is riders. These optional add-ons — like guaranteed lifetime income, enhanced death benefits or upfront bonuses — often sound great but come at a cost. Only add them if you completely understand what you’re getting and why you need it.
Get matched: Find a financial advisor who can help you maximize your investments
Bottom line
Unfortunately, there’s no one-click way to compare all your annuity options, especially across different types, like fixed, indexed and variable annuities. The most effective route is working with a trusted advisor or annuity broker who can access institutional-grade comparison tools and tailor recommendations to your situation. If you’re going solo, stick to straightforward products like fixed annuities or MYGAs, and avoid anything you don’t fully understand.
Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.
