What is an annuity rate?

An annuity rate is the percentage by which an annuity grows each year. Annuity rates are determined by insurance companies. The annuity return rate depends on how much money is invested, how the interest is credited and the length of the contract. Insurance companies set annuity rates and may determine a guaranteed rate for a set period.

How much do annuities cost?

Annuity fees can vary widely. Variable annuities, for example, may charge 1.5 to 3 percent a year in administrative fees, mortality expenses and investment fund expenses. Meanwhile, a type of fixed annuity called a multi-year guaranteed annuity shares similarities with a bank CD, and typically doesn’t have any annual fees.

Why are annuity rates so difficult to compare?

Annuity rates are tricky to compare because, as previously mentioned, different types of annuities earn interest in different ways. For example, traditional fixed annuities guarantee an interest rate for a one-year term, whereas other fixed annuities guarantee rates for anywhere from three to 10 years.