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Life Health > Annuities

Annuities Now Pay More Than CDs: AnnuityAdvantage

By Allison Bell

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Trends in the gap between what fixed annuity contracts pay holders and what comparable bank certificates of deposit pay are moving in the annuity issuers’ favor, according to AnnuityAdvantage.

(Related: Consider Fixed Annuities for Your Client’s Fixed-Income Portfolio) 

The Medford, Oregon-based company runs an annuity sales website. It tracks 290 annuity contracts from 35 insurers.

The highest-paying 3-year contract now offers a 2.1% crediting rate, and the highest-paying 5-year contract offers a 3.15% crediting rate, the firm says.

That compares with top CD rates of 2% for a 3-year CD, and just 2.4% for a 5-year CD, according to BankRate.com.

AnnuityAdvantage says, in a discussion of the rate comparison aimed at consumers, that the full gap in performance is much bigger than the top-rate figures suggest.

The firm points out that a consumer who holds a CD outside a retirement account must pay taxes on interest earnings every year.

A consumer who holds an annuity can defer paying taxes on interest until the consumer starts to take withdrawals, the firm says. 

— Read Annuity Sales May Be Starting to Firm Up: Wink on ThinkAdvisor.


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