Best Life Annuity Plans of 2020 Announced by Insuranks This Week

Best Life Annuity Plans of 2020 Announced by Insuranks This Week

Retirement planning has become critical in today’s day and age due to increased life expectancies. Social Security and Pension schemes are no longer enough to last out an entire post-retirement lifetime. This is the reason why many people are now looking at creating alternate revenue streams for retirement. One such revenue stream is life annuity.

In this review, we discuss the top annuities available in the market in 2020. We have also given a brief overview of what annuities are, how they generally work and what needs to be kept in mind while buying annuities. 

The top annuities in the market in 2020 are listed below. Here, we have listed the name of Insurance company, its AM Best Rating, the best annuity plan that that company has on offer, and its customer rating. We have also inserted the link to that plan for your convenience. The AM Best Rating is based on the financial health of the company, and there is a total of 16 possible ratings that can be given. The highest possible rating is A++. Each of the companies listed here have an excellent or better rating.

Brand  AM Best Rating Best Annuity Plans Customer Rating
MassMutual A++ MassMutual Variable Annuity

MassMutual Fixed Index Annuity

MassMutual Index Horizons Annuity

New York Life A++ New York Life Annuities

New York Guaranteed Future Income Annuity

Fidelity Annuity A- Fidelity Fixed Annuity

Fidelity Personal Retirement Annuity

Fidelity Deferred Income Annuity

AIG A AIG Polaris Variable AnnuityAIG Indexed AnnuityAIG Fixed Index Annuity 3.5/5
Symetra A Symetra Advantage Income Immediate AnnuitySymetra Trek AnnuitySymetra Fixed Annuity 3.5/5
Mutual of Omaha A+ Mutual of Omaha Annuity Ultra-Income 4/5

Reviews of the Top 6 Annuities of 2020  

  • MassMutual: MassMutual has an A++ rating from AM Best, and its top annuity plan is the Immediate Income Annuity (MassMutual RetireEase). This annuity costs between $10,000 to $3 million and has numerous customization options. 
  • New York Life: New York Life has an A++ rating from AM Best. Its best annuity plan is the Guaranteed Lifetime Income Annuity II, and the cost of this annuity ranges from $5,000 to $1 million. You also get numerous customization options
  • Fidelity: Fidelity is rated A- by AM Best, and its best product is the Fidelity Personal Retirement Annuity. The minimum cost of this product is $10,000. This is a low-cost plan, and the company states that it has done away with the higher fees by not offering too many customization options. 
  • AIG: AIG is rated A by AM Best, and its best product is the Polaris Variable Annuities. It offers growth potential, optional customization features as well as family protection. 
  • Symetra: Rated by AM Best as A, Symetra’s best product is the Symetra Advantage Income Immediate Annuity. The cost range for this product is $10,000 to $1 million. You get a range of optional features with this plan. 
  • Mutual of Omaha: This company has an A+ rating from AM Best, and its best product is the Mutual of Omaha Ultra-Income plan. The cost ranges from $10,000 to $1 million and it has multiple add-ons. 

Best Annuities Based on Plan Types
 There are many investors who want to know which are the best annuities in each category. Categories refer to the types of annuity plans that are available in the market today, in 2020. Best Fixed Income Annuities The top 3 companies for fixed income annuity plans in 2020 are: 

Annuity Type Brand AM Best Rating Features
Lincoln Fixed Annuity (Single Life) Lincoln MYGuarantee Plus A+ 1.05% APY for first 5 years, Withdrawal Allowance, Death Benefits, Tax-Deferred Savings
Lincoln Fixed Annuity (Joint Life) Lincoln Lifetime Income Advantage 2.0 A+ 4.5% Guaranteed lifetime income at 65 years of age, principal protection, tax-deferred, death benefits, nursing home enhancement from 70+
Principal Financial Fixed Annuity (Joint Life)  Principal Income Annuity A+ Tax-deferred, inflation protection, death benefits, principal protection, limited withdrawals

Best Flexible Annuities for Income The top 4 annuities for flexibility and income are: 

Annuity Type Brand AM Best Rating Features
Global Atlantic Forethought Fixed Indexed Single Life Advisory ForeIncome II  A Withdrawal base growth guaranteed at 8% roll-up every year, interest crediting option, tax deferment, protection against market losses
Athene Indexed Annuity Single Life Athene Ascent Pro 10 Bonus  A Athene annuity death benefit, guaranteed growth, Interest Credits, Premium Bonus, Free Withdrawals, Bailout feature, Terminal Illness and Confinement waivers
American Equity Fixed Index Annuity Single Life American Equity IncomeShield 10  A- Liquidity, Principal Protection, Guaranteed income, tax-deferred growth, may avoid probate
Lincoln Financial Fixed Indexed Annuity Joint Life Lincoln Optichoice 9  A+ Set Interest Rate for 1 year, Interest tied to performance of S&P 500, base interest rate credit, surrender charge 

Best Annuity for Potential Annual Income For a fixed-indexed annuity plan that offers the best chances of high potential annual income, the following are the best deals: 

Annuity Type Brand AM Best Rating Features
Symetra Fixed Indexed Annuity Symetra Advisory Income Edge  A Guaranteed Lifetime Withdrawal Benefit even if withdrawals have reached zero, growth-based interest, credited interest, tax deferred, limited withdrawal, contract cancellation with surrender charges, death benefits, protection against market losses, free-look period
American General Annuity – Fixed Indexed Single Life Power Index Plus Income  A Guaranteed living benefit, growth potential, principal protection, interest credit

Best Variable Annuity for Minimum Guaranteed Annual Income If you’re looking for an annuity plan that offers the potential for higher payouts based on the performance of invested assets, then these ones are the best: 

Annuity Type Brand AM Best Rating Features
Prudential Premier Retirement Variable Annuity Single Life Prudential Premier Retirement  A+ Highest daily lifetime income, Protection against market losses, high growth potential, crediting strategies
Transamerica Variable Annuity Single Life Transamerica Principium III  A+ Investment options, Automatic Asset Rebalancing, Dollar cost averaging, transfers, Annuitization after 3rd policy anniversary
Lincoln Variable Annuity Lincoln ChoicePlus  A+ Options for Growth Potential, Guaranteed Income for Life, Tax Deferral, Optional Benefits, Flexibility of Choosing Risk Level, Death Benefits

What are Life Annuities?

Life annuities (also known as lifetime annuities) are contracts between the buyer (called the annuitant) and an insurance company, where the buyer will be paid a guaranteed income for either the remainder of their life or for a fixed period of time, depending on the type of plan purchased. 

At the end of the day, such an investment allows a person to create an income stream even after they retire.

Life Insurance and Annuities

The difference between life insurance and annuities is simple. While both are long-term financial plans and have death benefits, annuities are protection against longevity (an income stream for the remainder of a person’s life after retirement), while life insurance is protection for the buyer’s dependents against an untimely death.

Why Are Life Annuities So Popular?

After the 2008 financial crises, many investors switched to annuities as a guaranteed income source after retirement. Since then, annuity sales have boomed, reaching their highest levels in 2019. This is because annuities offer their buyers the guarantee of a steady income after retirement, a guarantee that other types of investments cannot match.

Another benefit of buying an annuity plan is the savings on taxes. May investors end up maxing out their 401(k) and IRA tax shelters. This is where annuities can help. Investors can use their annuities to get further tax-deferment.

And finally, since annuities offer investors a guaranteed income, investors can look at more aggressive strategies for the other assets in their portfolio. 

How Do Annuities Work?

Depending on the type of annuity plan, premiums can either be paid in a lumpsum or over a period of time (as would be done for other types of insurance premiums). The good news is that annuity plan buyers do not need to pay premiums indefinitely. Once the contracted amount is paid in the form of premiums, buyers can either start getting their payouts, or they can defer their payouts for a later date.

The time during which a person has to pay premiums is called the accumulation phase. And once those premiums have been paid in full, the payout phase will begin.

The payouts that an annuitant gets is a mix of the principal amount paid, as well as the interest accrued on that amount.

How are the Annuity Payouts Structured?

One of the reasons why annuities are so popular as a retirement option is their flexibility. Annuity plans can be customized to fit any retiree’s needs or requirements. So, a person can choose to get paid a single lumpsum, for a fixed period of time, or even for the rest of their lives.

Buyers can also choose to end payments in the event of their death, or ask for payments to be continued for their heirs after they pass away – for a period of time, at least. This is what is called term certain annuity. It means that an annuitant gets his or her payouts for the rest of their lives, but if they pass away within a certain period of time (say, 10 years from the time the payouts start), then their dependents (or heirs) will continued to be paid that annuity for a specific amount of time. All of these conditions need to be laid out when the plan is being purchased.

Payout amounts are dependent on the annuitant’s life expectancy. So, if the investor has a high life expectancy, then he or she will be paid smaller sums over that period. Because of this, investors should think carefully about when they would like to start getting their payouts.

Annuity payouts can be structured to be paid out monthly, quarterly, annually, or even as a complete lumpsum. Payouts can begin as soon as the premium payment is completed, or be delayed by as much as several decades.

What Are the Downsides to Life Annuity?

Like any product, there are pros and cons to life annuities, and it is best to be aware of the downside of any product before you invest in it.

  • Plans are Permanent and Cannot be Changed

One of the biggest issues with life annuity plans is that they cannot be changed once purchased. All the terms of the annuity plan need to be clearly set before its purchase. There is no way to liquidate or even change the plan once it has been bought.

So, for example, if a person buys and annuity plan when the interest rates are low, later, when the rates go up, the annuitant will not be able to change his or her plan to a better interest rate.

  • The Issue of Life Expectancy

Nothing in life is certain, least of all how long a person will live. So, it is possible that someone buys a life annuity plan for $100,000, but just 6 months later, they die. All that money that person invested in his life annuity will go to waste. However, the good thing is that there is a workaround for this – which we will discuss later.

What Factors Impact Income on Annuities?

It is important to understand the factors that impact the payout before investing in an annuity plan.

  • Interest Rates at the Time of Purchase

The rate of interest that was offered at time a person bought their plan will impact the payout amount. Therefore, it is best to wait for interest rates to be at their highest before purchasing annuities.

  • Life Expectancy

Life expectancy is calculated based on many factors – the annuitant’s age when the payout is to start, their health condition, gender and so on. In fact, the gender of a person has a significant impact on the payout amount. This is because, statistically speaking, women are expected to live longer than men. And because of this, female annuitants are given lower payouts than male annuitants.

If an annuitant has poor health and has a lower life expectancy, this will impact the payout amount. However, if this is the case, then the annuitant can discuss the possibility of a special income quote called impaired annuity.

  • Annuity Payout Plans

The type of plan an annuitant chooses will also impact the amount that is paid out. For example, if the buyer has opted for a straightforward fixed annuity with no frills, then the amount paid out will be a combination of the interest and the principal. However, if the buyer opts for a variable annuity, then, while the principal remains the same, the amount of the return on investment will depend on market conditions.

This article originally appeared on Insuranks, an insurance website that ranks the best insurance companies and plans for the benefit of insurance shoppers and helps them compare and get insurance quotes. 

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