Best Life Annuity Plans (2020)

Retirement planning is more critical than ever before 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 why alternate revenue streams that yield guaranteed income for life after retirement are a good option to consider. One of the best ways to secure a guaranteed income for life are life annuities, also called life insurance annuity and lifetime annuity by some. If you haven't purchased life annuity yet, wait a little more until you read our review of the best life annuity plans in 2020 and then make your choice.

annuity insurance company ratings and specify the best insurance companies for annuities

For your convenience, you will also be able to find information and a brief overview of what annuities are, how they generally work, different types of annuities, definitions, and what needs to be kept in mind while buying annuities. 

Best Life Annuities in 2020

* AM Best Annuity 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 rating or better than that. 

Best Life Annuity Companies of 2020: Reviews

1. Allianz Life Insurance Annuity Plans: Allianz annuities, with A+ AM Best annuity rating,  is outperforming most of the other life annuity plans. Their best annuity plan is Allianz 222 annuity. The minimum premium rates for their annuities start from $10,000.
2. Nationwide Insurance Annuity: Nationwide Annuities, with A+ AM Best annuity rating, A1 Moody's rating and A+ rating from S&P, is among the best annuity plans of 2020. Their best annuity plan this year is the Nationwide Monument Advisor Variable Annuity. Their minimum premium costs start from as little as $300 for their Soloist annuity plan and $2,000 for Nationwide Quatro Select Annuity. A real bargain.
3. Metlife Annuity: Met life annuities and its partner company, Metropolitan annuity, has ranked among the best of 2020 thanks to an A+ AM Best rating and an increasing customer satisfaction from Metlife's pension and annuity services. Metlife insurance's leading annuity plan is Metlife Variable Annuity. Additionally, Metlife's structured settlement annuity is the highest ranked one. With a minimum Metlife and Metropolitan annuity payment of $2,500, a Metlife fixed annuity is one of your best annuity investments in 2020.
   
4. MassMutual Annuities: MassMutual annuity, also called massachusetts mutual annuities, has an A++ (1st of 15) rating from AM Best, and its best annuity plan in 2020 is their Immediate Income Annuity (MassMutual RetireEase). MassMutual RetireEase annuity costs from $10,000 to $3 million and has numerous customization options (either have income for the rest of your life, a set period of time, or both) and no annual fees. When you decide to start getting your payments, you can choose to get paid once a month, 3 month, 6 months or 12 months. RetireEase accepts annuitants aged 90 and younger to the plan. 
   
5. New York Life Annuities: Ranking in the top 5 in our best life annuity list, NY Life Annuities receives a A++ rating from AM Best. The best plan of NYL annuities is any plan in New York Life's variable annuities, and the cost of this annuity ranges from $5,000 to $1 million, with flexible fees. New York Life insurance annuities provides a wide range of customization options and is among the strongest annuity plans provider.
   
6. Riversource Annuities: Riversource annuity rating is among the highest thanks to rising customer satisfaction, flexible annuities, financial stability with A+ (2nd highest) AM Best rating, Aa3 on Moody's(4th of 21) and AA- (4th) on Standard's and Poor's financial rating. Riversource Life Insurance Company's best annuity plan is Riversource Flexible Annuity. With initial premiums starting from $1,000 only, there's no wonder why Riversource is ranked the 5th best annuity plan of 2020. 
7. Fidelity Annuity: Fidelity annuity is rated A- by AM Best, and its best product is the Fidelity Fixed Annuity, shortly before Fidelity Personal Retirement Annuity. With minimum premium cost of $0 and fees that vary for this product (including fidelity variable annuity fees), this is a very low-cost annuity plan, and the company states that it has done away with the higher fees by not offering too many customization options. 
   
8. Reliance Standard AnnuityReliance Standard annuity has made it to our best life annuity of 2020 list thanks to their A+ AM Best rating, their interest rate guaranatee, its safety of principal and the guaranteed lifetime income. Their best annuity plan is Reliance Standard Eleos MVA Single Premium Deferred Annuity (SPDA). However, this product is not for you if you are looking for a high ROI, or planning to access most (or all) of your money during the first few years of the program, with high withdrawal fees until year 6 and forward, which is where withdrawal fees reach 0%.
9. Mutual of Omaha Annuity: Mutual of Omaha has an A+ rating from AM Best. Their best product is the Mutual of Omaha Ultra-Premier annuity plan. Their plan costs ranges from $5,000 to $1 million and it has multiple add-ons. Mutual of Omaha is definitely one of the best annuities of 2020 to benefit from.
10. Great American Annuity: Great American Insurance Group (GAIG) annuities have made it to our list thanks to an A (excellent) AM Best rating to both Great American Life Insurance Company and Annuity Investors Life Insurance Company, its affiliate, as well as increased customer satisfaction ratings. With minimum premium starting from $10,000, most of them without any annual fees, and solid interest rates returns, Great American annuity positions itself as one of the best life annuity plan providers in 2020.
11. 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. 
    
12. Symetra Annuity: Symetra annuity, also misspelled symmetra annuity, is rated A by AM Best. Its best anunity plan 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. 
13. American Equity Annuity: American Equity Annuities have made it to our list due to growing popularity and customer satisfaction, a variety of annuity options to choose from and the excellent American Equity fixed indexed annuity plans. Their plans start from a minimum premium of $5,000 which makes it affordable enough. There are no annual fees on their fixed annuities. Instead, they take withdrawal fees.
    
14. Americo Annuities: Americo ins has a variety of products, including annuities. Americo's best plan is Platinum provider annuity, a deferred income annuity with no annual fees. None of Americo annuities have annual fees and they all range from a $10,000 minimum. Americo annuty plans do have withdrawal charges in case the annuitant withdraws over 10% of their total plan value following the first year of the annuity.

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 of 2020

The best guaranteed income annuity companies for fixed income annuity plans in 2020 and best annuities for lifetime income are:

Best Flexible Annuities for Income of 2020

The best annuities for flexibility and income are: 

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:

Best Variable Annuity for Minimum Guaranteed Annual Income in 2020

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

What are Life Annuities?

Life annuities (also known as lifetime annuities or simply annuities) are financial contracts between the buyer (called the annuitant) and an insurance company, where the buyer will be paid a guaranteed income for life - either the rest of their lives or for a fixed period of time, depending on the type of plan purchased. Annuities are mainly used as an income stream for retirees.

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

What is Cash Annuity?

A cash refund annuity is an amount that the beneficiary receives if the annuitant passed away ahead of getting back payments for their premium investment. It mostly depends on annuity type.

What is an Installment Refund Annuity?

An installment refund annuity is an optional annuity refund that provides the annuitant's beneficiaries a minimum annuity payout amount when the annuitant has passed away.

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 a protection for the buyer’s dependents against an untimely death. Life annuity and insurance complete each other rather than compete with each other.

* Annuity death benefit is a guarantee by the insurance company that if the annuity owner passes away before the end of the contract term, his or her beneficiary will receive at least the money paid until then. 

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 annuity payouts, or they can defer their annuity 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 annuity payout phase will begin. 

The annuity 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 annuity payout 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 annuity 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 annuity 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. 

Annuity 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 annuity payouts. 

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

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 annuity 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 annuity 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 annuity payout is to start, their health condition, gender and so on. In fact, the gender of a person has a significant impact on the annuity payout amount. This is because, statistically speaking, women are expected to live longer than men. And because of this, female annuitants are given lower annuity payouts than male annuitants. 

If an annuitant has poor health and has a lower life expectancy, this will impact the annuity 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 annuity payout amount. For example, if the buyer has opted for a straightforward fixed annuity with no frills, then the annuity payout 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 annuity payout and the amount of the return on investment will depend on market conditions. 

What are the Different Types of Annuities?

Many buyers get put off because of the sheer range of the types of annuities and their permutations and combinations that are offered by insurance companies today. And while we may not be able to cover each of the types and add-ons in detail in this review, we can help our readers by giving them a clearer picture about this subject.  

What is Income Annuity?

Income annuity is a contract that pays out income once the annuity has started. From the moment it is being paid for it is instantly annuitized. Income annuity payments might change at some points, since its income units can be either variable or fixed annuity investments. 

Fixed and Variable Annuities

Annuities are either fixed or variable. And each of these types have more sub-types. 

Fixed Annuity

Fixed annuities are the simplest and most straightforward. With fixed annuities, the annuitant is guaranteed an interest rate for a predetermined amount of time and the principal is protected. At the time of purchasing a fixed annuity, the annuitant has the choice of three annuity payout options:

• One lumpsum amount
• Getting paid for a fixed period of time
• Getting paid for a lifetime.

When interest rates are high, or markets are showing a downward trend, then fixed annuities are the best type to purchase. The best fixed annuity of 2020 is Allianz Fixed Annuity.

Variable Annuity

In Variable annuities, your premium is invested in a range of assets such as stocks, bonds and other money market instruments. These instruments are usually only available to the insurers. 

Therefore, if an annuitant purchases a variable annuity plan, then there is no guaranteed interest rate on annuity payouts. The annuitant will be paid out the returns on investments made. 

There is an upside as well as downside to this kind of an annuity. If the assets in the annuitant’s portfolio have done well, the annuity payouts could be quite high (but capped at a certain limit). However, if the market slumps, then the annuity payouts could be much lower. The silver lining here is that whatever be the case, the principal of the annuity is protected at all times. 

Types of Fixed Annuities

Here are the two types of purely fixed annuities:

Best Fixed Indexed Annuities of 2020

This type of annuity actually looks like a hybrid of a fixed and variable annuity. The purchaser is guaranteed a minimum return, but can also get more than that if the market performs well. This is because this annuity is usually based on global indices such as the S&P 500. The best fixed index annuities of 2020 are Allianz Fixed Index Annuity plans. Worths mentioning: Global Atlantic ForeAccumulation, a Global Atlantic Fixed Index Annuity.

Market-Value-Adjusted Annuity

This type of annuity has two benefits: 

• The annuitant can choose and fix the time period and the interest rate of the annuity
• The annuitant is allowed to withdraw their money before that time period has ended.

Straight Life Annuity

Straight life annuity, also called straight life policy, is an annuity that pays the annuitants until their death. 

Pros:

• Regular guaranteed retirement income that can't be outlived.
• Provides the highest guaranteed for life income amounts from all retirement plans.

Cons:

• Annuitant's spouse doesn't get anything following his/her death.
• If the annuitant dies shortly after retirement, the ROI will be very tiny for all of the earlier years invested to benefit from it in the later days.

Other Types of Annuities

The rest of the annuities that we will talk about can be fixed or variable:

What is Pure Life Annuity?

Pure annuity is an annuity that provides income throughout periods in the life of the annuitant. Pure annuity continues until the death of the annuitant. Pure annuity's premiums are accumulated and produce interests. When the annuitant matures, he or she is permitted to start getting annuity payouts and benefits.

Immediate and Deferred Annuity Plans

With an immediate annuity plan, the annuitant starts getting an income as soon as the premium is paid in full. Such plans are usually purchased closer to retirement. 

In a deferred annuity policy, the annuity payouts can be deferred to a later date. This date can be just a few months or as much as a few decades. Immediate annuities are always a good option to consider.

The best deferred annuity of 2020 is Principal Select Series Annuity, a single premium deferred annuity with market value adjustment and a 3 to 9 years of guaranteed period.

Qualified Longevity Annuity Contract

QLAC, which is also known as Qualified Longevity Annuity Contract, is another types of deferred annuity policy, where the annuitant pays a lump sum to the insurance company, and at a date that was determined in the beginning, the annuitant gets paid back a certain amount per month on a guaranteed basis for the rest of the lives of the annuitant and their spouse (whoever lives longer). 

Pros: 

• You know now exactly how much you get when you retire
• No interest rate risk
• One time payment (upfront)
• No annual fees
• Very easy to understand
• Transparency

The Best Qualified Longevity Annuity Contract of 2020

Massmutual RetireEase is 2020's best Qualified Longevity Annuity Contract. MassMutual RetireEase can be set as a QLAC when the contract is being issued, and enjoys the benefits of all of MassMutual annuities, with A++ (1st of 15) AM Best rating, flexibility, customization options and all the rest of their great perks outlined in this review. 

Advanced Life Deferred Annuity

Advanced life deferred annuity, or ALDA in short, also known as longevity insurance, is a long term deferred annuity which pays out a guaranteed lifetime income in an advanced age. How advance? 75-80 minimum. This lets you have a lot more guaranteed income at age 80-85 than you would normally have.

Annuity Certain

Annuity certain is an annuity investment that provides a minimum amount of guaranteed payments. Annuity certain proceeds throughout the annuitant's life, even in the event that the annuitant lives longer than the amount of payments that are detailed in the annuity certain contract. If the annuitant passes away prior to reaching the minimum number of guaranteed payments, a beneficiary that he or she specified receive the amount of payments left in the contract.

Lifetime and Fixed Period Annuities

Lifetime annuity, as the name suggest, is when the annuity payout continues until the annuitant dies. The annuitant has the choice of buying a single life annuity and a joint life annuity. 

Single Life Annuity

• Single life annuity is an annuity that stops annuity payouts when the annuitant dies, and the remaining sum is kept by the insurance company. Single life annuities are mostly more expensive because the payments continue until the annuitant's death.

Joint Life Annuity

• Joint life annuity, which is also called 'joint and survivor annuity, includes two annuitants (mostly couples, aka you and your spouse). In the event that one of the spouses die, the other will still get the payouts following his/her death to create an ongoing income flow during their retirement. 

In Fixed Period annuities, as the name suggests, you get an annuity payout for a fixed period of time, usually for 10 years. 

Qualified and Non-Qualified Annuities

A qualified annuity is funded using pre-tax dollars and can be funded with an annuitant’s retirement plan such as IRA or 401(k). However, with this plan, all annuity payouts will be taxed at normal rates. 

A non-qualified annuity is funded using after-tax dollars. What this means that the principal paid out will not be taxed, but the earnings will. To figure out how much of the annuity payout is from the principal and how much is from earnings, the insurance company uses a method called exclusion ratio. 

Single Premium and Flexible Premium Annuities

In the Single Premium Annuity (also called Single Purchase Annuity), the annuitant is required to pay a single lumpsum premium. After that, they have the choice of a Single Payment Deferred Annuity or a Single Premium Immediate Annuity. 

The Flexible Premium Annuity is where premiums are paid in installments and are only applicable to deferred annuities. 

EquiTrust Annuity Review

AM Best rating: B++ (Good)

Equitrust IRA (Individual Retirement Plan) is considered a good option overall. EquiTrust Life Insurance Company was founded back in 1966. In 2015, basketball legend Magic Johnson acquired EquiTrust life insurance and became its main shareholder. Other than life insurance, EquiTrust offers fixed annuities, immediate annuities and fixed indexed annuities. 

EquiTrust annuity commissions: Equitrust's annuities do not charge annual fees. It does, however, their MarketTen Bonus Index annuity charges a 1% optional income rider fee per year.

In the years 2 to 10, 1.5% to 10% annuity value withdrawal per year is allowed, given that you are 50 years old or older.