The Quiet Money Machine^™ Quick Quote

A contract with an insurance company. You safely transfer over a lump sum (like a 401(k) balance), and the company puts a guarantee in writing: either for a rate of interest for a set number of years, or a payment that arrives as long as you live. Or, a combination of benefits with carefully selected contracts.

But the type matters more than the word does. It covers products that behave nothing alike: some are built to give the money back with interest on a date you choose (MYGA), others to keep paying you and never give it back (Immediate), and still others can pay you for life while leaving money you don’t spend to your heirs (FIA). They are made for different jobs, so knowing “which is which” is most of the decision.

A contract where the interest you earn is tied to a market index instead of a fixed rate. In a year the index rises you are credited a share of the rise. In a year it falls you are credited nothing, and the account does not go down with it.

That floor is the whole point of the product. You give up some of the upside of being in the market, and in exchange you never have a losing year.

A Guaranteed Lifetime Withdrawal Benefit, also known as an “income rider.” The rider is optional and can be added to a Fixed Index Annuity (FIA). The benefit is that you may typically receive a much higher income rate than any bond, contractually guaranteed for life with no market interruption, even if the account balance is eventually emptied. This income certainty can allow you to make a plan for both you and your spouse. Rather than experiencing losses that can come from bond mutual funds, you are protected.

The income can start immediately with some annuities, but typically you “defer” your income start date for one year or longer. The longer you “defer”, the higher your income will be when you start because it is age-based. (The older you are the higher the income—like Social Security.) Result: The GLWB helps you combine principal protection with long term income certainty. The income is guaranteed while at the same time, your principal is protected against market loss. Key benefit: You can turn your IRA into a joint income for life for both you and your spouse, contractually guaranteed.

The insurance company fixes a rate of interest for a set number of years, commonly two to ten, and on the day the term ends the balance is a number you could have written down when you signed. There is no market to watch and nothing to rebalance.

It works much the way a bank CD works, with two differences: the interest compounds tax deferred until you take it out, and the guarantee rests on the carrier rather than on the FDIC.

A MYGA hands the money back with interest when the term is up, so you know the figure and you know the date. An FIA with a GLWB has no date: it pays every year for as long as you live, and whatever account value is left when you die goes to the people you named.

So the choice is not really about which one pays more. It is about whether the gap you are filling has an end to it.

The insurance company itself, rather than the FDIC. That is why an AM Best strength rating sits on every row of the table, and why the calculator lets you set a floor for it before you see a single figure.

Every state also runs a guaranty association that covers annuity contracts up to a limit if a carrier fails. The limits differ by state and are worth knowing.

It is a grade for whether the insurer can still pay you decades from now. The letters in the table above come from AM Best, which has graded insurance companies for more than a hundred years. The grade says nothing about how much the annuity pays. It says whether the company behind the promise is built to keep it.

A company with no grade is not a weak company. It is one AM Best has not rated. Setting a minimum rating leaves those carriers out, because an ungraded carrier has no honest place on a ladder of grades. Show me everything brings them back in.

Four things, weighed together: how much the company holds against what it owes, whether it earns money year after year, how steady its business is, and how carefully it handles risk. AM Best reviews the grade at least once a year, so a company can move up or down. Standard & Poor's and Moody's grade insurers too, and an A from one is not the same as an A from another.

A rating is an outside opinion on whether an insurer can still pay you in thirty years. Weaker companies often offer more, because a higher number is how they compete for your money. Stronger ones can offer less and still fill their books. Your minimum rating decides which of them you see, so lowering it shows you what strength costs before you decide.

On a guaranteed-rate contract, no. There is no management fee and no advisor fee, and the rate you are shown is the rate that compounds.

An income rider is where a charge usually appears. It comes out of the account value each year, and it is what buys the payment being guaranteed for life however long you live. Surrender charges are a separate thing again, and only apply if you take out more than the contract allows before the term is up.

Whatever is left goes to the people you name, and because they are named in the contract it passes to them directly rather than through probate. On a joint income contract the payments carry on for your spouse for as long as they live.

No. The results appear on this page. If you want a copy sent over you can ask for one after you have seen them, and if you would rather talk one of the rows opens a booking form. Neither is required to see a figure.

They come from carrier filings and are refreshed regularly. The date the figures were filed is printed under the table. Rates move, so a figure you saw last month may not be the figure today.

It depends entirely on the contract. Some let you take a set amount out every year without penalty. Some hold the money until the term ends and pay a higher rate for doing it. The Can take out column on the table says which is which, so the trade sits next to the rate rather than in the small print.

Sit down with a Certified Annuity Specialist^®. The two products solve different problems, and which one fits depends on things no rate table has asked you about: what else pays you every month, when you want work to become optional, and who the money has to look after besides you.

Steve holds that designation alongside the Accredited Investment Fiduciary^® mark, and the fifteen-minute Income Clarity Call is where that conversation starts.