Where to Buy an Annuity and Who Sells Them

You can buy an annuity from insurance companies, banks, brokerage firms, and financial advisors

An annuity is a contract sold by an insurance company, and you buy it through the company itself, through a bank, through a brokerage firm, or through a financial advisor who represents one or more insurance carriers. The seller you choose affects the products available to you, the fees you pay, and the support you get during the buying process. Most people do not buy directly from an insurance company website; instead, they work with an intermediary who can explain options and handle paperwork.

The four main channels — insurance companies, banks, brokerages, and advisors — overlap in practice. A bank may sell annuities underwritten by an insurance company. A brokerage may employ advisors who sell annuities. An independent financial advisor may have contracts with multiple insurers. Understanding who you are actually buying from matters because it determines what products you see and what happens if you have questions later.

Key Takeaways

• Insurance companies underwrite all annuities, but most people buy through a bank, brokerage, or advisor rather than directly from the insurer.
• Banks and brokerages typically offer annuities from multiple insurance carriers, while an advisor may represent one company or several.
• The person selling you the annuity may earn a commission that is built into the price, so the same annuity may cost different amounts depending on where you buy it.
• You will need to provide income and asset information, and some annuities require a medical exam or financial underwriting before the contract is issued.

Buying directly from an insurance company

Insurance companies that sell annuities include Fidelity, Vanguard, Schwab, Equitable, Principal, Prudential, Transamerica, and many others. You can visit their websites, call their phone lines, or request a meeting with a company representative. Buying directly means you are working with the insurer's own sales staff or website, not an intermediary.

The advantage of buying directly is that you see the company's full product line and there is no middleman commission layered into the price. The disadvantage is that you see only that one company's products. If you want to compare an annuity from Fidelity to one from Vanguard, you have to contact both companies separately. Direct sales also require you to do more of the legwork yourself — reading product materials, asking questions, and submitting paperwork without guidance from someone trained to explain the contract.

Most insurance companies require you to open an account on their website or by phone before you can purchase. You will provide personal information, income, assets, and the amount you want to invest. Some companies underwrite the annuity when ready; others may request tax returns or conduct a phone interview before issuing the contract.

Buying through a bank

Banks sell annuities through their investment or wealth management divisions. If you have a relationship with a bank already, you may see annuities offered alongside CDs, mutual funds, and other products. Banks typically partner with one or more insurance companies and sell those companies' annuities under the bank's brand or the insurer's brand.

The benefit of buying through a bank is convenience — you work with someone you may already know, and the process fits into your existing banking relationship. Banks also tend to have compliance and customer service infrastructure in place. The limitation is that you see only the annuities the bank has chosen to offer, which may be a narrow selection compared to the full market.

Bank annuity sales staff are usually licensed and trained, but they are not required to recommend the product that is best for you — only one that is suitable. This is an important distinction. Ask the bank representative which insurance companies they work with and whether they can show you products from more than one carrier if you want to compare.

Buying through a brokerage firm

Brokerage firms like Fidelity, Schwab, E-Trade, and Merrill Lynch sell annuities as part of a broader investment platform. You can browse annuities online, compare products from multiple insurance companies, and execute the purchase through your brokerage account. Some brokerages employ advisors who can walk you through the process; others are self-directed platforms where you make the choice yourself.

Brokerages typically offer a wider range of annuities than banks because they have relationships with many insurance carriers. You can see fixed annuities, variable annuities, indexed annuities, and when ready annuities all in one place. The brokerage handles the paperwork and coordinates with the insurance company on your behalf.

One thing to understand: brokerages earn commissions on annuity sales, and those commissions are built into the product price. You do not pay a separate fee, but the cost to you is higher than it would be if you bought directly from the insurer and paid no commission. Ask the brokerage what commission rate applies to the annuity you are considering, because rates vary by product type and carrier.

Buying through a financial advisor

A financial advisor — whether independent, working for a bank, or employed by a brokerage — can help you decide whether an annuity fits your situation and which type makes sense. Advisors have access to annuity products from one or more insurance companies, depending on their licensing and business relationships. Some advisors represent only one insurer; others can shop among several.

The advantage of working with an advisor is guidance. An advisor can explain the contract terms, discuss tax implications, and help you think through whether the product matches your goals. The disadvantage is that advisors earn commissions, which means they have a financial incentive to sell you an annuity even if you might not need one. Ask your advisor upfront which insurance companies they represent and whether they are compensated by commission, flat fee, or both.

If your advisor is a fiduciary, they are legally required to put your interests ahead of their own. If they are not a fiduciary, they only have to recommend a suitable product, not the best one for you. Ask directly: "Are you a fiduciary in this transaction?" The answer matters.

What to compare when shopping for an annuity

Regardless of where you buy, you will see differences in price, features, and guarantees across products. An when ready annuity that pays you $500 per month from one company may cost a different lump sum than the same payout from another company, even though the payout is identical. This is because insurance companies use different mortality tables, interest rate assumptions, and expense structures.

When you are comparing annuities across sellers, ask for the same information from each: the monthly or annual payout (for when ready annuities), the may provide rate and term (for fixed annuities), the fees and underlying fund options (for variable annuities), and the participation rate and cap (for indexed annuities). Write these down side by side so you can see the actual differences, not just the sales pitch.

Also ask about the insurance company's financial strength. Ratings from agencies like A.M. Best, Moody's, or Standard & Poor's tell you how likely the company is to pay your annuity when it comes due. A lower price is not a good deal if the company issuing it is financially weak.

The role of commissions and fees in where you buy

Annuity commissions are paid by the insurance company to whoever sells you the contract. You do not write a separate check for the commission, but it is built into the price you pay. Commissions on annuities range widely — from less than 1 percent on some when ready annuities to 10 percent or more on some variable or indexed annuities.

This means the same annuity can cost you different amounts depending on where you buy it. If you buy directly from the insurance company, there is no commission, so the price is lower. If you buy through an advisor who earns a 6 percent commission, that cost is embedded in what you pay. Over time, especially on a large purchase, commission differences add up.

Some advisors and brokerages also charge ongoing fees — a percentage of your account balance each year, or a flat annual fee. Ask whether the annuity you are considering has ongoing fees beyond the initial commission. For when ready annuities, there are usually no ongoing fees. For variable and indexed annuities, ongoing costs are common and should be disclosed clearly.

Frequently Asked Questions

Can I buy an annuity online without talking to anyone?

Yes, some insurance companies and brokerages allow you to purchase annuities entirely online. You fill out an process, provide financial information, and complete the purchase through the website. However, most people benefit from at least one conversation with a representative who can answer questions about the contract terms and make sure you understand what you are buying.

Do I need a financial advisor to buy an annuity?

No, you can buy an annuity directly from an insurance company or through a brokerage without an advisor. However, an advisor can help you understand whether an annuity is right for your situation and which type fits your needs. If you choose to work with an advisor, ask whether they are a fiduciary and how they are compensated.

What information do I need to provide to buy an annuity?

You will need to provide your name, Social Security number, date of birth, income, assets, and the amount you want to invest. Some annuities, particularly when ready annuities, may require additional underwriting or a medical exam. The insurance company uses this information to assess risk and determine whether to issue the contract.

Can I compare annuities from different companies easily?

Comparing is possible but requires effort. You have to contact each company or seller separately and request the same information from each — payout amounts, rates, fees, and guarantees. Writing the details down side by side helps you see the real differences. Brokerages make this easier because they show multiple products in one place, but you still need to read the fine print carefully.

What happens if I buy an annuity and change my mind?

Most annuities have a free-look period, usually 10 to 30 days, during which you can cancel the contract and get your money back without penalty. The exact length varies by state and product. After the free-look period ends, you may face surrender charges if you withdraw money early, depending on the type of annuity you bought.