Where to Buy an Annuity and What to Expect From Each Seller

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

An annuity is a contract you buy from an insurance company that pays you money over time — either when ready or starting at a future date. The place you buy it from depends on how much help you want with the decision and what type of annuity fits your situation. Insurance companies sell directly to consumers, but most people work through a broker, financial advisor, or bank representative who handles the paperwork and explains the terms.

Each route has different costs built in, different levels of guidance, and different people responsible if something goes wrong. Understanding who sells what and how they get paid will help you compare offers fairly.

Key Takeaways

• Insurance companies are the actual sellers of annuities, but most people buy through a broker, advisor, or bank rather than directly.
• Brokers and advisors earn commissions from the insurance company when you buy, which is built into the annuity's cost — you do not pay them separately.
• Banks and credit unions sell annuities but typically refer you to an insurance company or broker for the actual contract.
• Comparing quotes from multiple sellers is standard practice and takes a few days; each quote shows the exact monthly payment or lump sum you will receive.
• You should understand whether your seller is a fiduciary (legally required to act in your interest) or works on commission alone.

Buying directly from an insurance company

Insurance companies that issue annuities include Fidelity, Vanguard, Prudential, Equitable, Principal, Transamerica, and Allianz, among many others. You can contact them directly by phone or website to request a quote. The process is straightforward: you provide your age, the amount you want to invest, and the type of annuity you are interested in, and they calculate what your monthly payment would be.

Buying directly means no middleman commission, but it also means you are responsible for understanding the contract terms yourself. Insurance companies will answer questions, but they are not required to explain whether an annuity is right for your situation or how it compares to other ways to use that money. You get a quote, you read the contract, and you decide. This route works well if you have already researched annuities and know what you want.

Direct purchases typically take one to two weeks from quote to funding. You will need to provide proof of income or assets, sign the contract, and arrange the money transfer. The insurance company handles all the paperwork.

Working with a broker or insurance agent

A broker or insurance agent is a person or firm licensed to sell annuities on behalf of multiple insurance companies. They can show you quotes from several insurers, explain the differences, and help you choose based on your goals. Common brokers include Fidelity, Schwab, E-Trade, and independent firms in your area.

Brokers earn a commission from the insurance company when you buy — typically 3% to 10% of the amount you invest, depending on the annuity type. This commission is built into the annuity's cost; you do not pay it separately out of pocket. The insurance company deducts it before calculating your payment, so you see the net result in your quote. Brokers are required to disclose their commission, though the exact percentage may be buried in the contract details.

The advantage of using a broker is that you can compare multiple insurers' offers in one conversation and get guidance on which product might suit you. The disadvantage is that brokers are typically not fiduciaries — they are not legally required to recommend the option that is best for you, only one that is suitable. Some brokers do operate under a fiduciary standard; you can ask directly whether they are bound by one.

Buying through a financial advisor

A financial advisor — whether at a bank, investment firm, or independent practice — can recommend an annuity as part of your overall financial plan. Some advisors are fiduciaries, meaning they are legally required to act in your interest; others are not. This is a critical distinction and worth asking about before you meet.

Fee-only advisors charge you a flat fee or hourly rate for information and do not earn commissions on products they recommend. Commission-based advisors earn money when you buy an annuity, just like brokers do. Some advisors use both models — they charge a fee for planning but also earn commissions on products. Ask how your advisor is paid before you start.

An advisor can help you think through whether an annuity makes sense for your situation, compare it to other options like bonds or dividend stocks, and coordinate it with your other accounts and insurance. This guidance costs time and money, but it can prevent costly mistakes if you are unsure about your financial picture.

Buying through a bank or credit union

Banks and credit unions often have annuity products available, but they typically do not issue the annuities themselves. Instead, they refer you to an insurance company or broker partner. A bank representative will explain the options, help you fill out paperwork, and submit your process to the insurance company.

The bank earns a referral fee or commission for sending you to the insurance company, which is built into the annuity cost just as it would be with any broker. You may feel more comfortable working through a bank you already know, but the actual contract and payment terms come from the insurance company, not the bank. The bank is a middleman, not the seller.

This route is convenient if you want to handle everything in one place, but it typically costs the same or more than buying directly from the insurance company or through a dedicated broker.

Comparing quotes from multiple sellers

It is standard practice to get quotes from at least three different sources before buying an annuity. Each quote will show the exact monthly payment (or lump sum, depending on the annuity type) you would receive, the contract terms, any fees, and the insurance company's financial rating.

When you request a quote, have the same information ready for each seller: your age, the amount you want to invest, your birth date, and the type of annuity (when ready, deferred, fixed, variable, etc.). This ensures the quotes are comparable. Quotes are usually good for 30 to 60 days, so you have time to think and compare without pressure.

Pay attention to the insurance company's financial strength rating, which you can find through agencies like A.M. Best, Moody's, or Standard & Poor's. A highly rated company is more likely to be around to pay you for decades. Also note whether the quote includes any fees, riders (add-on features), or surrender charges if you need to access your money early.

Understanding commissions and costs

Every annuity has costs built in, whether you buy directly or through a middleman. With a direct purchase from an insurance company, the cost is the difference between what you pay and what the company invests on your behalf — this covers their overhead, profit, and the cost of paying claims. With a broker or advisor, an additional commission is added.

Commissions are not hidden, but they are not always obvious either. A broker's commission might be listed as a percentage in the contract, or it might be reflected in a lower monthly payment than you would get elsewhere. When comparing quotes, the monthly payment or lump sum is what matters most — that is what you actually receive. If one quote is significantly lower than others, ask why before assuming it is a better deal.

Some annuities also charge annual fees for management, riders, or account maintenance. These are separate from commissions and should be listed clearly in the contract. Read the fee section carefully or ask your seller to walk you through it.

What happens after you buy

Once you have chosen a seller and signed the contract, the insurance company will contact you to confirm your identity and the details of your purchase. This typically takes a few days. You will need to fund the annuity — either by transferring money from a bank account, rolling over funds from a retirement account, or sending a check.

After funding, the insurance company will issue a contract document that shows your payment schedule, the amount you invested, any riders you added, and the terms of the annuity. Keep this document safe; you will need it if you ever need to make changes or if you pass away and your beneficiary needs to file a claim.

Your first payment typically arrives 30 to 60 days after funding, depending on whether you bought an when ready annuity (payments start right away) or a deferred annuity (payments start at a future date you chose). The insurance company will send payments by direct deposit, check, or wire transfer, depending on what you set up.

Frequently Asked Questions

Can I buy an annuity online?

Yes, many insurance companies and brokers let you request a quote and start the process online. However, you will likely need to speak with someone by phone to confirm details, answer underwriting questions, and sign documents. Most annuities still require a phone call or in-person meeting at some point in the process.

What if I want to change my mind after I buy?

Most annuities have a surrender period — typically 5 to 10 years — during which you can withdraw your money but will pay a penalty. The penalty usually decreases each year. Some annuities allow you to withdraw a small amount (often 10% per year) without penalty. Read the contract to understand your options before you buy.

Do I need a financial advisor to buy an annuity?

No, but an advisor can help you decide whether an annuity is right for you and how it fits with your other savings and income. If you are confident in your decision and understand the contract terms, you can buy directly from an insurance company or broker without an advisor.

How do I know if a broker or advisor is trustworthy?

Check whether they are registered with the Financial Industry Regulatory Authority (FINRA) or your state's insurance department. Ask whether they are a fiduciary and get that answer in writing. Also ask for references from other clients and compare their recommendations against quotes from other sellers.

What if the insurance company goes out of business?

Each state has a guaranty fund that protects annuity holders if an insurance company fails. Coverage limits vary by state but typically protect up to $250,000 per person per company. Ask your seller about your state's guaranty fund coverage before you buy.