2026 Comparison
Annuity vs CD
vs Money Market
Guaranteed rates up to 5.55% — with tax-deferred growth that compounds faster than CDs.
Side-by-Side Growth Calculator
CD/MMF/savings returns adjusted for annual federal income tax (22% bracket). Annuity grows tax-deferred.
Fixed Annuity
$131,006
5.55% · Tax-deferred
+$31,006
CD
$118,826
4.50% · Taxed annually
+$18,826
Money Market Fund
$120,175
4.80% · Taxed annually
+$20,175
Savings Account
$103,961
1.00% · Taxed annually
+$3,961
Illustration only. Annuity rate based on current top market rate (5.55%). Tax calculation assumes 22% federal bracket. Actual results will vary. Consult a tax advisor.
Detailed Feature Comparison
| Feature | Fixed Annuity | Bank CD | Money Market |
|---|---|---|---|
Interest Rate (2026) | Up to 5.50% APY — guaranteed | 3.50%–4.75% APY — varies by bank | 4.00%–5.00% — variable, not guaranteed |
Principal Protection | 100% guaranteed by insurance carrier | 100% — FDIC insured up to $250k | Not FDIC insured — may 'break the buck' |
Tax Treatment | Tax-deferred growth — pay taxes only on withdrawal | Interest taxed every year as ordinary income | Dividends taxed every year |
Liquidity | 10% penalty-free withdrawal/year; surrender charges apply | Early withdrawal penalty (typically 3–12 months interest) | Fully liquid — withdraw anytime |
Rate Lock Period | 3–10 years — guaranteed for the full term | 3 months–5 years — rate locked for term | No lock — rate changes daily |
FDIC / Government Insurance | Not FDIC — backed by state guaranty associations ($250k–$500k) | FDIC insured up to $250,000 per bank | Not FDIC insured |
Minimum Investment | Typically $10,000–$25,000 | Often $500–$1,000 | Often $1,000–$3,000 |
Death Benefit | Full account value paid to named beneficiary, avoids probate | Passes through estate unless POD designated | Passes through estate |
Who Should Choose What?
Fixed Annuity Is Best If…
- You want the highest guaranteed rate
- You want tax-deferred growth
- You won't need the money for 3–10 years
- You want a named beneficiary + probate avoidance
- You have over $250k and want diversified protection
CD Is Best If…
- You want FDIC insurance
- You prefer a bank relationship
- Your investment is under $25,000
- You need easy renewal/rollover options
MMF/Savings Is Best If…
- You need full liquidity at all times
- This is your emergency fund
- You may need the funds within 12 months
Frequently Asked Questions
Are fixed annuities safer than CDs?
Both are very safe. CDs are FDIC insured up to $250,000 per bank. Fixed annuities are backed by the insurance carrier's financial strength and state guaranty associations (typically $250,000–$500,000). For amounts over $250,000, annuities can actually provide broader protection.
Why do annuities pay higher rates than CDs?
Insurance companies invest in long-duration bonds and mortgages that yield more than what banks need to offer. The tradeoff is a surrender period (typically 3–10 years) where early withdrawals may incur charges.
Is a money market fund the same as a savings account?
No. A money market fund (MMF) is an investment fund — not FDIC insured — that invests in short-term debt. A savings account is a bank deposit that is FDIC insured. Both offer easy liquidity but neither grows as fast as a fixed annuity.
Can I move my CD into a fixed annuity?
Yes! When your CD matures, you can roll the proceeds into a fixed annuity to lock in a higher rate. If you're using IRA funds, a direct rollover keeps the money tax-deferred. Our agents can help coordinate the transition.
How does tax deferral make annuities better than CDs?
With a CD, you pay income tax on interest every year — reducing your compounding base. With a fixed annuity, earnings compound untaxed until withdrawal. Over 10 years, this can add tens of thousands of dollars to your balance.