40% Return Annuity
What if you could lock in a guaranteed 40% return on your retirement savings—without the risks of the stock market? The 40% Return Annuity delivers exactly that. By combining guaranteed growth with principal protection and index-linked potential, this annuity gives retirees and conservative investors the confidence that their money will grow steadily, no matter what happens in the markets.
This annuity ensures that your premium grows to at least 140% of its original value after 10 years. That means a $100,000 deposit is guaranteed to grow into $140,000—with no risk of market loss, plus additional upside potential from index strategies.
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How the 40% Return Works
The 40% Return Annuity uses a vesting schedule that grows your deposit by 4% per year, reaching a guaranteed 40% increase after 10 years. Regardless of market conditions, this feature ensures your retirement savings grow with certainty.
- Example: A $250,000 deposit is guaranteed to be worth $350,000 after 10 years.
- Legacy Value: In the event of death, your beneficiaries can access a boosted benefit that reflects the guaranteed return.
- Upside Potential: In addition to the 40% guarantee, index-linked options may grow your account further.
If you are mostly focused on guaranteed income and want payments that can rise to help offset inflation, you might also compare this strategy with designs such as a single premium immediate annuity (SPIA) with inflation protection or a single premium deferred annuity (SPDA) with inflation protection, which are built more around predictable, inflation-aware income streams.
Benefits of the 40% Return Annuity
- Guaranteed Growth: Know exactly how much your deposit will be worth after 10 years.
- Market Protection: Your savings are shielded from stock market losses.
- Tax-Deferred Compounding: Earnings grow without being taxed until withdrawn.
- Liquidity Features: Access a portion of your funds annually after year one, with nursing home and terminal illness riders included at no cost.
- Income Potential: When paired with an income rider, the boosted account value results in higher lifetime payments.
Case Example
John, age 58, deposits $400,000 into the 40% Return Annuity. By age 68, his account is guaranteed to be worth at least $560,000. This enhanced value gives him the confidence to plan for lifetime income, knowing his payouts will be based on a larger guaranteed amount. If he chooses not to use the funds during his lifetime, his heirs still benefit from the 40% guaranteed return through an enhanced legacy payout.
If John’s $400,000 were currently sitting in an employer or qualified plan, he could explore moving it via a direct transfer strategy, whether that is from a deferred compensation plan, a Keogh plan, or a 457(b) plan, depending on how his retirement benefits are structured.
Who Is the 40% Return Annuity For?
- Pre-Retirees: Those who want to secure predictable growth before stepping away from work.
- Retirees: Seeking peace of mind with guaranteed income options and market protection.
- Conservative Investors: Anyone who values safety and predictable returns over speculation.
- Legacy Planners: Families interested in leaving a stronger inheritance.
Comparison to Other Annuity Options
The 40% Return Annuity is unique because of its built-in guaranteed return. But it’s worth comparing alongside other options:
- Fixed Annuities – Guarantee interest rates for specific terms.
- Bonus Annuities – Provide upfront boosts to your deposit.
- Income Annuities – Turn savings into guaranteed lifetime paychecks.
Larger savers who are evaluating whether to commit substantial assets to an annuity often want to see real dollar examples of what their premium can generate. If you are thinking about putting a significant amount into guaranteed income, you may find it helpful to review scenarios such as how much a 4 million annuity can pay in different payout structures.
For a complete overview, visit our Annuities Hub, which covers everything from annuity basics to advanced retirement planning strategies.
Why Work With Diversified Insurance Brokers?
Since 1980, Diversified Insurance Brokers has helped retirees nationwide find the right annuities to protect and grow their savings. With access to more than 75 top-rated carriers, we compare the highest-paying products and simplify the process so you can focus on retirement—not research. See why clients choose to work with us.
As an independent, fiduciary-style agency, we regularly help clients evaluate which companies are the best fit for their goals, including many that people recognize from our insurer reviews—such as Canvas Life, Colonial Penn, and TIAA—alongside numerous other highly rated carriers.
Get Your 40% Return Annuity Quote
Request your free personalized quote today and see how the 40% Return Annuity can guarantee growth, protect your principal, and boost retirement income.
FAQs: 40% Return Annuity
What is a 40% return annuity?
It’s typically a fixed or fixed indexed annuity that includes a contractual feature guaranteeing your contract value (or a benefit base used for income) will reach at least 140% of the initial premium after a stated period, often about 10 years, subject to vesting and product terms.
Is the 40% return guaranteed on my cash value or only for income?
It depends on the contract. Some guarantee the account value will reach 140% by a target year; others apply the 40% to an income benefit base used to calculate lifetime payouts (not a walk-away value). Always verify which value the feature applies to.
How does the vesting schedule work?
Many designs vest proportionally over the term (e.g., ~4% per year for 10 years). Surrendering early can reduce the vested amount and standard surrender charges may still apply. Review the contract’s vesting table and surrender schedule before committing.
Can my value end up higher than 140%?
Yes. If the annuity credits additional interest (fixed rates or index strategies), your value can exceed the 140% floor. The 40% component is a minimum target—actual results can be higher, but never rely on non-guaranteed credits.
What access do I have to my money during the term?
Most contracts include limited penalty-free withdrawals (often 5–10% annually) after the first policy year. Larger withdrawals or early surrender may incur charges and could reduce any guaranteed growth benefit.
How does the 40% feature affect lifetime income?
If the 40% applies to an income base, a larger base can translate to higher guaranteed lifetime payouts when you start income, using the carrier’s age-based payout factors. If it applies to account value, you may also have a larger value to annuitize or draw from.
Are there fees for the 40% return feature?
Some contracts embed the guarantee with no explicit fee; others attach it via an optional rider with an annual charge. Even without a line-item fee, the guarantee is priced into product design. Compare net guarantees, liquidity, and crediting terms across options.
What are the tax implications?
Earnings in non-qualified annuities grow tax-deferred and are taxed as ordinary income when withdrawn, generally on a LIFO basis. IRA/qualified annuities are taxed per retirement account rules. Consult a tax professional for your situation.
What happens if I pass away before the 10-year point?
Beneficiaries typically receive the contract’s death benefit, which may be the account value or a value defined by the contract. Some products include enhanced death benefits; others do not. Check the death benefit section of the contract.
Who might consider a 40% return annuity?
Conservative savers who value principal protection, a clear minimum growth target, and optional lifetime income—especially those comfortable committing funds for a multi-year period to reach the guarantee.
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About the Author:
Jason Stolz, CLTC, CRPC, is a senior insurance and retirement professional with more than two decades of real-world experience helping individuals, families, and business owners protect their income, assets, and long-term financial stability. As a long-time partner of the nationally licensed independent agency Diversified Insurance Brokers, Jason provides trusted guidance across multiple specialties—including fixed and indexed annuities, long-term care planning, personal and business disability insurance, life insurance solutions, and short-term health coverage. Diversified Insurance Brokers maintains active contracts with over 100 highly rated insurance carriers, ensuring clients have access to a broad and competitive marketplace.
His practical, education-first approach has earned recognition in publications such as VoyageATL, highlighting his commitment to financial clarity and client-focused planning. Drawing on deep product knowledge and years of hands-on field experience, Jason helps clients evaluate carriers, compare strategies, and build retirement and protection plans that are both secure and cost-efficient.
