Do Annuities Have Fees
Jason Stolz CLTC, CRPC
Do annuities have fees? It depends on the type of annuity you purchase and the features you select. Some annuities have no explicit annual fees, while others include costs for riders, investment options, or insurance guarantees. At Diversified Insurance Brokers, we help clients nationwide compare annuity contracts transparently—so you know exactly what you’re paying for and why.
Understanding annuity fees is essential when evaluating current annuity rates or designing an income plan for retirement. Fees can vary based on whether the annuity is fixed, indexed, or variable, and how the insurer structures guarantees.
Types of Annuities and Typical Fee Ranges
| Annuity Type | Common Fees | Approx. Annual Range |
|---|---|---|
| Fixed annuity | No annual fee, insurer earns spread on interest | 0% |
| Fixed indexed annuity | Optional income or enhanced benefit rider | 0.75%–1.25% |
| Variable annuity | Subaccount expenses, M&E risk charges, riders | 2%–4%+ |
Fixed and indexed annuities usually have minimal or no annual fees. Instead, the insurance company earns a small margin between your credited rate and its underlying portfolio yield. Variable annuities, however, invest in market subaccounts, which introduce explicit management and insurance charges.
Common Types of Annuity Fees
- Mortality & expense (M&E) charge: Covers insurance guarantees and administrative costs—mainly in variable annuities.
- Rider fee: Applies if you add features like lifetime income, enhanced death benefits, or long-term care riders.
- Surrender charge: A declining fee for early withdrawals before the end of the surrender period.
- Investment expense ratio: Internal costs for variable annuity subaccounts, similar to mutual fund fees.
Comparing Costs vs. Benefits
Paying a small annual rider fee may be worthwhile if it provides lifetime income or principal protection you can’t get elsewhere. The key is knowing what each fee buys you. For example, an income rider can guarantee payouts for life, even if your account balance is exhausted.
Estimate Lifetime Income Value
Use the calculator below to compare guaranteed income potential with or without a rider—so you can decide if the benefit justifies the cost.
When Annuities Have No Ongoing Fees
Many fixed annuities and bonus annuities charge no direct annual costs. You’ll know exactly what interest rate you’re earning, how long it’s locked in, and when penalty-free withdrawals are available.
Compare Current Annuity Rates
Review today’s top MYGA, fixed indexed, and income annuity rates side-by-side.
View Current Annuity RatesRelated Pages
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FAQs: Annuity Fees Explained
Do all annuities have fees?
No. Many fixed and indexed annuities have no annual fees. Others, such as variable annuities, include charges for investment management and riders.
What is the average fee for an income rider?
Most lifetime income riders cost between 0.75% and 1.25% annually, deducted from the account value or income base.
Are surrender charges considered fees?
Surrender charges are not ongoing fees—they apply only if you withdraw funds early, usually within the first 5–10 years.
Do annuity fees reduce my interest credit?
Some indexed annuities reduce credited interest by the rider cost, while fixed annuities credit the stated rate net of internal costs.
How do I find annuities with low or no fees?
Compare current fixed annuity rates or speak with a licensed advisor at Diversified Insurance Brokers for transparent, no-fee product comparisons.
