What Modern Annuities Actually Do

Key Takeaways

• Annuities have changed—today’s options are often simplified, more transparent and flexible than older products.
• A range of annuity types are built to address different goals, including protection, growth, and guaranteed lifetime income.
• Understanding what annuities can provide helps retirees evaluate where they fit in an income plan.

Annuities have evolved significantly in recent years. Traditional, commission-based annuities were often complex and came with high fees and long lock-up periods. Modern annuities are now available without built-in commissions, offering lower costs, greater transparency, and more flexibility.

At their core, annuities are insurance products built to provide guaranteed income, often for life. When used in a financial plan, annuities can complement an investment portfolio by helping mitigate risk through complete or partial principal protection, providing tax-deferred growth, and delivering a stream of reliable income for retirement, depending on the product and features you select.

Because there are several types of annuities, choosing the “right” product depends on a retiree’s financial goals, income timeline and needs, risk tolerance, and more. Understanding what modern, commission-free annuities are designed to do makes it possible to evaluate how they may help strengthen a retirement plan.

Because there are multiple types of annuities, the “right” one depends on a retiree’s goals, timeline, and risk comfort. Understanding what modern annuities can do helps investors evaluate where they may fit into an overall income plan.

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Disclosures:

This material is provided for educational purposes only and does not constitute investment, legal, tax, or insurance advice. It should not be relied upon as a recommendation to purchase, sell, or exchange any security or insurance product. Investors should consult their financial, tax, and legal professionals before making financial decisions.

Annuities are insurance products issued by insurance companies. Guarantees are subject to the claims paying ability and financial strength of the issuing insurer. Product features, limitations, fees, surrender charges, and availability vary by contract and carrier.