How Much Does a Fixed Annuity Cost? Fees, Minimums and Commissions (2026)

Do fixed annuities have fees in 2026?

Not in the way most people picture a fee. Traditional fixed annuities and multi-year guaranteed annuities carry no annual contract charge, no asset management fee and nothing resembling the mortality and expense charge a variable annuity bakes in. Whatever rate a carrier quotes you is the net number you receive every year for the entire guarantee period, full stop.

That single fact separates fixed annuities from their variable cousins more than anything else. Stack up a variable annuity's mortality and expense charge, its underlying fund expenses and its rider costs, and the annual drag can land anywhere from 2% up to 3.5%. A 5-year MYGA quoted at a given rate simply pays that rate, with nothing shaved off along the way. The lone carve-out is an optional income rider on a fixed index annuity, a different product covered further down.

"No fee" does not mean nobody makes money on the arrangement, and it is worth understanding why before assuming a MYGA is somehow too good to be true. The carrier is not running the contract as a charity; it earns a return on your premium that is larger than what it credits back to you, and the difference funds its overhead and profit. That mechanism, not a line-item deduction, is where the real cost lives, and the rest of this guide walks through exactly how it shows up.

How much money do you need to buy a fixed annuity?

Carriers typically ask for somewhere between $10,000 and $25,000 to open a fixed annuity, though a small number will take as little as $5,000. On the upper end, some MYGAs reward deposits of $100,000 or more with a better rate tier.

Anything above the listed maximum needs the carrier's underwriting team to sign off, which happens routinely for buyers funding the purchase with a retirement account rollover rather than fresh cash. The exact minimum also shifts by state and by which distribution channel is selling the contract, so treat the figures above as a general guide rather than a promise for your specific application. A larger deposit is not just about qualifying for a better rate band either; some carriers reserve entire product lines for deposits above a certain threshold, so it can be worth asking what opens up above $100,000 or $250,000 before assuming the standard minimum applies to you.

How are agents paid, and does it cost you?

An insurance company pays a licensed agent a commission as a percentage of what you deposit, and that check comes from the carrier's own pocket, not yours. It is never deducted from your account value and never tacked onto your premium. Roughly, commissions in 2026 run along these lines:

• 3-year MYGA: about 1.0% to 1.5% of premium
• 5-year MYGA: about 2.0% to 2.75% of premium
• 7-year MYGA: about 2.75% to 3.5% of premium
• 10-year MYGA: about 3.5% to 5.0% of premium
• Fixed index annuity: about 5% to 7% of premium

Put $100,000 into a 5-year MYGA and the carrier might pay your agent somewhere around $2,000 to $2,750. Your balance still opens at the full $100,000, earns the quoted rate starting day one, and matures at its full guaranteed value regardless of what the agent was paid. The only place this trade-off can surface is an early surrender, since the surrender charge schedule exists partly to let the carrier recoup a commission it already fronted. Our guide to surrender charges walks through how that schedule actually works.

This is also why an independent insurance agency works differently from a fee-based advisor. We are not registered investment advisers and we do not charge you a fee for the analysis or the recommendation; the issuing company pays a licensed strategist once a contract is placed, and that is the entire arrangement. It also means an agency working with a wide panel of carriers has no built-in reason to steer you toward one company's product over another's, since the commission structure looks broadly similar across most fixed annuities of a given term.

What is the actual cost of a fixed annuity?

If nothing shows up as a fee, the carrier has to be making its money somewhere, and it is: the investment spread. Say you deposit $100,000 into a 5-year MYGA paying a hypothetical 5.50%. The carrier turns around and invests that premium in a mix of investment-grade bonds, structured credit and private debt, aiming to earn something closer to 6.5% to 7%. It keeps roughly 1 to 1.5 percentage points of that gap to cover overhead, commissions, statutory reserves and profit, and passes the rest through to you.

That spread is the honest answer to "what does this cost." Using clearly hypothetical, rounded figures for comparison, a 5-year Treasury bond might sit around 4.00%, a competitive 5-year MYGA around 5.50%, and a 5-year FDIC-insured CD around 4.25%. The MYGA can still land ahead of both alternatives because the insurer is taking on slightly longer-duration, modestly higher-credit-risk investments and sharing most of that extra yield with you. Paying an indirect cost through the spread, in other words, does not stop the net result from often outrunning bonds bought directly.

Do fixed index annuities cost more than fixed annuities?

In two ways, yes. First, an FIA carries no explicit annual fee on its base contract, but it caps how much of the underlying index's gain you actually get to keep. Think of that cap or participation rate as the price you pay for having a guaranteed floor of zero. Second, an FIA sold with an optional income rider adds a real annual charge, generally in the neighborhood of 0.95% to 1.25% of the income value, deducted from the account every year.

For someone who specifically wants the lifetime income guarantee, that rider fee is simply the price of a personal pension. Decline it, and your only remaining cost is the ceiling placed on how much index growth you get to keep. To put the rider fee in dollars: on an income value of $200,000, a 1% charge works out to roughly $2,000 taken from the account each year, regardless of how the underlying index performed. Our fixed index annuity guide goes deeper on how crediting and rider pricing interact, and our piece on income riders breaks down that fee structure specifically.

How do fixed annuity costs compare to CDs and variable annuities?

Here is how the most common safe-money products stack up on cost, using clearly hypothetical, rounded yield figures rather than a live snapshot.

Judged purely on fees against yield, the MYGA comes out as the cheapest annuity structure available, and it tends to beat both a CD and a variable annuity for anyone able to leave the money alone for the full term. The variable annuity's fee load is the piece worth sitting with: even in a year the underlying funds perform well, the mortality and expense charge, the fund expenses and any rider costs all come out first, which means the account has to clear a real hurdle before you see a dollar of net gain. A fixed annuity carries no such hurdle, because there is no fee eating into the number before it reaches you.

What hidden costs should you watch for?

Fixed annuities are about as transparent as retirement products get, but a handful of cost-adjacent items still catch buyers off guard.

• Surrender charges. Pull out more than your free withdrawal allowance, commonly 10% a year, during the surrender period and a declining percentage penalty applies. A 5-year MYGA might start near 7% in year one and taper down to around 1% by year five. It is not labeled a fee anywhere in the contract, but it will absolutely cost you if circumstances force an early exit. Our surrender charge guide covers the full mechanics.
• Market value adjustment. Plenty of MYGAs include an MVA clause that resets your surrender value based on how interest rates have moved since purchase. Rates higher than when you bought generally push an early surrender's cost up; rates lower can actually work in your favor.
• Premium taxes. A handful of states, among them California, Nevada, Maine, South Dakota, West Virginia and Wyoming, charge insurers a small tax on annuity premiums, typically 0.5% to 3.5%. The carrier pays it directly, but it can occasionally show up reflected in a slightly lower credited rate for buyers in those states. Our annuity premium tax by state guide has the full chart.
• Income rider fees. Entirely optional, common on FIAs, almost never seen on a MYGA. Skip the rider if lifetime income is not something you need.
• Ordinary income tax on gains. Growth compounds tax-deferred, but withdrawals are taxed at your ordinary income rate rather than the lower capital-gains rate. For non-qualified buyers sitting in a high bracket, this is usually the single largest long-term cost of the whole arrangement.

Are fixed annuities worth the cost?

For a buyer chasing a guaranteed yield with no market risk and no annual fee, a fixed annuity offers about the cleanest cost structure available in retirement income products. A 5-year MYGA paying a hypothetical 5.50%, net of everything, delivers a guaranteed return that is genuinely hard to match elsewhere in the safe-money space at a comparable guarantee period.

Strip away the marketing language and the real story is simple: there is no line item to point at, only a spread built quietly into the pricing. Framing the decision around net return rather than a visible price tag is the more useful lens, and on that basis a well-chosen MYGA tends to hold up well against CDs, Treasuries and money market funds across most term lengths. We can run that comparison against current numbers for your term and deposit size at no cost to you.