Annuities
Medicare Covers Your Healthcare.
An Annuity Covers Your Income.
Most Medicare beneficiaries have their healthcare handled. Far fewer have a plan for guaranteed income that cannot run out. A fixed or indexed annuity fills that gap — contractually guaranteed, market-protected, and designed to last as long as you do.
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Estimates are for illustrative purposes only and are not guaranteed. Actual annuity income depends on product terms, interest rates, age, payout option, and the issuing insurer. Rates shown reflect general market assumptions and are subject to change. This is not a contract, offer, or commitment to insure.
What an Annuity Actually Is
An annuity is a contract between you and an insurance company. You deposit a sum of money, and the company guarantees it will grow at a defined rate — and can convert it into an income stream you cannot outlive. Unlike investments that fluctuate with markets, the guarantees in an annuity are contractual obligations of the issuing carrier.
For Medicare beneficiaries, annuities address the income side of retirement that Medicare was never designed to handle. Medicare manages healthcare. It does not replace a paycheck, supplement Social Security income, or guarantee you will not run out of savings. An annuity is built specifically to do those things.
The most common types used by people on Medicare are fixed annuities, fixed indexed annuities, and single premium immediate annuities. Each has a different purpose, a different structure, and a different risk profile — but all share the core characteristic of contractual guarantees that bank accounts and investment accounts cannot match.
Insurance Innovators works with Medicare beneficiaries in 38 states to evaluate whether an annuity fits their situation, which type makes sense, and which carriers offer the strongest terms. If an annuity is not the right fit, we will say so.
Types of Annuities We Work With
Not every annuity works the same way. The right type depends on your timeline, your income needs, and how much access you want to your principal.
Earns a guaranteed interest rate for a set period — typically 3 to 10 years. No market risk. Your principal and interest are protected regardless of what the stock market does. The most straightforward annuity available.
Credits interest based on the performance of a market index (such as the S&P 500), with a floor that prevents losses. You participate in market upside without being exposed to market downside. Popular for retirement income planning.
Functions similarly to a CD but with tax-deferred growth. Locks in a fixed rate for a defined term — often 3, 5, or 7 years. Frequently used to reposition savings earning low interest in bank accounts.
Converts a lump sum of money into a guaranteed income stream that begins immediately. Payments can be structured for a fixed term or for life. The simplest way to guarantee income you cannot outlive.
How an Annuity Works in Practice
The mechanics are simpler than most people expect. Here is what actually happens when you purchase an annuity.
You Fund It Once
Most annuities are purchased with a single premium — a lump sum from savings, a 401(k) rollover, or an IRA. There are no ongoing premium payments required. You fund it, and the contract goes to work.
Your Money Grows Tax-Deferred
Interest credited inside an annuity is not taxed until it is withdrawn. This allows your money to compound without being reduced by annual income taxes — a meaningful advantage for people managing fixed income in retirement.
Guaranteed Income When You Need It
Through an income rider or annuitization, the contract converts into a stream of guaranteed payments you cannot outlive. The income amount is contractually defined — it does not depend on market performance.
Principal Protection
Fixed and fixed indexed annuities protect your original premium from market loss. The carrier absorbs investment risk. Your money does not decrease due to a stock market downturn, regardless of timing.
Who Benefits Most from an Annuity
Annuities are not for everyone, and we do not present them as a universal solution. These are the situations where they genuinely fill a gap.
You have savings sitting in a low-yield account
Bank CDs and money market accounts often earn less than inflation. A MYGA or fixed annuity offers a higher guaranteed rate with tax deferral — a direct upgrade for money not needed immediately.
You are worried about outliving your money
Social Security and Medicare cover a portion of retirement needs. An annuity with a lifetime income rider fills the gap with a contractual guarantee — income that continues no matter how long you live.
You have a 401(k) or IRA you want to protect
A tax-free rollover moves retirement savings into a fixed indexed annuity that grows without market risk. You stay tax-deferred, eliminate downside exposure, and gain the option for guaranteed income later.
You want to leave something to your family
Many annuities include a death benefit that passes the remaining account value to a named beneficiary outside of probate. It is a simple, direct transfer that does not require a will or estate planning attorney.
What to Understand Before You Buy
Annuities involve long-term commitments. These are the four areas that determine whether you are buying the right product or an expensive one.
Surrender Charges and Liquidity
Most annuities carry a surrender period — typically 5 to 10 years — during which withdrawals beyond the free amount trigger charges. Understanding what portion of your money stays accessible is essential before committing.
Income Rider Fees and Guarantees
Income riders add a guaranteed withdrawal benefit, but they carry annual fees (typically 0.75–1.25% of the income base). The fee reduces accumulation value. We help you evaluate whether the guaranteed income is worth the cost.
Carrier Financial Strength
An annuity is a long-term contract with an insurance company. The guarantee is only as good as the company behind it. We work exclusively with carriers rated A or better by AM Best.
Impact on Medicare and Social Security
Annuity income is reportable and may affect IRMAA thresholds, which determine Medicare Part B and Part D premiums. Understanding how distributions interact with your existing benefits matters at the planning stage, not after.
Why This Matters Specifically for Medicare Beneficiaries
When you are on Medicare, your healthcare coverage is largely handled. Doctors, hospitals, prescriptions — Medicare addresses most of it, and a good Medicare Advantage plan or supplement fills the gaps Medicare leaves open.
What Medicare does not address is how you pay for the rest of life. Fixed costs, unexpected expenses, the possibility of living into your 90s on a fixed Social Security income — these are income problems, not healthcare problems. Medicare was not built to solve them.
An annuity is the income counterpart to Medicare. Used together, they address the full retirement picture — healthcare covered, income guaranteed, principal protected from market swings that cannot be absorbed on a fixed income.
Ben Sullivan’s team reviews both sides of that picture for Medicare clients across 38 states. If there is an income gap worth addressing, we will show you what it looks like to fill it. If an annuity is not the right tool for your situation, we will be straightforward about that too.
How We Approach an Annuity Review
An annuity review is not a pitch. It is an honest look at whether this product fits your income needs, your timeline, and your existing Medicare coverage.
Start With Your Income Picture
We look at what you have coming in — Social Security, pension, any other income — and what your fixed monthly costs are. The gap is what we are solving for, not a product we have already decided you need.
Match the Right Product to the Gap
Whether that is a MYGA for idle savings, an FIA with a lifetime income rider, or a SPIA for immediate guaranteed payments, the product recommendation follows the income analysis. Not the other way around.
Show You the Full Contract
Surrender periods, income rider fees, payout projections, IRMAA implications — we walk through every element. You make a decision you understand, not one you will have questions about six months later.
Common Questions About Annuities
Are annuities safe for someone on a fixed income?
Fixed and fixed indexed annuities protect your principal from market loss — the carrier absorbs investment risk. Your money cannot decrease due to a stock market downturn. For people on a fixed income who cannot afford to absorb losses, this protection is one of the primary reasons to consider an annuity.
Can I still access my money if I need it?
Most annuities allow penalty-free withdrawals of up to 10% of the account value per year. Beyond that, surrender charges apply during the surrender period. If liquidity is a priority, that affects which product makes sense — and we will factor it in.
How does an annuity affect my Medicare coverage?
An annuity does not affect your Medicare Part A or Part B eligibility. However, annuity distributions count as income and may affect your IRMAA calculation — the income-based surcharge on Part B and Part D premiums. We discuss this during the review so there are no surprises.
What happens to the money when I pass away?
Most annuities include a death benefit that passes the remaining account value to a named beneficiary outside of probate. The specifics — whether it is the full accumulation value, the original premium, or a minimum guaranteed amount — depend on the contract. This is one of the details we review before you sign anything.
Is an annuity the same as a life insurance policy?
No. Both are issued by insurance companies, but they serve different purposes. Life insurance pays a benefit when you die. An annuity is designed to generate income during your lifetime. Some annuities include a death benefit, but the primary function is income and accumulation, not life insurance replacement.
What is the difference between an annuity and a CD?
Both preserve principal and pay a guaranteed rate. The key differences: annuity growth is tax-deferred (CDs are taxed annually), annuities offer income options CDs cannot match, and annuities typically offer higher rates. The tradeoff is that annuities have surrender periods while CDs have shorter terms.
See Whether an Annuity Fits Your Retirement Income Picture
A no-cost income review takes about 20 minutes. We look at your Social Security, your existing coverage, and what guaranteed income would actually change for you in retirement — no pressure, no obligation.