You can buy certain annuities directly from insurance companies online, but the majority of the annuity market still requires working through licensed agents or advisors. Understanding which annuities are available to purchase directly—and which channels actually give you the best deal—will save you thousands in fees and commissions.
The Direct Purchase Reality
Not all annuities are created equal when it comes to buying them independently. Insurance companies like Vanguard, Fidelity, and Schwab offer some simplified immediate annuities and fixed annuities through their platforms with minimal or transparent commissions. However, variable annuities, indexed annuities, and complex fixed annuities with riders almost always require an agent or advisor involvement.
The reason is structural: traditional insurance distribution channels have built-in agent commissions ranging from 3% to 10% of your initial investment. Some insurers have disrupted this model with direct-to-consumer products, but they're typically stripped-down versions that don't include customized riders or complex features.
Where You Can Legitimately Buy Direct
Immediate annuities are your best bet for direct purchase. Companies like Fidelity, Vanguard, and Schwab let you compare and purchase immediate annuities with payout quotes you can see upfront. These products convert a lump sum into guaranteed monthly income and don't involve complicated options.
Some fixed annuities with basic structures are available directly. You'll typically input your age, health status, and desired payout period to get quotes. Expect to see annual payouts of 4–6% for someone in their 60s or 70s, depending on current interest rates.
Multi-year guaranteed annuities (MYGAs) can sometimes be purchased directly, offering fixed rates for specific terms (5, 7, or 10 years). Rates currently range between 4.5% and 5.5%, though this varies with market conditions.
Anything involving variable sub-accounts, guaranteed lifetime withdrawal benefits (GLWBs), or income riders typically requires agent licensing.
Why You'll Still Need an Advisor (Sometimes)
If you want a deferred income annuity that starts paying out at, say, age 85, or a variable annuity with a 6% guaranteed withdrawal rider, you'll need to work with a licensed insurance advisor or broker. These aren't roadblocks—they're necessary because the product complexity and customization require professional guidance to match your actual retirement goals.
A qualified advisor should:
- Explain surrender periods (typically 5–10 years, with 1–3% penalties if you access funds early)
- Walk through the specific riders and their costs (riders can add 0.5–2% annually to your fees)
- Clarify income guarantees versus market risk
- Show you competing quotes from multiple carriers
This consultation typically costs nothing upfront because the carrier pays the advisor's commission. The catch is that you need to verify the advisor is offering competitive quotes, not just products with the highest commissions.
How to Find Legitimate Direct Options
Check the insurance company's official website first. Vanguard, Fidelity, and Schwab all clearly label which annuity products you can purchase without an agent. Get quotes directly and note the specific payout amount and terms.
For products requiring an advisor, use Mercoly to compare and find trusted Annuities & Insurance-Based Investments providers who can give you transparent breakdowns of commissions and multiple carrier quotes in one place.
Compare at least three quotes from different carriers before committing. The difference between a 5.2% payout and a 5.5% payout on a $500,000 investment is $1,500 per year—or $30,000 over two decades.
Red Flags to Watch
Avoid advisors who pressure you into features you didn't ask for (like complex riders or variable accounts). Don't accept unclear explanations about fees or surrender charges. If an advisor won't show you quotes from competing carriers, walk away.
Direct-to-consumer platforms sometimes appear cheaper because they lack customization—you're trading flexibility for simplicity and lower cost.
Frequently Asked Questions
Q: Can I buy a variable annuity directly online? No, variable annuities require a licensed agent because they involve investment sub-accounts and complex fee structures. Direct-to-consumer annuities are limited to simpler fixed and immediate products.
Q: What's the typical commission an advisor earns on an annuity sale? Commissions typically range from 3–10% of your investment, paid by the insurance carrier. Some direct-to-consumer products charge 0–2%, but they offer fewer customization options.
Q: How long can I lock up money in an annuity without penalties? Surrender periods typically last 5–10 years, with early withdrawal penalties of 1–3%. Always confirm the exact terms in your contract before purchasing.
Start by getting quotes directly from major carriers, then compare advisor-recommended options to find the best fit for your retirement income needs.