Can You Lose Money In An Annuity?

Shawn Plummer

CEO, The Annuity Expert

Owners can not lose money in an immediate annuity, fixed annuity, fixed index annuity, deferred income annuity, long-term care annuity, or Medicaid annuity.

Is It Possible For An Annuity To Lose Money?

Looking for a “crash-proof retirement“? This guide will inform you which annuities have the ability to lose money that does not. In addition, this guide will answer the following questions:

  • Can you lose money in an annuity?
  • Is my money safe in an annuity?
  • Has anyone lost money in a fixed annuity?
  • What happens to annuities when the market crashes?
  • What is the safest type of annuity?
  • Are there any safe annuities?

Annuity owners can lose money in a variable annuity or index-linked annuities. However, owners can not lose money in an immediate annuity, fixed annuity, fixed index annuity, deferred income annuity, long-term care annuity, or Medicaid annuity.

Annuity Principal Protection At A Glance

Fixed Index
Principal ProtectionNoYesYesYesYes
Access To PrincipalYesYesYesNoNo
Control Over MoneyYesYesYesNoNo
Tax-Deferred GrowthYesYesYesNoNo
Guaranteed GrowthNoYesYesNoNo
Guaranteed IncomeYesYesYesYesYes
Inflation ProtectionYesYesNoYesYes
Death BenefitYesYesYesYes/NoYes/No
Long-Term Care HelpYesYesYesNoNo

You can lose money in a Variable Annuity.

Variable annuities are investment-based retirement plans. You are investing in stocks, bonds, mutual funds, etc. If the investment performance is negative, you will lose money.

You can lose money in an Index-Linked Annuity (Buffer Annuity).

The new index-linked annuities (not confused with fixed index annuities) offer the opportunity to lose money but with limitations. For example, most contracts have a buffer or floor that limits an individual’s loss each year.

You can not lose money in Fixed Annuities.

Fixed annuities do not participate in any index or market performance but offer a fixed interest rate similar to a CD.

Fixed Annuity Rates

Shop and compare the latest fixed annuity rates for terms ranging between 2 years and 20 years.

You can not lose money in Fixed Index Annuities.

Another insurance-based annuity allows owners to grow their retirement savings based on the positive movement of a particular stock or bond index while protecting against a stock market crash. Conversely, if the index performance is negative, the annuity’s value will stay at the same value of the previous year (minus fees).

Fixed Index Annuities

Research fixed index annuities illustrating the highest returns, then request a quote.

You Might lose money in Income Annuities.

Immediate and Deferred Income Annuities are income annuities that do not participate in any accumulation but rather a conversion of money into a stream of paychecks, either now or in the future. However, if an annuity owner selects a life-only payout and dies prematurely, beneficiaries may lose money because single-life annuities do not offer a death benefit in exchange for a higher income payment.

Helpful tip: If you want to leave money to your beneficiaries, life insurance might be a better option for you. You don’t have to take a medical examination in some cases. You can compare online life insurance quotes to find affordable coverage. Coverage starts at $9.37 per month.

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Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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