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Washington State Office of the Insurance Commissioner

What is an annuity?

It's a contract between you and an insurance company. People buy annuities if they:

  • Need to save significantly
  • Want an investment that reduces taxes
  • Want to ensure a steady flow of income

How they work

  • You pay either a single premium or make payments for a set period of time in exchange for a future income.
  • They should increase in value, income-tax free.
  • You can request to receive payments in a lump sum or in periodic fixed amounts.
  • A popular payout option is lifetime income with ten years certain.  This means the annuity pays a monthly income for the life of the annuitant or for 10 years, whichever is longer.    

Types of annuities

Benefits of choosing an annuity




Updated 05/04/2012

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or Email us at cap@oic.wa.gov.