7-Year Fixed Annuity Rates

If you’re interested in investing for the future and want a safe investment that provides guaranteed rates, consider a 7-year annuity. A 7-year fixed annuity typically provides a more competitive rate than alternatives such as CDs and also comes with additional benefits including tax-deferred growth.

This guide will help you determine if a 7-year fixed annuity is the right choice for you.

Annuities are customizable contracts with life insurance companies. You can purchase different types of annuities, including a 7-year fixed annuity that offers a guaranteed rate of return for seven years. You can choose an immediate annuity and begin receiving payments immediately, or a deferred annuity and receive income later in life.

Annuities are either fixed or variable. If you buy a 7-year fixed annuity, you’ll earn a guaranteed interest rate for the full seven years the term lasts. The annuity works similarly to a certificate of deposit (CD) but often provides a higher rate of return. You may have more options for 7-year annuities as well, since not many banks offer 7-year CDs.

A 7-year annuity is one of multiple options if you’re looking for a fixed annuity, as term lengths typically range from one to 10 years. Annuities with longer-term lengths usually offer higher interest rates, so you’d generally have a higher ROI with a 7-year annuity compared with a 3-year annuity. However, the longer the term, the more interest-rate risk you take on.

When you buy a 7-year fixed-rate annuity, you get a guaranteed minimum rate for the entire seven-year duration. Your guaranteed rate is not tied to any financial index, so your ROI won’t decline regardless of economic conditions. Your rate could stay the same for the entire seven years if you have a multi-year guaranteed annuity (MYGA), or the rate could change after a set period but can’t drop below the guaranteed minimum.

Your 7-year annuity rate is set based on various factors at the time you purchase it. These factors include economic conditions when the annuity is issued, such as the Federal Funds rate, treasury yields and corporate bond yields.

The credit rating of the issuing insurer also impacts rates, as insurers with higher ratings sometimes offer lower rates since investors take on less risk and since the insurer often must hold more capital to maintain its rating.

Annuity rates are typically higher than CD rates but lower than bond rates. Fixed annuities can also grow tax-deferred, which can lead to a better ROI over time since you can leave more money invested.

Annuity rates for seven-year fixed annuities vary by insurance provider. Here are some of the best rates available as of October 21, 2024.

These rates are more competitive than 7-year CD rates, most of which are under 4.00% as of October 21, 2024.

While your rate is locked in once you have purchased your annuity, it’s important to note that annuity rates for initial annuity contracts do fluctuate over time. If you buy an annuity in the future, your rate will likely differ from those listed.

The Federal Reserve has projected it will reduce interest rates, potentially through 2026, so it is likely annuity rates will also decline for the foreseeable future.

You can limit these risks by choosing a financially stable insurance provider and ensuring you only invest money you won’t need for the annuity term.

There are many factors to consider to find the best 7-year fixed annuity provider. These include the following:

You can compare annuities online to make the most informed choice.

A 7-year fixed annuity could be the right investment option for you if you’re looking for a guaranteed rate for seven years, you can afford to tie up your money for that period, and you feel the ROI you’re being offered will outpace inflation and provide reasonable gains.

Often, 7-year annuities make sense if you are looking for guaranteed returns over a long period as you near retirement. However, you’ll need to consider your individual risk tolerance, liquidity needs and financial objectives when deciding if a 7-year annuity is right for you.

Editor Norah Layne contributed to this article.