8-Year Fixed Annuity Rates

An 8-year fixed annuity can be an ideal option if you want a tax-deferred investment offering a guaranteed ROI with a competitive rate that lasts for a long time. While annuities aren’t right for everyone, there are some significant benefits of 8-year fixed annuities worth considering.

Check out this guide to find out how these annuities work, what rates you could earn and whether these annuities may be right for you.

When you buy an annuity, you enter into a contract with a life insurance company. These contracts are customizable, as you can decide whether you want your annuity to offer a fixed or variable rate.

An 8-year fixed annuity allows you to lock in your rate for eight years. You must keep your money invested during that time to avoid surrender fees or penalties, but you’ll have the peace of mind of knowing that the ROI won’t change even if economic conditions are unfavorable.

Certificates of deposit (CDs) and 8-year fixed annuities are very similar as both are safe investments that provide guaranteed yields in exchange for giving up liquidity for a set period. However, while there are few options for eight-year CDs, there are many 8-year annuities, all of which generally offer a higher rate than similar investments including CDs or savings accounts.

When you’ve purchased an annuity, you can choose an immediate annuity to begin receiving payments immediately or a deferred annuity if you’d prefer income later. This makes an 8-year annuity an ideal option if you are saving for medium or long-term goals or want a low-risk retirement savings option.

A fixed annuity comes with a guaranteed minimum rate so your ROI is locked in. If you buy a multi-year fixed-rate annuity, your rate is guaranteed for the life of the investment. With a traditional fixed-rate annuity, you’ll have a guaranteed minimum and your rate could potentially change after a set time.

With a fixed-rate annuity, you’ll know up-front the return you’re going to earn and don’t have to worry about returns declining along with a financial index. Economic conditions aren’t going to cause you to earn less than anticipated.

Individual insurance companies set the rates or 8-year fixed annuities. Insurers take many factors into account. Economic trends play a big role, and the rate you’re offered will be impacted by things like the Federal Funds rate, as well as corporate bond yields and treasury yields.

The insurer’s financial health also plays a role, as those with solid credit ratings may offer slightly lower rates. Their high rating means your investment isn’t as risky — but it also means they may have to keep more capital on hand, so they have less incentive to offer higher rates to entice people to enter into annuity contracts.

Rates on 8-year annuities tend to be higher than rates on annuities with shorter terms because of the term premium. Essentially, you are paid more to commit to holding an investment for a longer period of time.

In general, 8-year fixed annuity rates tend to pay higher yields than CDs. Most CDs also have terms of five years or less. Fixed annuities also may offer a better ROI than savings accounts and, unlike variable-rate saving accounts, the minimum rate your fixed annuity pays will not decline.

Here are some current 8-year fixed annuity rates from major annuity providers.

Remember, after you buy an annuity, changes in economic conditions will not reduce the rate you’re paid. However, the rates for new annuities can and do change as economic conditions shift. These rates are current as of October 21, 2024, but the rate you’re offered if you buy at a later time may be higher or lower.

Since many long-term CDs are now offering yields below 4.00%, these rates are very competitive. While the rates are below what you could earn in an S&P 500 index fund if you were willing to put your money in the market, these annuities present much less risk compared with investing in equity.

There are significant benefits of buying an 8-year fixed annuity that you should consider to determine if this investment is right for you. Here are some of the biggest benefits.

You also must be aware of the risks that an 8-year fixed annuity can present. Here are some potential downsides.

These risks are serious but can be minimized by doing careful research, finding the right annuity with a competitive rate and analyzing how much of your portfolio belongs in this type of investment. Making sure the insurance company you’re buying from is in good financial shape is also important.

If you’re interested in buying an 8-year fixed annuity, there are a few key factors you should look for to find the right one. You’ll want to compare multiple annuity providers and consider these issues to determine which is best for you:

If you aren’t sure that you’re choosing the right annuity, consider talking with a financial advisor. Your advisor can help you understand fees, the tax implications of your purchase and how your annuity fits within your overall portfolio.

If you are interested in a stable, predictable investment that offers you guaranteed returns for a long time, an 8-year fixed annuity is the best choice for you. If you’re nearing retirement and don’t want to take the risk of putting your money in the market, this is an ideal investment. However, you’ll need to consider your risk tolerance, how soon you may need to access the funds and your projections for how interest rates will trend to decide what’s best for you.

Editor Norah Layne contributed to this article.