Current Annuity Rates in Illinois
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| Product |
Rate
|
Guarantee Period
|
Surrender Period
|
AM Best Rating
|
|---|---|---|---|---|
|
GCU Insurance 1 + 4 Choice |
4.25% | 1 Years | 5 Years | A- |
Access SPDA |
3.25% | 4 Years | 4 Years | A- |
|
Access SPDA |
3.45% | 6 Years | 6 Years | A- |
|
Security Benefit Life Insurance Company Advanced Choice |
4.85% | 5 Years | 5 Years | A- |
|
Security Benefit Life Insurance Company Advanced Choice |
4.85% | 7 Years | 7 Years | A- |
|
Security Benefit Life Insurance Company Advanced Choice |
4.60% | 3 Years | 3 Years | A- |
Advantage 5 Advisory |
5.05% | 5 Years | 5 Years | A++ |
|
American Life & Security Corp American Classic |
5.05% | 5 Years | 5 Years | B++ |
|
American Life & Security Corp American Classic |
5.20% | 3 Years | 3 Years | B++ |
|
American Freedom Aspire 3 |
4.45% | 3 Years | 3 Years | A++ |
Buying an Annuity in Illinois
Illinois is one of the largest states in the country, which helps make it a sizeable annuity market. The state’s protections in place for annuity customers along with its generally favorable tax rates can make it an advantageous area to purchase an annuity.
If you are an Illinois resident interested in purchasing an annuity, familiarize yourself with the state’s specific regulations and process. Annuities are regulated at the state level, so — while there are often many similarities between states — each process may be a bit different.
Illinois includes one of the standard benefits available across many states for customers: a mandated 10-day free look period. This window allows you to review your contract and walk away without penalty if you so choose, adding in some extra insulation in case you find the final contract is not to your liking.
The state also adopted the latest revisions to the NAIC Suitability Model Regulations. These revisions primarily serve to help protect customers from predatory practices, which can benefit consumers.
Essentially, annuity providers are bound to consider the full scope of a customer’s financial situation before offering them an annuity.
Suitability Requirements Annuity Providers Must Consider:
- Your financial situation
- Your tax status
- Your investment goals
Source: Illinois Department of Insurance
As of early 2024, the majority of U.S. states adopted or planned to adopt the newest revisions.
Retirees seeking to purchase an annuity without the burden of annuity premium tax will find Illinois advantageous, as the state does not impose such a tax. I have clients in other states like Nevada and California, where such taxes are levied, causing frustration for retirees aiming to minimize expenses. Therefore, Illinois presents an appealing option for annuity holders seeking to reduce costs.
John Stevenson, CFFOwner and Advisor at Stevenson Retirement SolutionsJohn Stevenson, a Certified Financial Fiduciary®️, specializes in securing retirements with tax-free accounts. With a focus on guaranteed retirement, he’s ensured none of his clients suffer from market fluctuations. As a renowned educator and podcast host, John empowers thousands weekly, sharing his expertise in minimizing taxes and protecting against financial downturns.
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Regulations/Tax Implications in Illinois
Illinois does have a state income tax, which can somewhat reduce the earnings from your annuity payments. While some may prefer states with no income tax for their annuity investments, Illinois’ flat tax rate of 4.95% can be advantageous for high net worth individuals. In contrast to states with progressive taxes, where higher earners pay proportionately more, Illinois’ flat tax ensures that those with significant wealth can capitalize on annuities without as much value decrease.
Understanding the tax implications is crucial when considering annuities, as emphasized by Aamir Chalisa. He stresses the importance of comprehending the state’s regulations regarding annuities and their associated rules. Aamir guides his clients through various considerations, such as the free look period, state guaranty amount, penalties and taxation, ensuring that each annuity sale aligns with their specific needs. By delving into these topics in detail, Aamir ensures that his clients can fully appreciate the tax-deferred growth of annuities, allowing them to benefit from compounded interest over time. This meticulous planning contributes to the satisfaction and contentment of his clients.
Illinois Resources
Illinois has several resources to help customers within the state make the right choice for themselves when purchasing an annuity.
The Illinois Department of Insurance offers plenty of publicly available information on annuities. This includes breakdowns of different types of products along with specific information on how annuities can work for seniors.
Illinois Department of Insurance Annuity Resources
Additionally, also available in the state is the Illinois Life and Health Insurance Guaranty Association, which provides additional protections to annuity customers within the state.
This includes useful FAQs to help customers understand what benefits they receive from having a state guaranty association.
Looking To Buy an Annuity in Illinois?
FAQs About Annuities in Illinois
Illinois provides a 10-day free look period to its residents and has also adopted the latest NAIC Model Regulation revisions to protect potential annuity customers from predatory practices.
Illinois does not levy a separate tax on annuity premiums, meaning your annuity will operate as a tax-deferred product. Tax is owed when you begin receiving payments.
Yes, Illinois provides many regulations to help benefit annuity customers within the state, including a free-look period and regulations that require carriers to consider the suitability of a product for a customer.
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