Annuity Rates in Texas

Current Annuity Rates in Texas

The following table shows rates for fixed annuities in the state of Texas. A fixed annuity earns a guaranteed interest rate for a set number of years, sometimes known as the annuity’s term. When the term elapses, the owner can cash out their annuity or convert it into a stream of income payments.

Buying an Annuity in Texas

Annuities offer principal-protected growth and the ability to generate lifelong income for so many Texans. Annuity providers paid nearly $7 billion in annuity income to Texas families in 2022, according to the American Council of Life Insurers.

When you purchase an annuity in Texas, you’ll have a 20-day free-look period. During this period, you can review the terms of your annuity contract and, if necessary, cancel the contract to receive a full refund.

When replacing a current annuity, Texas residents have 30 days to review the replacement policy. This is crucial information, especially given the current high rates of annuity replacements due to increased interest rates. I currently have a client who is replacing a policy that will provide her with twice as much income as her previous one. Texas residents should exercise caution whenever approached about replacing a policy, as it can incur significant surrender charges.

John Stevenson, CFFOwner and Advisor at Stevenson Retirement Solutions

John 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.

Annuity Regulations and Taxation in Texas

The Texas Department of Insurance (TDI) licenses and regulates the insurers and agents that sell annuities in the state. Agents must have a license from the TDI to sell annuities. The TDI works in conjunction with the U.S. Securities and Exchange Commission (SEC) and the Texas State Securities Board to regulate variable annuity sales, since variable annuities are considered securities.

Texas has created annuity regulations similar to those in other states. In 2021, the state adopted “best interest” regulations as recommended by the National Association of Insurance Commissioners (NAIC).

These best interest standards require financial advisors to ensure that the products they recommend support their clients’ financial needs. Advisors and agents must satisfy four requirements to adhere to the best interest standards: a duty of care, disclosure, conflicts of interest and documentation.

Annuities have full protection from creditors in Texas. According to Texas Property Code, all annuities including inherited annuities are exempt from the claims of creditors. Additionally, any income received from an annuity is completely protected from creditors.

Texas does not levy a premium tax on annuities, unlike some other states. Texas also has no state income tax, so annuity income won’t be subject to tax other than federal income tax.

Texas Annuity Resources

As you consider your annuity options in Texas, review the company’s ratings to gauge the financial stability of the provider. A financial advisor or annuity expert can answer your questions and guide you in the right direction as you pursue your financial goals.

To learn more about annuities in Texas, check out these resources:

• Texas Department of Insurance
• Texas Life & Health Insurance Guaranty Association
• Texas Annuities Guide