When planning for retirement, many people turn to annuities to create a guaranteed stream of income that lasts for life. However, one of the most common questions is where to buy one—from a bank or an independent agent. While both can connect you to an insurance company, the experience and range of options differ dramatically. Here’s why working with an independent agent often gives you the edge when choosing the right annuity for your needs.
All Annuities Come from Insurance Companies
Before comparing where to buy, it’s essential to understand how annuities work. Life insurance companies issue all annuities. Whether you purchase through a bank, a brokerage, or an independent advisor, your contract ultimately comes from an insurer. The key difference lies in how many products and companies your intermediary has access to.
When you buy through a bank, the options are typically limited to one or two companies with which the bank has partnered. On the other hand, an independent agent has access to a wide marketplace of annuity products—often from dozens of top-rated insurance carriers. That means you can compare features, rates, and benefits more freely to find the plan that best fits your long-term goals.
More Choice Means a Better Fit
There are more than 800 life insurance companies in the United States, and each offers its own selection of annuities with different payout options, bonuses, and features. An independent agent can shop across that entire landscape to help you find the best product for your specific situation. Banks, by contrast, are typically limited to selling annuities from a small number of preferred providers.
This difference in access can translate directly into better financial outcomes. With an independent agent, you can compare fixed, variable, and indexed annuities and see how each aligns with your income needs, growth goals, and comfort with risk. A bank’s advisor may only be able to offer one type—or one brand—of annuity, regardless of whether it’s the best fit for you.
Unbiased Recommendations
Independent agents work for you, not a particular financial institution. Their goal is to find the best product for your needs, not to meet internal sales quotas or promote a limited lineup of products. This objectivity often leads to more transparent conversations about fees, risk, and income guarantees.
Bank representatives, while knowledgeable, are bank employees. Internal policies and corporate agreements with select insurers usually limit their recommendations. As a result, the advice you receive may be less personalized and more focused on what the bank is authorized to sell.
Understanding Bonuses and Payouts
Some annuities advertise a “signing bonus” or “income bonus,” which can make them look more attractive at first glance. However, not all bonuses are created equal. Some are credited to the accumulation value (your actual account balance), while others apply to the income value used to calculate future payments. An independent agent can help you understand these nuances and ensure you know what type of bonus you’re really receiving.
Banks may highlight bonuses as a selling point. Still, an independent agent has the flexibility to compare multiple products and find one that offers a meaningful benefit—not just a marketing gimmick. They can also explain how your income will be calculated, so you fully understand how your annuity will support you in retirement.
Transparency in Fees and Commissions
Fee transparency is one of the biggest advantages of working with an independent agent. Independent advisors are required to disclose commissions and fees clearly in writing. Fixed and fixed-indexed annuities, for example, typically have low or no annual fees. The insurance company pays the agent’s commission directly, meaning 100% of your investment goes into the account.
Variable annuities, often sold through banks and brokerage firms, tend to include higher ongoing fees—ranging from 3% to 5% annually—because they are tied to investment subaccounts. These expenses can greatly diminish your profits as time goes on. Independent agents can help you compare these expenses before you commit, ensuring you fully understand where your money is going.
Stronger Focus on Your Long-Term Goals
Independent agents take a holistic view of your financial situation. Rather than concentrating on a single product, they will evaluate how an annuity integrates into your complete retirement strategy—taking into account other assets, Social Security, and your income schedule. Banks, by contrast, tend to operate on a transactional basis, focusing on the immediate sale rather than long-term financial alignment.
This broader perspective can make a big difference in choosing the right type of annuity—whether you need immediate income, deferred growth, or protection from market volatility. Independent agents also help ensure your annuity complements, rather than conflicts with, your broader investment strategy.
Evaluating the Financial Strength of Insurers
No matter where you buy your annuity, it’s important to verify the financial stability of the issuing insurance company. Independent agents can provide ratings from agencies such as A.M. Best, Moody’s, and Standard & Poor’s, giving you confidence that the insurer can meet its long-term obligations. While banks may also provide this information, an independent agent can compare ratings across multiple insurers instead of being limited to one or two options.
How to Research and Compare Options
Before purchasing any annuity, take the time to understand the contract terms, payout options, and potential fees. Independent agents can walk you through these details and show you comparisons from several carriers. To further research annuities and insurance company ratings, you can visit the National Association of Insurance Commissioners (NAIC), which offers consumer tools and educational resources.
The Bottom Line
Buying an annuity is a major financial decision that affects your long-term security and peace of mind. While banks may offer convenience, their limited selection and potential conflicts of interest often make them less ideal for finding the best value. On the other hand, independent agents offer access to a wide range of products, personalized guidance, and a fiduciary mindset that puts your needs first.
In the end, working with an independent agent ensures you get clear, unbiased advice—and an annuity that truly supports your retirement goals for years to come.
