Annuities & retirement income in Washington

What annuities do

An annuity is a contract with an insurance company where you give the company a lump sum (or make periodic payments), and the company guarantees to pay you income for a specified period or for your entire life. Annuities convert savings into guaranteed cash flow—a form of pension without relying on a traditional employer plan. You can add riders (like long-term-care insurance) to customize the contract.

Types of annuities

• Fixed annuities. the insurer credits a fixed interest rate (e.g., 4–5% annually) to your account; predictable, safe, modest returns
• Indexed annuities (IAs). your returns are tied to a stock-market index (usually S&P 500) with a cap (e.g., 8–10% max annual return) and a floor (usually 0–2%); growth potential with downside protection
• Variable annuities. you choose sub-accounts (mutual funds); returns depend on market performance; highest upside, highest risk
• Immediate annuities. you give the insurer a lump sum and they begin sending you income right away, for life or a fixed period

Accumulation phase vs. income phase

Most annuities have an accumulation phase where your money grows tax-deferred, and an income phase where you receive distributions. During accumulation, you can make withdrawals but may face surrender charges (typically 1–10%, declining over 5–10 years). Once you enter the income phase, you receive predictable payments and surrender charges no longer apply.

Common annuity riders in Washington

• Long-term-care rider. adds LTC coverage to your annuity; if you enter nursing care, the rider helps pay care costs without reducing your death benefit or spousal benefit
• Death benefit rider. guarantees your heirs receive at least your initial investment, even if market performance is poor
• Spousal continuation rider. your surviving spouse continues receiving income after your death, rather than payments ending

Guaranty Association protection in Washington

All annuities sold in Washington are backed by the Washington Life & Disability Insurance Guaranty Association. The Guaranty Association guarantees your annuity present value up to $250,000 per contract—so if your insurer fails, you're protected up to that limit. This is critical for retirees depending on annuity income.

Suitability and best-interest rules in Washington

Washington's Insurance Commissioner (OIC) requires insurers and agents to recommend annuities that are suitable for your situation—considering your financial needs, risk tolerance, and alternatives. This means your agent should explain the trade-offs between fixed, indexed, and variable annuities and discuss whether an annuity is the right choice for you at all.

How to buy annuities in Washington through Maru

Maru helps you understand annuity types (fixed, indexed, variable) and their role in your retirement plan. We explain surrender charges, riders (like long-term-care), and how annuity guarantees are protected by the Washington Guaranty Association. We evaluate your situation for suitability and discuss alternatives before recommending an annuity.

Frequently asked questions

Vadim — Maru Insurance
Licensed independent insurance agent · WA & FL
Written and reviewed by a licensed Maru advisor. Maru Insurance is an independent agency (WA License WAOIC #1365574, FL License #G363233) representing multiple A-rated carriers across Washington and Florida.