Understanding Rate Lock and How It Differs Between Income Annuities and Fixed Annuities

Oct 4, 2022

Blueprint Income Team

A summary of rate lock procedures for income annuities and fixed annuities.

  • Rate Lock (the idea of knowing you’ll get the rate in effect when you apply, assuming certain requirements are met) procedures differ between income annuities and fixed annuities.
  • In general, when you apply for an income annuity (including immediate annuities and longevity annuities) the rate in effect when you apply is the rate you’ll receive. Rate Lock occurs when you submit what is referred to as an illustration with your application and that application is accepted “In Good Order” before the illustration expires.
  • When you apply for a fixed annuity, there is no illustration and Rate Lock procedures are murkier. In order to be sure that you receive the highest rates, it’s best to have your application “In Good Order” and ideally the funds transferred before the end of a calendar month (when an insurer is most likely to change rates). This, however, is not a guarantee that the rate in place when you applied will be honored.

Rate Lock is a complicated aspect of purchasing an annuity and it’s especially important in a falling rate environment, like the one we’re in now. In this post, we explain how Rate Lock differs between income annuities and fixed annuities (MYGAs) and we describe the steps we take to help you get the highest possible rate from insurers.

Annuity Illustrations and Income Annuity Rate Lock

An annuity illustration is always part of an income annuity application. The illustration shows the amount of guaranteed monthly income you’ll receive based on the parameters you’ve provided (gender, age, premium amount, income start date, death benefit features, and any riders). The illustration also describes the conditions under which the rate will be honored. Typically, it requires that the insurance company receives the application and approves it in good order by the illustration expiration date. The expiration date is typically 7-14 days from the date the illustration was created, depending on the insurance company. Once you have a Blueprint Income account, you can run, download, and save multiple illustrations to your account.

Having the rate from an income annuity illustration honored typically also requires that funds are transferred in the prescribed time frame. Depending on whether the policy is purchased using qualified or non-qualified funds, the allowable period for receipt of funds can range from 10 days to 2 months.

Summary of Income Annuity Illustration and Rate Lock Procedures

Insurers with One Week Rate Lock

  • American National
  • Guardian
  • Integrity
  • Lincoln
  • Minnesota Life
  • Mutual of Omaha
  • Nationwide

Insurers with more than One Week Rate Lock

  • AIG (2 weeks)
  • New York Life (2 weeks)
  • Pacific Life (2 weeks)
  • Principal (10 days)
  • Protective (30 days)
  • Symetra (10 days)
Can you lock in a fixed annuity/MYGA rate?

The short answer is no. There are typically no illustrations with fixed annuities, and even if there are, the insurer reserves the right to give you the rates applicable at the time of issuance of the policy. That said, barring a massive downward movements in rates, insurers will usually honor the rate applicable when the fixed annuity application was accepted “In Good Order.” It’s difficult to say that this is the policy industry-wide because sometimes insurers differ in how they treat one case from another.

What do we at Blueprint Income do to get you the highest possible rates?

Rate drops, in most cases, are easy to predict. When yields on medium-term (for MYGAs) and long-term (for income annuities) treasuries move, that’s usually a good leading indicator that annuity rates will soon move. Insurers reserve the right to update rates as often as they’d like, but insurers rarely update rates more than once a month barring some kind of major event in the capital markets.

It’s definitely the case that insurers’ Rate Lock policies are different. We try our hardest to work with those insurers who have been most accommodative in the past and are transparent about how they will treat different applications if specific conditions are met.

Believe us when we say this: we don’t like this status quo either. We think a common illustration and Rate Lock policy across insurers would go a long way to simplify matters. The Rate Lock rules are part of a broader set of aspects of your annuity purchase that can vary by insurer, by state, or even both by insurer and by state.

Rate Lock Rules

Vary by Insurer

Discussed above

 Guaranty Fund Limits

Vary by State

Read more here

Free Look Periods

Vary by both State and Insurer


mention of Free Look periods here

What does all this mean? If you follow these three rules, you should be OK:

  1. Work with someone experienced in income and fixed annuities and experienced specifically with working with the insurer that you’ve chosen to purchase a policy from.
  2. Make sure you understand the Rate Lock rules for the specific product you’re applying for.
  3. Ask questions if you don't understand or aren't sure if your understanding is correct.

And if you want a quick guide to how the annuity buying process works, you can find it here.

Blueprint Income Team

We are a team of finance, insurance, and actuarial professionals working to make it easier for everyone to achieve a steady and comfortable retirement. We write about annuities (the good and the bad) and provide strategies to help Americans prepare for retirement.