How to Buy an Annuity: A Step-by-Step Guide

Buying an annuity can feel complicated, especially if you’re exploring the process on your own for the first time. The Multi-Year Guaranteed Annuity (MYGA) from Canvas is designed for buyers who want to purchase an annuity online, without using an agent or paying a commission. As a result, the process is refreshingly straightforward.

Before you dive in, take a little time to learn about your options and what to expect. This article breaks it all down, covering the types of annuities to consider, what you need before applying, and the step-by-step process of buying an annuity.

Which Type of Annuity Should You Buy?

If you want to buy an annuity, the first step is to determine what type of annuity you want, and they’re not all the same. There are multiple types of annuities, and to find the right match, you need to identify your goals and preferences.

• Do you want an annuity that provides a guaranteed crediting rate? A fixed annuity provides a guaranteed crediting rate. You’ll receive a predetermined crediting rate regardless of how the market performs, so you have no market exposure. This can be a good option for annuity buyers who are worried about how a market downturn could affect their savings. A Multi-Year Guaranteed Annuity (MYGA) is a type of fixed-rated annuity that guarantees a minimum crediting rate for multiple years. The Canvas Future Fund is a MYGA.
• Do you want some market exposure with built-in protection? A fixed indexed annuity provides a minimum guaranteed crediting rate and performance is linked to a market index. Your crediting rate won’t fall below the predetermined minimum regardless of how the market performs. This can be a good option for annuity buyers who want the potential for higher gains but want to control their risk.
• Do you want the potential for larger gains? A variable annuity has a variable crediting rate that’s directly tied to underlying investments. If the investment performs well, your annuity can provide higher yields – but your principal is at risk if the investment does not perform well. This type of annuity can be a good option for annuity buyers who are fine with taking on more risk.
• Do you want to start receiving income payments immediately? A Single Premium Immediate Annuity (SPIA) is funded with a single, lump-sum payment and begins providing income payments soon after purchase. A SPIA can be a good option for annuity buyers who want to convert funds into a pension-like stream of income that can last for a set period or for their lifetime. The Canvas Forever Fund is a commission-free SPIA.

Interested in the MYGA? Learn more about the advantages below.

What You Need Before You Apply

Once you’re ready to buy an annuity, you’ll need to complete the application. You can do this online, and the process can be easy – as long as you have all your documents ready. Before you begin, organize all your documents so you won’t hit any roadblocks.

What documents do I need to buy an annuity?

Use this checklist when applying for an annuity.

• Government-issued ID. You will need to confirm your identity, and you may also need to provide proof of your age. You can use your driver's license. To apply online, you will need a picture of the front and back of your license.
• Social Security number. In addition to your ID, you will need to provide your Social Security number.
• Beneficiary information. The annuity beneficiary is the person, people, or entity you name to receive the value of your annuity after your death, per the terms of the annuity contract. You’ll need the beneficiary’s name, date of birth, and relationship to you. Providing the beneficiary’s Social Security number can help with identification.
• Funding source information. For example, you can use a personal bank transfer, an IRA rollover or a 1035 exchange. Whichever funding source you use, you’ll need the account information.

How long does it take to buy an annuity?

If you have all the documents you need, the application process can be very quick. However, you’ll also need to wait for application approval and funding. The entire process may take two to six weeks, and purchases using account rollovers tend to require more time.

If you’re purchasing a Canvas Multi-Year Guaranteed Annuity with funds from a checking or savings account using ACH, paper check or wire transfer, you can complete the application in less than 10 minutes and your policy will be issued soon after.

Steps to Buy an Annuity Through Canvas Annuity

You can purchase an annuity from Canvas using an easy online process. For simple applications, you can complete the process on your own using the simple online form without an agent. For more complicated applications, or if you would like help, you can use the online applicant portal to complete the application with the assistance of an agent.

Option 1. Apply for an annuity with the help of an agent.

The agent-assisted process is ideal for more complicated annuity purchases, such as those involving funding from a life policy, IRA, 401(k), or other rollover, or for annuities owned by trusts, corporations, or charities, or if you’d feel more comfortable with assistance. An agent will assist you with the annuity application. To get started on your agent-assisted annuity application, you’ll need to register for the applicant portal.

• Enter your name, contact information, date of birth, Social Security number, gender, and citizenship status.
• Upload photos of the front and back of your driver’s license.
• Create a password.

Option 2: Apply for an annuity using “DIY” fast application process.

This is ideal if you want a fast process; you’re funding your annuity from a checking or savings account; and you can navigate simple online forms easily. You can compete the entire process in less than 10 minutes.

To get started on your annuity application, use the online application form. The online form will guide you through the entire process, but here’s an overview of how to purchase an annuity without an agent.

• Enter your name, email address and state.
• Select the type of annuity you want to purchase, and answer some simple questions about your income, expenses, savings and funding needs.
• Provide additional information about the annuity owner and annuitant. The owner is the person who purchases the annuity, and the annuitant is the person who receives the payments and who’s life acts as the “measuring life” for the payout schedule. If you’re buying an annuity for yourself, you are both the owner and annuitant. You’ll need to provide your name, contact information, date of birth, gender, citizenship status, Social Security number, and whether you have any other life of annuity contracts.
• Provide information about the beneficiary you would like to designate.
• Provide account details to fund the annuity. If you’re funding an annuity from checking or savings, you can use ACH, paper check or wire transfer. (Do you want to fund your annuity by rolling over your 401(k) or other account? Use the application portal in Option 1 instead.)
• Review and sign your application.

Opening an Annuity Online Has Never Been Easier

Whether you’re looking for a fully digital experience so you can buy a commission-free annuity online by yourself, or you’re interested in receiving agent assistance, buying an annuity has never been easier.

Canvas offers a simple way to buy annuities, with options that protect your principal from market loss. Canvas is owned by Puritan Life, an insurance company with a 65-year history and a B++ rating from AM Best.

Apply for an Annuity today.

Online Annuity FAQs

Can I buy an annuity without a financial advisor?

Yes, you can buy an annuity online without a financial advisor or agent. If you’re funding your annuity with money from your checking or savings account, use the Canvas Annuity fast application process.

Can I roll my 401(k) or IRA into an annuity?

Yes, you can roll your 401(k) or IRA into an annuity, but to avoid triggering taxes, it’s important to follow IRS rules. A direct custodian-to-custodian transfer is the usual method. Use the Canvas online application portal, and an agent will be happy to assist you with the process.

What is the minimum amount needed to buy an annuity?

Many people are surprised to learn that you don’t need a lot of money to buy an annuity. The minimum amount will depend on the company and annuity product. You can buy a Canvas Future Fund with as little as $2,500.

What’s the difference between a fixed annuity and a MYGA?

A MYGA is a type of fixed annuity. Fixed annuities provide a predetermined guaranteed crediting rate. A MYGA uses a contract that covers multiple years, and your crediting rate is predetermined and guaranteed for the length of the term you select. If you want an annuity that will provide reliable earning for multiple years, and you’re worried about how market volatility could affect your principal, a MYGA is a good way to ensure a guaranteed crediting rate and protect your principal from market losses.

What is a 1035 exchange?

A 1035 exchange is a way to transfer funds from one account to another account of the same type, for example, from one annuity to another. If you have an annuity but you would like to switch to a Canvas annuity, a 1035 exchange provides a tax-free way to do it that complies with IRS rules. Use the Canvas online application portal, and an agent will assist you with the process.