CD vs. annuity: compare the protections, not only the rate
A CD is a bank deposit. An annuity is an insurance contract. A useful comparison starts by putting both choices on the same time horizon.
| Question | Bank CD | Fixed annuity |
|---|---|---|
| Who issues it? | A bank or savings association | An insurance company |
| What backs it? | FDIC insurance may apply within coverage rules and limits | The issuing insurer's claims-paying ability |
| How is access limited? | Early-withdrawal penalties may apply | Surrender charges and contract provisions may apply |
| When is interest taxed? | Interest is generally taxable as earned, subject to account type and tax rules | Tax deferral may apply until distributions, subject to contract and tax rules |
| What happens at the end? | Review maturity and renewal instructions | Review guarantee-period end, renewal, surrender, and maturity provisions |
Use your own numbers
Write down the exact deposit or premium, term, rate, withdrawal needs, tax setting, and end-of-term instruction. A licensed insurance professional and qualified tax adviser can address product and tax questions.
Primary sources
- FDIC: What deposit insurance covers
- NAIC: Buyer's Guide to Fixed Deferred Annuities
- IRS Publication 575
Reviewed September 9, 2026