Understanding what life annuity rates are (a life annuity is an investment instrument) is important before anybody considering purchasing such a thing as an annuity actually does invest in one. Basically, these annuities (known more commonly as “life insurance annuities”) can be a way for a person investing in one to ensure a reliable (in some cases, guaranteed) income stream that can be paid out for a pre-set length of time or for one's whole remaining life (the life left after the annuity is purchased).

Life annuity rates also depend on the kind of annuity that's purchased, and these are a wide variety of such investment instruments being offered these days.  Additionally, they're normally the province of life insurance companies, who are the most common offerors of such instruments. They're also sold by registered and licensed agents, all of whom offer a variety of investment products.

In general, life annuity rates depend on the specific type of annuity product that's purchased. Something like a fixed rate annuity depends upon an investment in the annuity, which then invests in low-risk securities such as government bonds. It can offer a guaranteed rate of return because the bonds invested in by the annuity administrators will be returning back a guaranteed rate of return themselves, which is then passed along to the annuitants.

Annuitants, for purposes of discussion, are those people who purchase an annuity. They're generally looking for a way to fund something like a retirement or expect to have a paid-out rate over a pre-determined period of time, for example, 10 years. Some instruments that feature high life annuity rates pay out at higer levels than others but they come with a bit more risk.  And remember that an annuity is only guaranteed to the extent the company that sold the annuity stays in business.

The above is why it's a very good idea to check out the company selling the annuity before purchasing it, even before looking at the life annuity rates the company is offering or promising. It's generally best to purchase one from a company that's considered “blue chip” or which is rated highly by certain ratings agencies. For those who can tolerate a little more risk, one can always go for an annuity coming from a company a little less well-known but which is offering a higher rate of return.

Life annuity rates also will depend upon the length of the annuity and the money invested in the annuity as well as the type of annuity purchased. If the instrument is “annuitized” (meaning that it'll last for the life of the person who bought it) then the chances are good it'll pay out a lower rate than one which is funded and purchased for a pre-set length of time.

Annuities can be a valuable investment product and can work when they're one part of a menu of investments. Always research the company offering them as well as the agent who'll be selling it, because most always work on commission. This isn't a slam against that concept at all; just remember to make sure the agent knows who he or she is going to be working for.