While annuities can vary in their structure, at their core, they provide either a variable or fixed rate of return on invested capital at a future date and are offered by an insurance company. While no investments provide guaranteed returns, annuities are backed by insurance companies - so they are relatively safer investments. In comparison, p2p provides higher risk-adjusted returns but does not offer the promise of a fixed return nor protection of initial investment. However, consumer credit (very similar to p2p) has existed for decades and continues to produce consistent profits for banks and credit card issuers - now individuals can capture those same returns. With an annuity, you can attempt to remove some risk, but as a result, they provide a relatively low rate of return.
Also, it’s important to understand fully all of the fees that may be involved if you purchase an annuity - such as surrender charges, insurance charges, and investment management fees. The fees involved with p2p investing are typically an investor service fee for payments received, as well as a management fee if you choose an independent investment manager for your portfolio.
For example, as of the time of writing this article (June 7, 2016), an average 10-year fixed rate immediate annuity yields between 3-4% according to immediateannuities.com.
According to the NSR Platform, average returns for loans issued between 2008-2015 have been 6.16% as of June 7, 2016.