Well, that's quite a big assumption.
What is the guaranteed rate of return under that option?
If you could get even a 5% guarantee and don't have an immediate need for the money, I'd take it in a heartbeat.
Annuity terms are all over the place with all sorts of provisions, terms and contingencies; so generally it's not wise to focus on one aspect of the annuity (the interest rate) without understanding all the provisions.
Look at it this way, if the annuity is structured to pay 1,000. a year for 30 years, the first year, if the annuity earned 7.5%, that would equal $816.67. So that 1st year the balance of the $1,000. would come from principal, or $183.33. That would leave a balance of $10,704.67 for year 2 @ 7.5% would equal 802.85 and the balance of the $1,000. withdrawal would have to come from principal or $197.15 leaving a principal balance for year 3 of $10,507.52, and so on.
The only problem is, that the Insurance Company has the same investment problems you do. Where are they going to earn 7.5% in today's investment market? Making unrealistic projections is only one of the significant problem with annuities.
So, the only projection you can rely on, is the guaranteed rate of return and only then if the Insurance Company itself has at least an A rating as their obligations are only as good as the Insurance Company's ability to stay in business and honor their commitments. In the past, many Insurance Company's defaulted on the their annuity obligations because they couldn't achieve the investment earnings "guaranteed" in their contracts.
How much did your current annuity earn over what period? What was your initial deposit?