Fixed Annuity Rates: Frequently Asked Questions
Straight answers to the questions buyers ask most about fixed annuity and MYGA rates — how they work, how they compare to CDs, and what to check before you lock one in.
Last updated: June 1, 2026
Rates & getting the best deal
What is the best fixed annuity rate right now?
The best fixed annuity rate available right now is shown live in the rate table at the top of this page, which updates throughout the day as insurers change their pricing.
Multi-year guaranteed annuities (MYGAs) typically offer the highest fixed rates. Longer surrender terms and insurers with lower AM Best ratings often pay more — so the single highest number isn't automatically the best fit for you.
What is a good fixed annuity rate?
A good fixed annuity rate is one that beats comparable safe alternatives — like CDs and Treasuries of the same term — from an insurer with a financial-strength rating you're comfortable with.
Rate alone isn't the whole story. Before you judge a quote, compare:
- The guaranteed rate — and whether it's compound or simple interest
- The length of the rate guarantee (e.g. 3, 5, or 7 years)
- The insurer's AM Best (and other agency) financial-strength rating
- The free-withdrawal allowance (often up to 10% per year)
- The surrender-charge schedule and any market value adjustment (MVA)
- Whether it's a bonus or teaser rate that drops after year one
- The minimum premium and any contract fees
- How the death benefit passes to your beneficiaries
How are fixed annuity rates set?
Fixed annuity rates are set primarily by what insurers can earn on high-quality bonds, so they tend to rise and fall with prevailing interest rates — especially intermediate-term Treasury and corporate bond yields.
Insurers invest your premium mostly in bonds, keep a spread for expenses and profit, and credit the rest to you. Longer guarantee periods and the insurer's own pricing strategy and capital position also influence the rate.
Should I lock in an annuity rate now?
Whether to lock in a rate now depends on your time horizon and your view on rates — locking in guarantees today's rate for the full term, while waiting risks lower rates if yields fall but could capture higher rates if they rise.
Because no one reliably predicts interest rates, many buyers ladder annuities — splitting money across different terms — to balance the two. The right choice is the one that fits when you'll need the income, not a market-timing bet.
Annuity basics
What is a fixed annuity?
A fixed annuity is an insurance contract that guarantees your principal and pays a set interest rate for a defined period, with earnings growing tax-deferred until you withdraw them.
It's one of the most conservative annuity types, with no exposure to stock-market losses. Fixed annuities are commonly used to protect savings and create predictable retirement income.
What is a MYGA (multi-year guaranteed annuity)?
A MYGA, or multi-year guaranteed annuity, is a type of fixed annuity that locks in a set interest rate for a chosen number of years — typically 2 to 10 — much like a CD, but issued by an insurer and growing tax-deferred.
MYGAs usually offer the highest rates among fixed annuities and are popular for safe, predictable growth over a defined term. At the end of the term you can renew, withdraw, transfer, or annuitize.
What's the difference between compound and simple interest on an annuity?
Compound interest pays interest on both your principal and previously credited interest, so it grows faster than simple interest, which pays only on your original principal.
Over a multi-year term the difference can be meaningful, so always confirm which method a quoted rate uses. When comparing two annuities, make sure you're comparing compound to compound — or you'll overstate the simple-interest product.
Comparing your options
How do fixed annuity rates compare to CD rates?
Fixed annuities (MYGAs) often pay higher rates than bank CDs of the same term and grow tax-deferred, but CDs are FDIC-insured and more liquid, while annuities are backed by the issuing insurer and carry surrender charges for early withdrawal.
Because annuity interest isn't taxed until you withdraw it, a 5% annuity can leave you with more after taxes than a 5% CD — see the tax-equivalent yield comparison earlier on this page. CDs win on short-term flexibility and federal insurance; MYGAs win on rate, tax deferral, and longer guarantees.
How do I compare fixed annuities?
To compare fixed annuities, line up products with the same guarantee term and compare four things side by side: the credited rate, the insurer's AM Best rating, the free-withdrawal and surrender terms, and whether interest compounds or is simple.
Comparing a 3-year rate against a 7-year rate is apples to oranges. Match the term to when you'll need the money, then let financial strength and liquidity break ties between similar rates.
Why do direct-to-consumer (DTC) annuities sometimes have higher rates?
Direct-to-consumer annuities can show higher rates because some carriers reduce or remove the agent commission and pass part of those savings into the credited rate.
The tradeoff is that you give up personalized guidance on which product, term, and carrier actually fit your situation. A licensed multi-carrier marketplace can often access the same or comparable rates while helping you avoid a product that's wrong for your goals.
Ratings & safety
What are AM Best ratings and what do they mean?
AM Best ratings are financial-strength grades for insurers, running from A++ and A+ (Superior) and A and A− (Excellent), down through B++ and B+ (Good), B and B− (Fair), and lower.
The rating reflects AM Best's opinion of the insurer's ability to pay claims and meet its obligations. For long-term products like annuities, many buyers favor carriers rated A− or better, though strong B++ carriers are also common.
Is a B++ AM Best rating good?
Yes — a B++ rating falls in AM Best's "Good" category, meaning the insurer has a good ability to meet its ongoing obligations, though it sits below the "Excellent" (A / A−) and "Superior" (A+ / A++) tiers.
B++ carriers are common at the higher-rate end of the MYGA market. Many buyers accept a B++ rating in exchange for a stronger rate, especially when the contract stays within state guaranty-association coverage limits. Choose the rating level you're personally comfortable holding for the full term.
Are fixed annuities safe, and can I lose my principal?
A fixed annuity (MYGA) guarantees your principal and a stated interest rate, so you can't lose money to market swings — but the guarantee is backed by the issuing insurer's claims-paying ability, not the FDIC.
If you surrender early, you can get back less than you put in due to surrender charges and any market value adjustment. State guaranty associations provide a backstop up to limits that vary by state if an insurer fails — one reason to check the carrier's rating and keep amounts within those limits.
Access & withdrawals
What are free withdrawals on a fixed annuity?
Free withdrawals let you take out a set amount each year — commonly up to 10% of the contract value — without triggering surrender charges.
The exact allowance and when it begins (often after year one) vary by contract. Withdrawals may still be taxable and, before age 59½, may face a 10% IRS penalty even if they're penalty-free under the contract itself.
What is a surrender charge on an annuity?
A surrender charge is a fee the insurer deducts if you withdraw more than the free amount or cancel the contract before the surrender period ends.
Charges usually start higher (often 7–10% in year one) and step down to zero by the end of the surrender period, which typically matches the guarantee term. Staying within the free-withdrawal allowance and holding to term avoids them entirely.
What is a market value adjustment (MVA)?
A market value adjustment (MVA) is an increase or decrease applied to your withdrawal value if you take money out early, tied to how interest rates have moved since you bought the annuity.
If rates rose after purchase, an early withdrawal is typically adjusted down; if rates fell, it can be adjusted up. The MVA applies on top of any surrender charge and only affects early or excess withdrawals — not money you take at the end of the term.
Is there a penalty for withdrawing from an annuity early?
Withdrawals of taxable gains from an annuity before age 59½ are generally subject to a 10% IRS penalty, on top of ordinary income tax on the gain.
This federal penalty is separate from any surrender charge or MVA the insurer applies. Certain exceptions can apply, so check IRS guidance and ask a tax professional about your situation.
Taxes & transfers
How are fixed annuities taxed?
A fixed annuity grows tax-deferred, so you owe no taxes while interest accumulates; you pay ordinary income tax on the gains only when you withdraw them or receive income payments.
In a non-qualified annuity (bought with after-tax money), only the earnings are taxed, and withdrawals are generally treated as gains-first. In a qualified annuity (inside an IRA or similar), withdrawals are typically fully taxable. Tax deferral postpones taxes — it doesn't eliminate them.
What is a 1035 exchange?
A 1035 exchange is an IRS-permitted transfer that lets you move money from one annuity (or a life insurance policy) into a new annuity without triggering current income tax on the gains.
It's commonly used to move into a contract with a better rate or features once a surrender period ends. The exchange must go directly between insurers to stay tax-free, and the new contract may start its own surrender schedule.
What's the difference between a qualified and non-qualified annuity?
A qualified annuity is funded with pre-tax money inside a retirement account like an IRA, so withdrawals are generally fully taxable; a non-qualified annuity is funded with after-tax money, so only the earnings are taxed.
Qualified annuities are also subject to required minimum distribution (RMD) rules; non-qualified annuities generally are not. Which one you have changes how your withdrawals and any rollovers are taxed.
At maturity & beyond
What happens to my annuity when it matures?
When a fixed annuity reaches the end of its guarantee term, you typically have three choices: renew at the insurer's new rate, withdraw or transfer the money (often via a 1035 exchange), or annuitize it into a stream of income payments.
Many contracts auto-renew if you do nothing — sometimes at a lower rate — and a short window opens at maturity to act without surrender charges. Mark that window so a renewal isn't made by default.
What is the death benefit on a fixed annuity?
If you die during the contract, a fixed annuity generally pays the remaining account value to your named beneficiary, usually bypassing probate.
Beneficiaries can often choose a lump sum or a series of payments, and the gains are taxable to them as ordinary income. Naming and updating your beneficiary keeps the payout out of probate and aligned with your wishes.
Buying an annuity
What is the minimum amount needed to buy a fixed annuity?
Most fixed annuities have a minimum premium between about $5,000 and $25,000, with many MYGAs starting around $10,000.
Some carriers offer higher rate "bands" for larger deposits (for example, $100,000 or more). Minimums and rate bands vary by product, so check the specific contract.
Where can I buy annuities online?
You can buy fixed annuities online through independent annuity marketplaces and direct-to-consumer carriers, including platforms like My Annuity Store, Blueprint Income, Gainbridge, Stan The Annuity Man, and PlanEasy.
A multi-carrier marketplace lets you compare rates from many insurers in one place and work with a licensed agent, while a single-carrier site offers only its own products. Compare both the rate and the financial strength of the issuing insurer before you buy.
