Best 3-Year Fixed Annuity Rates

What Is a 3-Year Fixed Annuity?

A 3-year fixed annuity is an insurance contract that guarantees a fixed interest rate for three years. You pay a lump-sum premium, the insurer credits a locked rate, and at the end of the term you can withdraw the money, renew into a new contract, roll into another annuity tax-free via a 1035 exchange, or annuitize for income.

Because the term is short, a 3-year MYGA is the closest annuity equivalent to a 3-year bank CD. The difference: the rate is usually higher, growth is tax-deferred, and the contract is issued by a life insurance carrier rather than a bank.

A 3-year fixed annuity typically includes:

• A guaranteed interest rate for the full 36 months
• Principal protection from market losses
• Tax-deferred growth (no 1099-INT each year)1
• 10% annual penalty-free withdrawal provision on most contracts
• Surrender charges if you exit before month 36
• A renewal rate or contract maturity options at the end of year 3

Fixed Annuity Rates vs CD Rates

Fixed annuities and CDs both provide a guaranteed interest rate while protecting your principal from market fluctuations. On rate alone, fixed deferred annuity rates have generally paid 1.0% to 1.75% more than top CDs at the same term over the last 24 months.

However, fixed annuities are designed for long-term savings goals (like retirement) and their growth is tax-deferred, whereas CDs are typically for short or intermediate goals and their interest is subject to income tax each year.

On a $100,000 deposit, today’s best 3-year fixed annuity at 6.50% grows to about $119,500, versus $113,137 for a 4.20% 3-year CD. That is roughly $6,363 more in interest over 3 years.

A 3-year MYGA may be a better fit if you:

• Want tax-deferred growth on retirement dollars
• Can leave the money untouched for 36 months
• Are over age 59A« (or comfortable waiting until then to withdraw)
• Want a higher guaranteed rate than a bank offers

A 3-year CD may be a better fit if you:

• May need the money before the term ends
• Are under age 59A« and may need early access
• Prefer FDIC insurance2 and a bank relationship
• Are in a low or zero tax bracket

For a full breakdown, see our fixed annuity vs CD comparison guide or run your numbers through our CD vs annuity calculator.

What Happens When the 3-Year Term Ends?

About 30 to 60 days before the contract matures, the carrier sends a maturity notice listing your options. You typically have a 30-day window (some carriers 10-day) to make a decision. If you do nothing, most contracts auto-renew at the carrier’s current renewal rate, which is rarely the best available rate on the market.

Before that window closes, compare three things:

• The carrier’s renewal rate offer
• Current best-available 3-year, 5-year, and 7-year rates on the open market
• Your own need for liquidity versus another lock-in

If a different carrier offers a better rate, a 1035 exchange moves the money tax-free. We handle that paperwork for clients at no cost.

What Affects Fixed Annuity Rates?

Rates are driven by a mix of market conditions, insurer strategy, and product design. The factors below explain why one contract pays 6.50% while another pays 5.20% on the same term.

• Interest rates and Treasury yields. Insurers invest premiums in bonds, so when yields rise, annuity rates rise3.
• Contract term length. Longer terms usually pay more, but lock you in longer.
• Insurer pricing strategy. Some carriers compete aggressively on rate; others offer slightly lower yields with stronger ratings.
• Financial strength and risk profile. Lower-rated carriers often lead the rate tables.
• State availability. A contract offered in Florida may not be approved in New York.
• Premium amount. Deposits of $100,000+ typically earn higher tier rates.
• Optional features and liquidity. Enhanced free withdrawals and riders trade base rate for flexibility.

How to Buy a 3-Year Fixed Annuity

The process takes 15 to 30 minutes and looks roughly the same at every carrier:

• Step 1: Compare live rates. Use the table above or request a personalized rate report with your state, age, and deposit amount.
• Step 2: Review carrier financials. Check AM Best, S&P, and Moody’s ratings. We recommend A- or better4.
• Step 3: Complete the application. Most carriers offer e-application. You will need ID, beneficiary info, and funding source.
• Step 4: Fund the contract. Transfer from a bank, another annuity (1035), or an IRA rollover.
• Step 5: Free-look period. Every state gives you 10 to 30 days to review the issued contract and cancel penalty-free5.

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