Best 3 Year Fixed Annuity Rates October 2021

3 year fixed annuity rates

Today's Best 3 Year Fixed Annuity Rates

My Annuity Store’s best 3 year fixed annuity rate is 2.35% as of October 11, 2021. It is available in the Oceanview Harbourview 3 and allows for 10% free withdrawals in contract years two and three.

The table below lists the best 3 year fixed annuity rates available today.

 Fixed Annuity CompanyRatingFixed AnnuityLiquidity
1st Yr / Yr 2+
Oceeanview logo Oceanview Life
A-Harbourview 30% / 10%2.35%Apply
Sagicor life logo Sagicor Life InsuranceA-Milestone MYGA 3 ($100K+)0% / 10%2.30%Apply
American life logo American LifeB++American Classic 3 MYGA0% / 10%2.25%Apply
Liberty bankers life logo Liberty BankersB++Bankers Elite 3None2.10%Apply
Liberty bankers life logo Liberty BankersB++Bankers 3Interest Only2.00%Apply
Fidelity & guaranty life annuity logo Fidelity & Guaranty LifeA-FG Guarantee-Platinum 3Interest Only1.95%Apply

You’ll find Fixed Index Annuity Rates here if you’d like to look at them instead.

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What is a 3 Year Fixed Annuity?

A 3 year fixed annuity is essentially a 3 year Certificate of Deposit (CD) issued by an insurance company instead of a bank. 3-year fixed annuities provide a guaranteed annuity rate for 3 years.

After the 3 year guarantee period you will have the option to either renew for another 3 year period at the new declared interest rate, withdraw your funds, convert your annuity to monthly income payments, or transfer to a new annuity using a tax-free 1035 exchange.

As stated above, in addition to providing a guaranteed rate of return for the initial 3-year investment term, 3 year fixed annuities provide the opportunity to turn your savings into lifelong, pension-like income. The fixed annuity rate guarantee is backed by the financial strength of the issuing insurance company.

IMPORTANT NOTE: You have likely heard of a fixed annuity referred to as any of these other names:

Illustration of woman with money going into safe and then the money coming out and the woman has aged

Fixed Annuity Definition:

With a fixed annuity, the insurance company guarantees both the rate of return (the interest rate) and the payout to the investor. Although the word “fixed” might suggest otherwise, the interest rate on a fixed annuity can change over time. 

The fixed annuity contract will explain whether, how, and when this can happen. 3 year fixed annuity rates are fixed for the initial 3 year contract period and a new interest rate is declared at the end of the 3 years.

 You’ll have an option to withdraw your funds, transfer to a new investment vehicle or accept the new declared rate.

Source: “Learn to Invest, Investment Types, Annuities, Fixed Annuities.”  Financial Industry Regulatory Authority (FINRA).  Visit FINRA’s Fixed Annuities Webpage

Fixed Annuity vs. CDs

Fixed annuities work very much like a certificate of deposit (CD). Both a fixed annuity and a CD provide principal protection, meaning your account value will not decrease due to market performance. A fixed annuity, or MYGA, guarantees a set interest rate for a specified period of time – just like a CD. However, Fixed annuity guarantees are backed by the claims-paying ability of the issuing insurance company and are not insured by the FDIC like a CD. While not FDIC insured, State Insurance Guaranty Associations provide a safety net for their state’s annuity policyholders. These Guaranty Associations guarantee policyholders continue to receive coverage (up to the limits spelled out by state law) even if their insurer is declared insolvent.
Financial InstitutionAPY 5 yearMinimum Deposit
Delta Community Credit Union1.25%$1,000
SchoolsFirst Federal Credit Union1.01%$20,000
VyStar Credit Union1.00%$500
First Internet Bank of Indiana0.96%$1,000
Suncoast Credit Union0.95%$500
Golden 1 Credit Union0.90%$500
Navy Federal Credit Union0.90%$1,000
Comenity Direct0.90%$1,500
Ally Bank0.85%$0
Randolph-Brooks Federal Credit Union0.85%$1,000

Best 5 Year CD Rates

Effective February, 27 2021. Source:

Calculating Real Rate of Return for CDs

In 18 of the past 30 years, CDs have had a negative return (after taking into account the impact of taxes and inflation), and in three of the positive years, they earned less than a 1% real rate of return.

Have you considered the impact that taxes on interest may have on your overall rate of return? Generally, the interest received in these CD’s may not keep pace with inflation. This could mean lower purchasing power for you over time. Also, at renewal, a new rate along with a new withdrawal penalty may apply.

Here’s a quick way to determine your CD’s real rate of return:

3 step process to calculating real rate of return on a cd

Fixed Annuity vs CD Comparison Table

Issued ByInsurance CompaniesBanks
Investment Amount$2,000 - $1,000,000Essentially Any Amount
Investment Term3 years - 10 years3 months - 5 years
Interest Rates (APY)Rates by product but usually higher.Varies by financial institution, term and investment amount.
LiquidityUsually, 10% annually or interest earned.Almost always accumulated interest.
GuaranteesThe claims-paying ability to issue Insurer and by State Guaranty Funds.Backed by the FDIC up to $250,000 per depositor, per institution.
Death BenefitPassed directly to the beneficiary without probate process.Probate process required.
1035 exchange banner my annuity store, inc

Can I Exchange My Annuity for a New 3 Year Fixed Annuity?

The Internal Revenue Service (IRS) allows you to exchange an annuity policy that you own for a new annuity policy without paying tax on the investment gains earned on the original contract. 

This can be a substantial benefit. This rule is governed by Section 1035 of the Internal Revenue Code which is why these are called “1035 Exchanges.” Below is a direct link to the complete text of the code.

U.S. Code > Title 26 > Subtitle A > Chapter 1 > Subchapter O > Part III > Section 1035


1035 Exchange Rules

There are a couple of important rules that must be followed in order to receive the benefits of a 1035 Exchange.

  • The tax code says that the old annuity policy must be exchanged for a new policy – you cannot receive a check and apply the proceeds to the purchase of a new insurance policy.
  • You can 1035 exchange from a life insurance policy to an annuity
  • You can 1035 exchange from an annuity to a long-term care policy.
  • You can not 1035 exchange from an annuity to a life insurance policy

Here is an example of an actual 1035 Exchange form you would need to complete to move from one annuity to another via a 1035 Exchange.


Advantages of a 1035 Exchange

The primary advantage of using a 1035 exchange to exchange your existing life insurance or annuity policy for a new contract is it is not a taxable event. 

There are different scenarios where exchanging life insurance policies or annuity contracts might make sense. For example, advantages of a 1035 exchange include:

  • You need more life insurance coverage than you currently have
  • You want to change the type of life insurance policy you have
  • You’re looking for an annuity contract with lower fees
  • You want to restructure your annuity payments
  • You currently own a variable annuity and your risk tolerance has changed

As long as you’re exchanging contracts within the guidelines set by the IRS you all of the above events will be tax-free to you. 

How is a Fixed Annuity Taxed?

The deciding factor on how your fixed annuity will ultimately be taxed depends ultimately on the money you used to buy it. 

Since we are talking about taxes there is no way to say with certainty exactly how your annuity will be taxed. Tax laws and tax rates can and do change all the time.

However, we can make very educated guesses about certain scenarios based upon how annuities have been and are taxed currently. First, we will look at the types of funds you can use to purchase an annuity and explain the differences in how they are taxed.

Roth IRA Annuity Taxation

If you purchase a fixed annuity with funds from a Roth individual retirement account (IRA) or Roth 401(k) it is very likely you won’t have to pay federal income tax at all on the money when you withdraw it from your annuity. That includes the principal and interest.

Qualified funds are monies that you have never paid taxes on such as a traditional IRA or a traditional 401(k). It would be nice if the IRS would allow going from tax-deferred to tax-free but that is not the case.

When you begin to make withdraws from a qualified annuity you will pay normal federal income taxes. Meaning, 100% of your annuity is treated as ordinary income and 100% of the funds will be taxed when they are taken.


Qualified Annuity Taxation

A non-qualified fixed annuity is an annuity purchased with after tax-dollars such as money from a taxable personal savings or checking account or a personal brokerage account.

If you own a non-qualified annuity, you will only pay income tax on the gain in your contract but not the money you used to purchase the annuity. The money used to purchase a non-qualified annuity is considered the “basis”. Insurance companies keep track of your “cost-basiswhich is the original amount used to purchase an investment.

This “cost-basis” is the amount of money on which you will not pay taxes because you’ve already taxes on it once. The interest earned will be taxed as ordinary income, with a few exceptions that we will discuss momentarily.

Lifetime Income Annuity Taxation

A 3 year fixed annuity can be converted to an income annuity at the end of the initial 3 year annuity contract period via annuitization.

There are really two types of income annuity payout options: lifetime or period certain. A lifetime annuity is an annuity that guarantees payments for as long as you are alive whereas a period certain annuity guarantees payments for a specified period of time. 

Remember, if you own a non-qualified annuity you only pay taxes on the interest earned not the original cost basis. So to determine what portion of your monthly payments are taxable there is a calculation that needs to be done to establish what percent of each annuity is principal (or cost-basis) and what percent is interest earned.

These calculations establish your exclusion ratio, or in plain terms, the percent of each annuity payment that is exempt from income taxes. The method of determining the exclusion ratio varies depending on whether you have a period certain annuity or a lifetime annuity. Let’s look at an example for each.

3 Year Fixed Annuity Buyers Guide

Fixed annuities, or Multi-Year Guarantee Annuities (MYGAs), are the simplest of all annuities making them the easiest variety to shop for and compare. However, there are still a few important items to consider when shopping for the best 3 year fixed annuity rates, other than the guaranteed interest rate.

1. Duration: Typically the longer contract you purchase the higher your guaranteed interest rate will be. But that is not the case, especially given the current inverted yield curve.

2. Liquidity: Most all fixed annuities have some type of annual free withdrawals, but the amount available varies by product. You’ll see most of the fixed annuities at our marketplace provide interest-only withdrawals annually. Others allow for 10% Free Withdrawals (10% of previous years’ account value) annually.

3. Insurance Company’s Financial Rating: It is very important to consider an annuity company’s financial rating because it is an indicator of its ability to fulfill financial commitments to its policyholders. Usually, a lesser-rated insurance company will offer higher fixed annuity rates, but this is not always true.

Pros and Cons of a Fixed Annuity

Fixed Annuity Pros

Fixed annuities are meant to be long-term retirement savings vehicles.  They provide a safe, tax-advantaged way to earn a good return on savings needed soon. They are remarkably like CDs, with added benefits:

  • Provide a Guaranteed Rate of Return
  • Grows Tax-Deferred
  • Principal Protection
  • Offer Some Liquidity
  • The Most Simple of All Annuities

Fixed Annuity Cons

  • Annuity Withdrawals prior to age 59½ may be subject to a 10% IRS penalty.
  • Limited Income Options
  • Limited Liquidity Options
  • Won’t provide equity-like returns

Fixed Annuity FAQs

Yes. Insurance companies as a whole have a long history of stability, even thru our nation’s most difficult economic times. Fixed annuities are backed by the full faith and credit of the issuing insurance company so it is important to consider the financial strength of an annuity company when purchasing a fixed annuity.


A “CD Type Annuity” is a type of fixed annuity that guarantees a specified interest rate for a set number of years. They are also often referred to as a Multi Year Guaranteed Annuity.

When you purchase an annuity contract you are committing to leave your money there for the duration of your annuity (usually 2 to 10 years). However, most fixed annuities allow taking free withdrawals of interest earned or up to 10% free withdrawals annually (varies by annuity company and contract)

There are no fees for any of the fixed annuities listed on this page and, in general, fixed annuities do not have any fees. However, there are some fixed annuity products that offer optional income riders, death benefit riders, or long term care riders for an additional annual fee.

A 3 year fixed annuity is an annuity contract with a three year surrender charge schedule (CDSC). 3 year fixed annuit rates are locked in for the initial 3 year annuity contract period and you agree to keep the annuity for the 3 year contract term.

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