CD Type Annuity

Worried older couple looking at laptop with calculator in hands - cd type annuity featured image

CD Type Annuity: A CD Alternative

A CD-type annuity is essentially a CD that is issued by an insurance company instead of a bank. Bank CDs and “CD Type” annuities both credit interest in the same way.

Just like a bank certificate of deposit (CD), a CD Type annuity credits a guaranteed rate for a set number of years. The interest rate and term of the contract period are contractually guaranteed by the insurance company issuing the policy.

Retirement isn't supposed to be hard - cd type annuity infographic

Today's Best CD Type Annuity (MYGA) Rates

The below table lists our best CD Type Annuity rates. Compare today’s best CD rates to the best-fixed annuity rates here.

TermInsurer AnnuityRateAM BestW/Ds 
2 Years Americo financial annuity logo AmericoPlatinum Assure4.30%AGreen check mark
3 Years Guaranty income life insurance company logo Guaranty Income LifeGuaranty Rate Lock5.30%A-Green check mark
4 Years Guaranty income life insurance company logo Guaranty Income LifeGuaranty Rate Lock5.40%A-Green check mark
5 Years Ibexis annuity logo Ibexis MYGA Plus6.00%A-Green check mark
6 Years Oceanview annuity logo OceanviewHarbourview5.30%A-Green check mark
7 Years Aspida annuity logo ASPIDASynergy Choice5.55%A-Red check mark
8 Years Oxford life insurance company logo Oxford LifeMulti-Select 4.95%AGreen check mark
9 Years Oxford life logo Oxford LifeMulti-Select 4.95%AGreen check mark
10 Years Oceanview annuity logo OceanviewHarbourview5.20%A-Green check mark

Request Annuity Rates Report

Fill out the form below to receive a free annuity quote or use one of our annuity calculators.

Can You Lose Money In a CD Type Annuity?

Although fixed annuities are not insured by the federal government, they’re considered safe because they’re insured by the issuing insurance company and, in most cases, also by state guaranty associations.

Since a fixed annuity is guaranteed by the issuing insurance company’s ability to meet its policyholder obligations – it is important to consider the life insurance company’s financial rating when buying an annuity. 

Bank CDs are considered an extremely safe investment because the FDIC insures them for up to $250,000.

CDs vs Fixed Annuity

The below table compares and contrasts some of the key similarities and differences between a CDs and CD Type Annuities. The main difference is an annuity’s interest grows tax-deferred while the interest you earn in a CD is taxable in the year it is earned, regardless of whether or not you spend it.

Issued ByInsurance CompaniesBanks
Investment Amount$2,000 - $1,000,000Essentially Any Amount
Investment Term2 years - 10 years3 months - 5 years
Interest Rates (APY)Varies by product.Varies by bank, term and investment amount.
LiquidityUsually, 10% annually or interest earned.Almost always accumulated interest.
GuaranteesBacked by Insurer & State Guaranty Associations.Backed by the FDIC.
Death BenefitMay avoid probate.Probate process required.

Access to Your Money

Annuities are not as flexible as CDs, and they have higher penalties for early withdrawals greater than the contract’s free withdrawal amount.

Fixed Annuities

Annuity annual free withdrawal amounts vary by company but are usually either 10% of the annuity’s account value or interest earned. A withdrawal during the initial contract period is subject to a declining surrender charge schedule. 

For instance, a 5 year fixed annuity may have a surrender charge of 8%, 7%, 6%, 5%, 4%, 0% surrender charge schedule. This means a withdrawal above the free amount would be charged an 8% penalty in year one, 7% in year two, 6% in three, etc.

In addition to the penalties imposed under the annuity contract, annuity owners under the age of 59½ must pay the IRS a penalty of 10 percent for early withdrawal from an annuity.


If you close a CD earlier than scheduled, the penalty you pay is typically the interest you have earned. So you always get back at least your original deposit.

And whereas penalties for early withdrawals from a CD typically increase each time the CD is renewed, penalties for early withdrawals from an annuity are fixed.

How Are Annuities Taxed?

The interest you are paid on a certificate of deposits (CD) is taxed in the year in which it is received whereas interest earned from an annuity grows tax-deferred until you withdraw your funds.

You pay taxes on interest earned on a CD whether you spend it or not.

Try this annuity vs CD calculator to see the difference in the interest you will earn in a taxable vs tax-deferred savings account. 

Dollar Amount$100,000 $100,000
Interest Rate5%5%
Interest Earned$5,000 $5,000
Tax Bracket32%32%
Taxes Payable$1,600 $0
After Tax Earnings$3,400 $5,000
Net After Tax Yield3.40%5%
Interest Earned $5,000$5,250
Taxes Payable$1,600 $0
After Tax Earnings$3,400 $5,250
Net After Tax Yield3.40%5.25%

Annuities allow a surviving spouse access to the annuity funds without penalty. However, penalties apply to CDs in the event of the death of a spouse.

Annuity beneficiaries are not required to go through probate court in the event of the annuity owner’s death to claim their benefits.

Related Articles

An Elderly Retired Couple Sitting on a Bench with their back towards us. My Annuity Store Annuity Company Directory.
Fixed Annuity

Nationwide Secure Growth Annuity | 7 Year

Details and review for the Nationwide Secure Growth 7-year annuity paying 5.35% for $100K+, 10% free withdrawals, & full account value at death.

Life Expectancy Tables
Fixed Annuity

Nationwide Secure Growth 5

The Nationwide Secure Growth 5 Annuity is an individual, single-purchase payment, deferred fixed annuity designed for long-term savings.

North American Guarantee Plus 5 Annuity Brochure Cover
Fixed Annuity

North American Guarantee Plus 3

North American Guarantee Plus Annuity can help protect your retirement savings, while also offering the potential for higher interest rates.

Best Annuity Rates in White Text Over a Picture of $100 Bill Under UV Light
Fixed Annuity

Best Annuity Rates for November 2022

Compare today’s current annuity rates for 2022; including immediate annuity rates, fixed annuity rates, fixed index annuity rates, and bonus annuities.

Get a Free
Annuity Quote

My Annuity Store, Inc. BBB Business Review