Today's Top
Annuity Rates

2 Year

3 Year

6.15% Simple
5 Year

10 Year

CD Type Annuity

Worried older couple looking at laptop with calculator in hands - cd type annuity featured image
Table of Contents
    Add a header to begin generating the table of contents
    Scroll to Top

    MYGA Annuities are often referred to as a CD Type annuity because of the similarities they share. CD Type annuities pay a set interest rate for a specified period of time and typically allow you to take your interest payments monthly.

    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 of 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 Rates

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

    TermInsurerCompany DetailsRateAnnuity AM BestApplication
    2 Years Oceanview life and annuity logo Oceanview Life5.00%CL SundanceA-Apply
    3 YearsSecurity sentinel life logoSentinel Security5.90%CL SundanceB++Apply
    4 Years Nassau logo Nassau5.50%MyAnnuityB++Apply
    5 Years Ibexis annuity logo Ibexis 6.15% SimpleMYGA PlusA-Apply
    6 Years Equitrust annuity logo EquiTrust5.80%Certainty SelectB++Apply
    7 Years Nassau logo Nassau5.80%Platinum AssureB++Apply
    8 Years Equitrust annuity logo EquiTrust5.50%Certainty SelectB++Apply
    9 Years Clear spring life and annuity logo Clear Spring5.40%MYGA PreserveA-Apply
    10 Years Equitrust annuity logo EquiTrust5.60%Certainty SelectB++Apply

    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.

    How Tax-Deferral Works in Annuities

    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 the interest your CD earns in the year in which it is earned whether you spend it or not. 

    Federal Tax Bracket
    Tax-deffered annuity rateYou'd have to earn this rate in a taxable investment to match the earnings in your annuity:

    Can I access my money in a CD Type Annuity?

    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.

    Frequently Asked Questions

    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.

    Up Next in Fixed Annuity & Annuities 101

    Best Annuity Rates

    Annuity Rates November 2023

    Compare today’s current annuity rates for 2023; including immediate annuity rates, fixed annuity rates, fixed index annuity rates, and bonus annuities.

    Get Annuity Quote

    Jason Caudill Picture standing chest up.
    NBC logo
    ABC Logo
    fox logo
    MarketWatch logo
    Investopedia logo
    CBS Logo
    My Annuity Store, Inc. Logo
    Request an Annuity Quote