Multi Year Guaranteed Annuity the Ultimate CD Alternative

Banking and savings

What is a Multi Year Guaranteed Annutiy?

A Multi Year Guaranteed Annuity is a type of fixed annuity that pays a guaranteed interest rate for a set number of years (usually 2 to 10) and typically allows you to withdraw your interest monthly. Essentially a multi year guaranteed annuity is a CD that is issued by an insurance company rather than a bank. 

Because current CD rates are at all-time lows and these similarities, multi year guaranteed annuities have become popular among conservative investors looking for a safe and steady way to grow their retirement savings.

Key Features of a Multi Year Guaranteed Annuity

  • Safety of principal
  • Guaranteed growth
  • Guaranteed retirement income
  • Leave a legacy
  • Access to your money

Multi Year Guaranteed Annuity (MYGA) vs CD

MYGAs works 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.

You can view your state’s guarantee association’s annuity coverage limit by visit our State Insurance Guaranty Associations page. The associations provide a safety net for their state’s annuity owners and guarantee policyholders continue to receive coverage.

SOLD BYInsurance CompaniesBanks
AMOUNT YOU CAN INVEST$2,000 - $1,000,000Essentially Any Amount
INVESTMENT DURATION3 years - 10 years3 months - 5 years
INTEREST RATESVaries by insurer, term and investment amount. Typically higher than CDsVaries by financial institution, term and investment amount.
LIQUIDITYVaries by insurer and annuity. Usually either 10% of account value or accumulated interest annually.Almost always accumulated interest.
GUARANTEESBacked by the claims paying ability of issuing Insurer and by State Guaranty Funds.Backed by the FDIC up to $250,000 per depositor, per institution.
DEATH BENEFITAsset passed directly to beneficiary without going through the probate processProbate process required to pass asset to heirs

Multi Year Guaranteed Annuity Rates March 2021

A multi-year guaranteed annuity, or MYGA, is a type of fixed annuity that offers a guaranteed fixed interest rate for a certain period, usually 3-10 years. A MYGA is appropriate for someone who is closer to retirement and prefers tax deferral and a guarantee of investment return.

Below is a chart that shows our best MYGA rates by the term today. If you would like to shop and compare more MYGA annuities you can do so at our virtual MYGA Marketplace.

Annuity CompanyRatingFixed AnnuityRate
Nassau Life and AnnuityB+Nassau MYAnnuity 7X 0% Free2.90%
Sentinel Security Life InsuranceB++Personal Choice Annuity 72.90%
Atlantic Coast LifeB++Safe Haven 72.89%
Upstream LifeB++Secure Legacy 7 Year2.85%
Fidelity & Guaranty LifeA-FG Guarantee-Platinum 72.80%
Sentinel Security LifeB++Personal Choice Annuity 7 (CA, FL)2.80%
Oceanview Life and AnnuityA-Harbourview 72.80%
Nassau Life and AnnuityB+Nassau MYAnnuity 7X 10%/Free2.70%
Guaranty Income LifeB++Guaranty Rate Lock 7 ($250K+)2.65%
Great American (GALIC)A+SecureGain 7 ($100K+)2.64%
Atlantic Coast LifeB++Safe Haven 7 - 86-902.64%
Oxford Life InsuranceA-Multi-Select 72.60%
Sentinel Security LifeB++Personal Choice Annuity 7 86-902.55%
Guaranty Income LifeB++Guaranty Rate Lock 7 ($10K+)2.55%
Sagicor Life InsuranceA-Milestone MYGA 7 ($100K+)2.50%

The Best Fixed Annuity Companies

  1. New York Life
  2. AIG Companies 
  3. Global Atlantic
  4. Massachusetts Mutual 
  5. Pacific Life 
  6. Principal Financial Group
  7. Western & Southern Group 
  8. Symetra Financial
  9. MetLife 
  10. Great American 

Each year the Secure Retirement Institute publishes total U.S. Individual Annuity Sales and breaks out the results for the top 20 Insurance Companies. 

In addition to overall annuity sales, they also break out the results by types of annuities including fixed, indexed, and top variable annuity companies as well.

Fixed annuity sales broke sales records in 2019 with sales of $139.8 billion in 2019, up 5% from the prior year.

The below table lists the top 10 Fixed Annuity Companies based on U.S. Individual Fixed Annuity Sales in 2019. In addition to the total annuity sales for each company, we’ve included their Comdex Score and AM Best Rating as well.

Insurance CompanyA.M. Best
2019 Fixed
Annuity Sales
New York LifeA++100$9,863,105.00
AIG CompaniesA82$7,237,372.00
Global Atlantic Financial GroupA75$4,684,876.00
Massachusetts Mutual LifeA++98$3,854,866.00
Pacific LifeA+93$2,873,727.00
Principal Financial GroupA91$2,844,881.00
Western Southern GroupA+96$2,468,257.00
Symetra FinancialA82$2,103,435.00
Great AmericanA82$1,403,162.00

The Top Selling Multi Year Guaranteed Annuity

New York Life Secure Term Choice II MYGA

The Secure Term Choice II allows you to choose the guaranteed interest rate and length of the annuity contract period from 3-7 years. The longer period, the higher the interest rate.

  • The annuity is available up until age 90
  • It is Single premium annuity so you can not add additional deposits in the future
  • The minimum amount you can invest is $5,000
  • $1,000,000 is the maximum investment allowed
  • No Fees or charges with this annuity

How is a Multi Year Guaranteed Annuity Taxed?

A MYGA offers tax deferral of interest that is compounded on an annual basis. This can create additional wealth exponentially because the tax occurs only when you take the money out. It’s like investing in an IRA or 401(k) but without the contribution limits.

The tax rules change slightly depending on whether the funds are qualified or non-qualified. If you purchase a MYGA with qualified funds, such through an IRA or other tax-advantaged account, you pay income tax on the principal and interest when you take out money. If you purchase a MYGA with nonqualified funds, you pay taxes only on the interest.

This tax benefit is not unique to MYGAs. It exists with traditional fixed annuities as well.

Multi Year Guaranteed Annuity Pros and Cons

Advantages of a Multi Year Guaranteed Annuity

A multi-year guaranteed annuity, or MYGA, is a type of fixed annuity that offers a guaranteed fixed interest rate for a certain period, usually from three to 10 years. A MYGA is appropriate for someone who is closer to retirement, and prefers tax deferral and a guarantee of investment return.

  • MYGAs Provide a Guaranteed Rate of Return
  • A MYGA Grows Tax-Deferred
  • MYGAs Protect Your Principal From Loss
  • Most MYGAs Provide Some Liquidity
  • A Multi Year Guaranteed Annuity is the Simplest of any Annuity Product

Disadvantages of Multi Year Guaranteed Annuities

  • 10% IRS Penalty on Withdrawals from a Fixed Annuity Made Before Age 59½
  • A Fixed Rate Annuity Offers Few Income Options

MYGA's Have Fewer Income Options than Income Annuity

A MYGA is usually purchased because it offers higher interest rates than other available investment options. However, all annuities must have the option to be converted into a lifetime income stream.  

All multi-year guaranteed annuities have annuitization rates built into the contract. This means you have the right to turn your annuity contract into a guaranteed income stream that will last for the rest of your life.

Since MYGAs are designed to pay out the best annual interest rate possibles they are ideal as an income investment. If you own a multi year guaranteed annuity and want to begin lifetime income payments you are almost always better of to transfer to an immediate annuity or deferred annuity with an income rider.

Using a tax-free 1035 exchange you are able to transfer an existing MYGA to an income annuity without incurring any tax ramifications.

Fixed Annuity Income Options

Receive Annuity Income Payments for a set number of years

You receive annuity income payments for a fixed period that you select, usually 10 to 20 years.

Receive Payments for Life and a Minimum Amount of Years

You receive income benefit payments for life. If you select a minimum fixed period and die before the end of the period, the remaining income benefit payments are paid to the person you designate.

For Your Lifetime and then a 50% Reduced Income Amount for Spouses Lifetime

Income benefit payments are guaranteed for your life and the life of a designated joint annuitant. If you are survived by the joint annuitant, he or she will receive 50% of the income benefit payment for life.

Multi Year Guaranteed Annuity Buyers Guide

Fixed annuities are the most simple annuity product which also makes them the easiest to shop for.  Below are a few features to consider when comparing current annuity rates using our online annuity database.

Length of Annuity Contract: Typically the longer contract you purchase the higher your guaranteed interest rate will be. However, that is not always the case in today’s low-rate environment.

Access to Your Money during Annuity Contract: 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 either:

    • Interest-only withdrawals annually, or
    • 10% Free Withdrawals (10% of the previous years’ account value) annually. 

The Annuity Company’s Financial Rating: Annuity companies receive financial ratings from independent rating agencies. These ratings are very important to consider because they are an indicator of its ability to fulfill financial commitments. Most often a lower rated annuity company will offer multi year guaranteed annuities with higher interest rates. 

Our annuity rate tables only list the AM Best Rating however if you click on the name of an insurer you’ll be directed to its Profile Page where all ratings will be listed.

Multi Year Guaranteed Annuity FAQs

Yes. Insurance companies as a whole have a long history of stability, even through our nation’s most difficult economic times. Fixed annuities, unlike variable annuities, are backed by the full faith and credit of the issuing insurance company.

A CD-type annuity is an industry coined term to describe a multi-year guarantee annuity. The interest rate is guaranteed in advance for a set number of years, similar to a bank CD.

In the broadest terms, an annuity is a contract between you and an insurance company, where you make a premium payment(s) in exchange for the benefits defined in the contract.

With fixed annuities, there are no fees, upfront loads or sales charges. 100% of your money goes into your contract without any expense to you. The only time you might experience a fee, is if you choose to add an optional rider that comes with a cost.

If you are considering a multi year guaranteed annuity you can access current multi year guaranteed annuity interest rates at our online annuity marketplace.

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Kiara Caudill

Kiara Caudill

I spent the first 10 years of my career as a clinical mental health therapist and I saw firsthand that finances play a large role in one’s happiness. A good financial plan is not only important to your financial health it’s also important to your mental health. I approach financial planning from a behavioral finance perspective using a goals-based approach. Kiara holds a B.A. Degree in Psychology from Goshen College and an M.A. in Clinical Mental Health Counseling from Valparaiso University.

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Annuities are distributed by My Annuity Store, Inc. Guarantees are subject to the claims-paying ability of the insurer. My Annuity Store, Inc. does not advise clients on the purchase of non-fixed annuity products. The information presented here is not of tax or legal nature and is not intended to be a recommendation to purchase a fixed annuity, fixed index annuity, variable annuity contract, registered index-linked annuity (RILA), immediate annuity (SPIA), longevity annuity, or Qualified Longevity Annuity Contract (QLAC). 

The contract features described may not be current and may not apply in the state in which you reside. Annuities are issued by Insurance companies and contracts are ‘state-specific. Insurance companies also change their products and information often and without notice. Annuities are subject to the terms and conditions of the specific contract issued by the insurer, are not FDIC or NCUA insured, are not bank guaranteed, may lose value, and are not a deposit. Please call (855) 583-1104 if you have any questions or concerns. 

The information presented here is not a representation regarding the suitability of any concept or product(s) for an individual and it does not provide tax, accounting, or legal advice. It is important to read the prospectus carefully and consider your objectives, risks, fees, and charges associated with the contract. You should always consult your own financial planning, tax, and legal counsel to determine if a fixed annuity, immediate annuity, longevity annuity, or Qualified Longevity Annuity Contract are suitable in your financial situation.

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