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Multi-Year Guaranteed Annuity (MYGA) – An Expert’s Guide

Banking and savings
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    What is a MYGA (Multi Year Guaranteed Annuity)?

    A Multi-Year Guarantee Annuity (MYGA) is a type of fixed annuity that pays a guaranteed interest rate for a set number of years (usually 2 to 10 years) 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. 

    For this reason, MYGA’s are often referred to as a CD Type of Annuity.

    Because current CD rates are at all-time lows, 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

    An MYGA 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 visiting our State Guaranty Associations page. The associations provide a safety net for their state’s annuity owners and guarantee policyholders continue to receive coverage.

    MYGA Annuity Rates

    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 2-10 years. 

    Below is a chart that shows our best MYGA annuity 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.

    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

    The Best MYGA 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.

    RankAnnuity CompanyFixed Sales
    1New York Life$14,857,784
    2Mass Mutual$11,900,949
    3Athene Annuity and Life $9,714,648
    4Corebridge Financial$7,146,379
    5Western Southern Group$6,230,513
    6Global Atlantic Financial Group$5,159,947
    7Pacific Life$4,512,947
    8USAA Life$4,155,154
    9Fidelity & Guaranty Life (F&G) Review$3,740,550
    10Brighthouse Financial$3,704,850
    11Symetra Financial$2,954,492
    12Sammons Financial Companies$2,745,169
    13Reliance Standard$1,457,344
    14Nationwide$1,301,800
    15Delaware Life$1,148,882
    16American National Insurance Company$937,996
    17Security Benefit Life$926,412
    18The Standard$750,428
    19Thrivent Financial$744,781
    20Mutual of Omaha$688,054

    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

    MYGA Pros

    A multi-year guaranteed annuity is a type of fixed annuity that offers a guaranteed fixed annuity rate for a certain period, usually from 2 to 10 years. A MYGA is appropriate for someone who is closer to retirement and prefers tax deferral and a guarantee of investment return.

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

    MYGA Risks

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

    MYGA Income Options

    An 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 they are not 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.

    MYGA Buyers Tips

    MYGA 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, a longer contract will pay you a higher guaranteed interest rate. 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 year’s 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.

    MYGA FAQs

    Yes. Insurance companies as a whole have a long history of stability, even through our nation’s most difficult economic times. MYGAs, 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 MYGA annuities, there are no fees 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.

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