Multi-Year Guaranteed Annuities (MYGA)
A multi-year guaranteed annuity — commonly called a MYGA — offers a fixed interest rate locked in for a set number of years, typically 3, 5, or 7 years. For conservative savers who want predictable growth without stock market risk, MYGAs are one of the most straightforward retirement savings tools available.
What Is a Multi-Year Guaranteed Annuity?
A MYGA is an insurance contract that guarantees a specific interest rate for the entire contract term. Unlike a variable annuity, there are no investment options and no market risk. You deposit a lump sum, the insurance company credits a fixed rate each year, and at the end of the term you receive your principal plus accumulated interest. Growth is tax-deferred, meaning you pay no taxes on the interest until you withdraw.
How MYGAs Compare to Bank CDs
MYGAs are often described as the annuity equivalent of a bank CD. Both offer principal protection and a guaranteed rate for a fixed term. The key differences are that MYGAs typically offer higher interest rates than comparable CDs, growth is tax-deferred (CDs are taxed annually), and MYGAs are backed by insurance company reserves and state guaranty associations rather than FDIC insurance. For savers in higher tax brackets, the tax deferral alone can make a MYGA significantly more valuable than a CD over a 5–7 year period.
How the Surrender Period Works
MYGAs have a surrender period — typically equal to the contract term — during which early withdrawals may incur surrender charges. Most MYGAs allow penalty-free withdrawals of 10% of the account value per year, which provides some liquidity for unexpected needs. At the end of the term, you can withdraw your full balance, renew at the current rate, or roll into a different annuity product without tax consequences using a 1035 exchange.
Who Is a Good Candidate for a MYGA?
MYGAs are well-suited for people who have savings they will not need for 3–7 years, want a higher rate than bank savings accounts or CDs, prefer simplicity over complex investment options, and want tax-deferred growth. They are particularly popular for IRA rollovers, 401(k) rollovers, and conservative savers approaching retirement who want to protect a portion of their savings from market risk.
Common Misconceptions About MYGAs
Some people assume all annuities are complex, expensive, or have hidden fees. MYGAs are actually among the simplest financial products available — there are no annual fees, no investment management charges, and no market risk. The insurance company earns a spread between what it earns on its investment portfolio and what it credits to you, similar to how a bank operates. The rate you are quoted is the rate you receive.
Why Work with an Independent Agent?
MYGA rates vary significantly from one insurance company to another. An independent agent like AG Insurance & Financial Solutions can compare current rates from multiple carriers to find the best available rate for your term preference and premium amount. We serve clients throughout West Virginia, southern Ohio, and eastern Kentucky — and consultations are always free.
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