MYGA Annuities Explained: Rates, Terms & How They Work

Quick Answer: A multi-year guaranteed annuity (MYGA) is a fixed insurance product that pays a locked interest rate for a set term — typically 3, 5, 7, or 10 years. Your principal is fully protected, interest grows tax-deferred, and as of mid-2026, top 5-year MYGA rates range from 5.40% to 5.85% and top 3-year rates from 5.10% to 5.55% — typically 75 to 140 basis points above comparable bank CDs, while still offering the added advantage of tax-deferred growth.

What Is a Multi-Year Guaranteed Annuity?

A multi-year guaranteed annuity — commonly called a MYGA — is an insurance product designed for safe, predictable accumulation. You make a single lump-sum deposit, agree to a fixed term, and receive a contractually guaranteed interest rate for the entire period. At the end of the term, you receive your original principal plus all accumulated interest.

MYGAs are often described as the insurance world's equivalent of a bank CD. The structural similarities are real: fixed term, guaranteed rate, principal protection. The key differences are the issuer (an insurance company rather than a bank), the tax treatment (tax-deferred rather than annually taxable), and typically the rate (MYGAs have historically offered higher rates than CDs for equivalent terms).

MYGAs are not investment products. They do not fluctuate in market value. There are no stocks, no bonds, no market exposure. The insurance company invests the premium in its own fixed-income portfolio and contractually guarantees your return regardless of what financial markets do. This makes MYGAs particularly well-suited for retirees and pre-retirees who want principal protection with a competitive, predictable yield.

How MYGAs Work: The Mechanics

The basic structure of a MYGA is straightforward, but understanding the mechanics helps you evaluate products and make smart comparisons.

Premium and Term Selection

You begin by choosing how much to deposit (the premium) and what term length fits your timeline. Most carriers offer terms from 2 to 10 years, with 3-, 5-, and 7-year options being the most commonly selected. Minimum premiums typically start at $10,000, though some carriers require $25,000 or more for their highest-rate products. Some MYGAs offer slightly higher rates for larger premium amounts — a tiered structure worth asking about when shopping.

Interest Crediting

Interest accrues daily at the contractually guaranteed rate and compounds throughout the term. Unlike a CD where you might receive interest checks monthly, MYGA interest typically accumulates inside the contract and is paid out at maturity or withdrawal. This compounding dynamic — combined with tax deferral — makes MYGAs efficient accumulators over multi-year terms.

Free-Withdrawal Provisions

Most MYGAs include a free-withdrawal provision that allows you to access a portion of the account value each year without triggering surrender charges. The standard is 10% of the account value annually, though some products are more generous. This provision is important to understand — it provides a liquidity valve during the term without penalty, as long as you stay within the allowance.

Surrender Charges and the Surrender Period

Withdrawals beyond the free-withdrawal allowance during the surrender period trigger surrender charges. These charges typically start at 7% to 10% in year one and decline by roughly one percentage point per year until they disappear at the end of the term. The surrender period is typically the length of the contract — a 7-year MYGA has a 7-year surrender period. Planning your liquidity needs in advance — and keeping adequate liquid reserves outside the MYGA — makes the surrender schedule a non-issue for most retirees.

2026 MYGA Rate Landscape

MYGA rates are influenced by the broader interest rate environment — primarily the 10-year Treasury yield and investment-grade corporate bond spreads. With rates elevated compared to the low-rate era of 2015–2021, MYGAs in 2026 offer some of the most attractive guaranteed rates seen in over a decade.

Current Sample MYGA Rates (2026)

Term	Sample Rate	Monthly Income on $100K	Annual Income on $100K
3-Year MYGA	5.65%	$471	$5,650
5-Year MYGA	6.30%	$525	$6,300
7-Year MYGA	6.50%	$542	$6,500
10-Year MYGA	6.05%	$504	$6,050

Sample rates for illustration. Actual rates vary by carrier, premium amount, and state. View current MYGA rates for live comparisons.

MYGAs vs CDs: Key Differences

Because MYGAs and CDs share a similar structure — fixed term, guaranteed rate, principal protection — they are often directly compared. Here is how they differ on the dimensions that matter most for retirement planning.

Rate Premium

In 2026, competitive 5-year CD rates from online banks top out around 4.75% to 5.0%. Top 5-year MYGA rates reach 6.0% to 6.3%. On $100,000 over five years, that rate differential adds up to approximately $7,500 to $9,000 in additional interest. The MYGA rate premium over CDs has historically persisted because insurance companies operate on longer investment horizons and can access different segments of the fixed-income market than banks.

Tax Treatment

CD interest is taxable in the year it is earned — even if you do not withdraw it. The IRS calls this "constructive receipt." For a retiree in even a moderate tax bracket, this erodes the effective yield each year. MYGA interest accumulates tax-deferred until withdrawal, which improves compounding and allows you to control when you recognize income — potentially timed to lower-income years for a lower effective rate.

Principal Guarantee Mechanism

CDs are backed by FDIC insurance up to $250,000 per depositor per institution — the strongest deposit guarantee available in the U.S. MYGAs are backed by the financial strength of the issuing insurance company and protected by each state's insurance guaranty association, typically up to $250,000. For amounts within those limits and with highly rated carriers (A or better from A.M. Best), both products provide robust principal protection — through different mechanisms.

Who Is a MYGA Right For?

MYGAs work particularly well for retirees and pre-retirees who meet a specific set of conditions. You want a higher guaranteed rate than CDs without taking any market risk. You have a defined segment of your savings you do not need immediate access to for three to ten years. You want to reduce your current taxable income from interest. You are building a ladder of guaranteed income streams across different maturities.

MYGAs are less suitable if you need daily liquidity, have a very short time horizon (under two years), or need the absolute FDIC guarantee regardless of rate differential. Discuss your full financial picture with a licensed safe money advisor before committing — the right term length and carrier selection matter significantly for optimizing your outcome.

MYGA vs Fixed Index Annuity: Understanding the Trade-Off

A related product worth understanding is the fixed index annuity (FIA). Where a MYGA offers a fully guaranteed fixed rate, an FIA credits interest based on the performance of a market index like the S&P 500 — but with a floor of 0%, so your principal can never be lost to market declines.

In exchange for downside protection, FIAs typically cap or limit the upside participation. In a strong bull market year, you may earn less than the index. In a bad year, you earn 0% rather than losing principal. MYGAs suit investors who want certainty above all — knowing their exact rate from day one. FIAs suit those who want principal protection with some potential for above-CD returns. Both belong in the safe money category; the right choice depends on your income timeline and risk comfort. Use our retirement planning calculator to model both scenarios.

Frequently Asked Questions

What happens to my MYGA if I die during the term?

Most MYGAs include a standard death benefit that pays the full account value — principal plus accumulated interest — to your named beneficiary. This transfer bypasses probate in most cases, providing faster access to funds for your heirs than assets that must pass through a will. The beneficiary will owe income taxes on the deferred interest as ordinary income, so coordinating beneficiary designations with your estate plan is worthwhile.

Can I roll a maturing CD into a MYGA?

Yes, and many retirees do exactly this when CDs mature. If funds are in a qualified account (IRA or 401k rollover), you can move them into a MYGA IRA with no tax consequences. If funds are non-qualified (already-taxed money), you can purchase a non-qualified MYGA and gain the tax deferral benefit going forward. The rollover process is handled by the receiving insurance carrier — your advisor coordinates the paperwork.

Are MYGA rates negotiable?

Not directly with the carrier, but shopping across multiple carriers absolutely produces meaningfully different rates for the same term. An independent safe money advisor with access to 20 or more carriers will regularly find rate differences of 0.25% to 0.75% on the same term between different products. On $200,000 over seven years, a 0.5% rate difference translates to roughly $7,000 in additional interest. Always compare multiple carriers before deciding.

What is a market-value adjustment (MVA) MYGA?

Some MYGAs include a market-value adjustment provision that adjusts the surrender value (not the maturity value) if you withdraw during the surrender period. If interest rates have risen since you purchased the product, the MVA may slightly reduce your early withdrawal value. If rates have fallen, the MVA may increase it. MVA products often offer slightly higher rates to compensate for this provision. For investors who plan to hold to maturity, the MVA is irrelevant — your full guaranteed value is paid at term end regardless.

• MYGAs offer guaranteed fixed rates for a defined term with full principal protection — making them one of the purest safe money tools available.
• 2026 top rates: 3-year at 5.65%, 5-year at 6.30%, 7-year at 6.50% — significantly above competitive CD rates for equivalent terms.
• Tax deferral is a meaningful advantage: MYGA interest compounds without annual taxation, improving effective yield versus CDs for retirees in moderate or higher tax brackets.
• Most MYGAs allow free withdrawals of up to 10% per year — maintaining limited liquidity without triggering surrender charges.
• Carrier financial strength matters: always choose a MYGA from an insurer rated A or better from A.M. Best for maximum confidence in the guarantee.
• Use the MYGA rates comparison tool at SafeMoney.com to see current rates across multiple carriers and terms.

Ready to put your savings to work at a guaranteed rate? Connect with a SafeMoney certified advisor who can compare current MYGA rates across multiple top-rated carriers — at no cost to you.