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A MYGA locks one guaranteed interest rate for the full term you choose — usually three to ten years. You deposit a lump sum with an insurance company, the rate never changes during that period, and your principal does not move with the stock market. Most people searching MYGA are comparing it to a bank CD: same idea (guaranteed rate, defined term), but MYGAs typically pay higher headline rates and grow tax-deferred.
The decision comes down to three things: whether you can leave the money in place for the full term, whether the guaranteed rate beats your CD after tax, and whether the carrier's financial strength fits your deposit size.
Insurance Geek compares MYGA rates across 30+ A-rated carriers on the same premium, term, and state. Below: what a MYGA is, how the rate lock works, how MYGAs compare to CDs, what happens at maturity, and who they fit.
Key Takeaways
Rate lock. One guaranteed interest rate for the full term — 3, 5, 7, or 10 years. The rate at purchase is the rate you earn every year until maturity.
CD alternative. Same structure as a certificate of deposit, but issued by an insurance company with tax-deferred growth instead of annual interest taxation.
Principal protected. Your account value does not fall because equities fell. The carrier backs the guarantee.
Limited liquidity. Most contracts allow about 10% out per year without a surrender charge. Full access before maturity triggers declining surrender penalties.
Maturity decision. When the term ends, you withdraw, roll into a new MYGA, exchange into another annuity, or annuitize. Auto-renewal applies if you do nothing.
What Is a MYGA?
MYGA stands for multi-year guaranteed annuity. It is a type of fixed annuity where the carrier guarantees one interest rate for the entire surrender period you select at purchase.
You fund the contract with a lump sum. The carrier credits that rate with daily or monthly compounding for the full term. There is no market index, no cap, and no annual rate reset — the number on your contract is the number you earn.
MYGAs are insurance contracts, not bank deposits. Guarantees depend on the issuing carrier's financial strength and state guaranty association limits — not FDIC insurance.
How MYGAs Work
Every MYGA follows the same flow from purchase through maturity.
- Pick a term: You select a term length and lock the guaranteed rate at funding.
- Accumulate: Interest compounds inside the contract for the full period — tax-deferred on non-qualified money.
- At maturity: You choose what to do with the balance — withdraw, roll, exchange, or annuitize.
Most carriers require $5,000–$10,000 minimum premiums. Maximums often reach $1–2 million per contract. Some products accept additional contributions during the first contract year only.
MYGA Rates
MYGA rates vary by term length, carrier, premium band, and state. Longer terms often pay higher rates, but not always — the shape of the rate curve shifts with the interest rate environment.
The rate you lock at purchase is contractually guaranteed for the full term. It does not move with the stock market or change mid-contract.
Current guaranteed rates by term and carrier are on the MYGA rates page. Carrier financial strength is on best MYGA companies. Confirm live rates on your illustration before you fund — published tops shift monthly.
A quarter-point rate difference on a $100,000 deposit over seven years is roughly $1,800 in additional return. Carrier shopping matters — but so does financial strength relative to your deposit size and state guaranty limits.
MYGA vs Bank CD
This is the comparison most MYGA shoppers start with. Both products offer a guaranteed rate for a defined term. The differences are tax treatment, backing, and typical rate levels.
| Feature | MYGA | Bank CD |
|---|---|---|
| Rate | Guaranteed for full contract term | Set by bank for term |
| Tax | Deferred until withdrawal | Taxed annually on credited interest |
| Backing | Insurance carrier + state guaranty limits | FDIC up to $250K |
| Liquidity | ~10% free annually; surrender charges during term | Early withdrawal penalty; full access at maturity |
| Minimum | Often $5,000–$10,000 | Often lower |
MYGAs typically publish higher headline rates than CDs on similar terms. Tax deferral widens the after-tax gap further — CD interest is taxed every year it is credited, even if you never withdraw. The tradeoff is carrier financial strength instead of federal deposit insurance.
For a deeper side-by-side, see annuities vs CDs.
Tax Treatment
MYGA growth is tax-deferred. Interest compounds inside the contract with no annual tax bill until you take money out.
- Non-qualified: Funded with after-tax dollars. Only the gain is taxed on withdrawal, at ordinary income rates. Gains come out first under LIFO accounting; principal returns tax-free once the gain is exhausted.
- Qualified: Funded with pre-tax dollars — typically an IRA rollover. Every dollar withdrawn is taxed as ordinary income. The MYGA structure adds no extra tax benefit beyond the qualified account itself.
Withdrawals before age 59½ on the taxable portion also carry a 10% IRS penalty — separate from any carrier surrender charge. Inherited contracts and annuitization rules are covered on how annuities are taxed.
Liquidity and Surrender Charges
MYGAs are built for money you can commit for the full term.
- Free withdrawal: Most contracts allow up to 10% of account value out each year without a surrender charge.
- Early full withdrawal: Taking more than the free amount during the surrender period triggers declining surrender charges — often starting around 7–9% in year one and stepping down each year.
- Hardship waivers: Many contracts waive surrender charges for nursing home confinement or terminal illness. Read the contract before you assume coverage.
- At maturity: The surrender period ends. You can withdraw the full balance with no carrier penalty.
If you need guaranteed access to principal on a specific date within the next few years, match the contract term to that date or keep the money in a CD or savings account.
What Happens at Maturity?
When your MYGA term ends, the surrender period ends with it. You have four main options:
- Withdraw the full balance as a lump sum.
- Roll into a new MYGA at current rates.
- Exchange into another annuity through a tax-free 1035 exchange.
- Annuitize — convert the balance into a guaranteed income stream.
Most carriers provide a 30-day decision window after maturity. If you take no action, the contract typically auto-renews at the carrier's then-current rates — which may be higher or lower than your original guarantee. Know your renewal terms before the window closes.
Laddering — buying multiple MYGAs with staggered maturity dates — is a common way to maintain liquidity while keeping higher guaranteed rates on each rung.
Expert Tip: What I look at before recommending a MYGA
Before I recommend a MYGA, I match the term to when the client actually needs the money — not just which term pays the highest rate today. Then I check whether tax deferral at their bracket beats the CD after tax, and whether the carrier rating fits the deposit size relative to state guaranty limits. The highest rate on the sheet is not always the right answer on a 7- or 10-year commitment.
—Brad Cummins, Insurance Geek Founder
Is a MYGA Right for You?
Most buyer regret on MYGAs comes down to term mismatch — funding a 7-year contract with money needed in year three.
This is right for you
- You want a guaranteed rate locked for a specific term with no market exposure
- You are comparing bank CD rates and want higher headline rates with tax-deferred compounding
- You have a lump sum — rollover, inheritance, or sale proceeds — that needs safe growth for a known timeline
- You can leave the money in place through the full surrender period
This is not right for you
- You need full access to the principal within the next few years
- You may need more than 10% of the balance out in any given year during the term
- Your deposit size exceeds state guaranty association limits at the carrier offering the top rate
- You are under 59½ and may need access — the IRS penalty changes the after-tax math
Before you commit
Before you fund a MYGA, walk through the same checks we run on every case:
- Term match: Does the contract length align with when you will actually need the money?
- After-tax comparison: At your tax bracket, does the MYGA beat the CD once you account for deferral vs. annual taxation?
- Carrier strength: Does the AM Best rating fit the term length and deposit size relative to your state's guaranty association limit?
- Same assumptions: Are you comparing quotes on the same premium, term, and state — not headline rates on different minimums?
- Maturity plan: Do you know whether you will withdraw, roll, or exchange before auto-renewal kicks in?
Fill out the form below with your premium, term, and state. We compare MYGA rates across the leading carriers available to you and follow up with the best-fitting options. You do not have to sort through rate sheets yourself — that is what we do every day.
Compare MYGA illustrations
Compare MYGA rates on the same premium, term, and state — one of our licensed agents runs the comparison and follows up with your options.
Conclusion
A MYGA answers one question: what guaranteed rate can you lock in for how many years? If you know you will not need the money before maturity, it is one of the simplest safe-money products on the market — higher headline rates than most CDs, tax-deferred compounding, and a number you can quote on day one.
The work is not picking the product category. It is matching the term to your timeline, comparing carriers on the same assumptions, and planning what happens at maturity before auto-renewal decides for you.
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About Brad Cummins
Brad Cummins is the founder of Insurance Geek and primary author of its educational content. Licensed since 2004, he brings over 21 years of experience structuring life insurance and IUL strategies for clients nationwide.
Fact checked by Ryan Wood
Ryan Wood is a licensed insurance professional and contributing advisor at Insurance Geek, serving as a fact checker and technical reviewer for life insurance and annuity content. First licensed in 2013, he brings more than 12 years of experience and holds licenses in over 40 U.S. states.
