By a financial services industry contributor.
The advertised interest rate on a Multi-Year Guaranteed Annuity, or MYGA, can be attractive. You see a high, fixed number and imagine a simple, CD-like investment for some of your retirement money. But that number is only the beginning of the story. The real work is understanding the product’s rules and the company making that promise.
With total U.S. annuity sales reaching $464.1 billion in 2025, according to LIMRA, more people are using these contracts than ever. While comparing the latest myga rates is a good first step, it’s important to look deeper. Keeping your money safe depends on more than just the rate. You need to look at the insurance company’s financial health and the details in the contract.
This market is growing for a reason. Sales of fixed-rate deferred contracts, the category that includes MYGAs, hit $45.2 billion and grew 11% year-over-year in the second quarter of 2025. As you look at your choices, your focus should shift from shopping for rates to checking for risk.
Quick answer: A good MYGA review goes beyond the interest rate. You must check the insurer’s financial strength ratings from independent agencies, understand the rules and fees for early withdrawals, and clarify the rules for withdrawals, getting income payments, and death benefits before signing a contract.
What’s inside
- How Do Insurers Actually Guarantee the Rate?
- How Can I Assess an Insurer’s Financial Health?
- What Questions Should I Ask About the Contract Terms?
- Frequently Asked Questions
- Balancing the Guarantee with the Guarantor
How Do Insurers Actually Guarantee the Rate?
Insurers guarantee your rate by investing your money into their “general account.” This is a large, safe collection of investments, mostly made up of high-quality bonds. The market for these products is large, with sales of fixed-rate deferred contracts alone reaching $45.2 billion in the second quarter of 2025, according to LIMRA. Because they handle so much money, they can buy many different types of long-term investments.
The process is simple. The insurance company gathers the money from thousands of customers. They use this money to buy things like corporate bonds and government bonds. The company’s experts figure out how much money they expect to make from these investments. They then offer you a slightly lower rate. The difference pays for their business costs, their profit, and gives them a safety cushion.
❝ The interest rate an insurer offers shows its investment plan and its view of the market. A rate that is much higher than others could be a sign of riskier investments, a newer company trying to get more customers, or different business costs. Understanding this helps you see the rate as a clue about the company’s approach to business.
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This entire operation is watched closely by state governments. Each state’s department of insurance requires companies to keep a certain amount of cash on hand. This means they must have enough money to pay everyone what they are owed, even if the economy is bad. This government supervision, combined with the safe investments in the general account, is what makes the guarantee so strong. The total U.S. annuity market represents a huge amount of these promises, with sales reaching $464.1 billion in 2025 per LIMRA.
How Can I Assess an Insurer’s Financial Health?
You check an insurer’s health by looking at its financial strength ratings from independent agencies and then carefully reading the contract details. These two steps give you a good idea of the company’s safety and exactly what it is promising you. It is very important that the insurer can pay its long-term bills, and these ratings are the best way to check on that.
Financial strength ratings are educated guesses about an insurance company’s future ability to pay what it owes to customers. They don’t grade how well its investments are doing. Several independent agencies give these ratings. A.M. Best focuses only on the insurance industry. You should look for ratings from more than one source to get the full picture.
| Rating Agency | Highest Ratings (Secure) | What It Measures |
| A.M. Best | A++, A+ | Focuses exclusively on the insurance industry. |
| Standard & Poor’s (S&P) | AAA, AA | Broadly covers financial institutions. |
| Moody’s | Aaa, Aa | Assesses creditworthiness and financial risk. |
| Fitch Ratings | AAA, AA | Provides credit ratings and market research. |
After you confirm the insurer is highly rated, your next job is to read the real contract. The sales brochure is not the real contract. Ask for the full contract to read. Pay close attention to the section on surrender charges. This explains the fees for taking your money out early. Also, check the rules for taking out some money each year without a fee, which is often 10%. Is that 10% of your first deposit or 10% of your current balance? That difference can add up.
❝ A common question is whether to choose a slightly lower rate from an A++ rated company or a higher rate from an A- rated one. There is no single right answer. But rating agencies consider the A++ company to have a better ability to pay its customers. The decision depends on how much risk you are comfortable with.
Finally, understand if your contract has a Market Value Adjustment (MVA). An MVA can change the amount you get if you withdraw more than the free amount before your term is over. This adjustment is based on whether interest rates have gone up or down since you bought the contract. Also, know that state guaranty associations offer a safety net for customers. They protect your money up to a certain limit if an insurance company fails. The National Association of Insurance Commissioners (NAIC) gives people information on how these state-based systems work.
What Questions Should I Ask About the Contract Terms?
You should ask specific questions about withdrawals, death benefits, and what happens when your guarantee period is over. The ads focus on the rate, but the contract has the real details. Understanding these three areas will help you avoid surprises later.
First, look closely at the rules for penalty-free withdrawals. Most MYGAs let you take out some of your account value, often 10%, each year without a fee. The key question is: “Is that 10% based on the first deposit or the current balance?” On a $200,000 contract that has grown, this difference is important. Also, ask if you can carry over unused withdrawal amounts to the next year. This is rare, but some contracts allow it.
Next, understand the death benefit. Usually, if you pass away during the term, the person you chose as your beneficiary gets the full value of your account with no fees. The important follow-up question is about spousal continuation. “Does the contract allow a surviving spouse to become the new owner and keep the tax benefits?” This can be an important part of a couple’s financial plan. This can prevent the spouse from getting a large tax bill.
❝ Ask the agent or advisor: “What are my exact options 30 days before the guarantee period ends? Will the new rate be good, or do you expect me to move my money elsewhere?” This question helps you see if the product is a good long-term fit or just has a good starting rate.
Finally, know your choices at the end of the term. When the guarantee period ends, you have several options:
- Renew: You can start a new guarantee period with the same company at whatever rates they offer then.
- Transfer: You can move the money to a new contract at a different company. This is called a 1035 exchange, and it is usually tax-free.
- Get Income Payments: You can turn your money into a series of regular payments that can last for a set number of years or for the rest of your life.
- Withdraw: You can take all your money out. If you do, you will have to pay income tax on all the interest it has earned.
It’s important to understand these choices. The income payment options in your contract might not be the best you can find later on, so it’s good to know you have the option to transfer your money.
Frequently Asked Questions
What is a competitive MYGA rate today? Rates change daily based on the bond market and an insurer’s needs. A “competitive” rate for you must also be balanced against the insurer’s financial strength rating. A slightly lower rate from an A++ rated company is often a safer choice than the highest available rate from a B-rated one.
How much does a $300,000 annuity pay per month? This question is usually about a different product called an immediate income contract. A MYGA is designed to grow your money over a set period of time. An immediate income contract turns a lump sum of money into regular payments right away. The monthly payment from a $300,000 immediate income contract is not one set amount. It depends on your age, gender, interest rates when you buy it, and the payment option you choose.
Are MYGA annuities a good choice for retirement? A MYGA can be a good tool if you want to protect your money and get a guaranteed return, similar to a bank CD. They are designed for the safe part of your retirement savings where you don’t want to risk losing money. They are not a good fit for people who want high growth or for those who might need all their money back before the term is over.
Why do rates differ so much between companies? Rates vary based on the length of the guarantee term and the individual insurance company. Longer terms, such as 7 or 10 years, often offer higher rates than shorter 3 or 5-year terms. Rates are also a result of the company’s own investments, its business costs, and its plan to attract new customers. This is why you will always see a range of different rates for the same term length.
How are annuity owners protected if an insurer fails? These products are regulated at the state level by each state’s Department of Insurance. These departments have strict rules about how much money insurers must keep in reserve. This means insurers must have enough cash to pay what they owe to all their customers. If an insurer does fail, which is rare, state Guaranty Associations give customers a safety net. They protect your money up to certain limits, which are different in each state.
Balancing the Guarantee with the Guarantor
A high, guaranteed interest rate is very attractive. That number, however, is only the first step in your research. The real work is to look beyond the rate. You need to understand the financial strength of the company that is making the promise. You also need to read the contract carefully, since it controls your money for the whole term.
You will probably have to make a tradeoff. For example, you might have to choose between a top rate from an A-rated company and a slightly lower rate from an A++ rated company. The right choice is up to you and depends on how comfortable you are with risk. Checking ratings and the contract helps make sure you are being rewarded fairly for the risk you take.
A MYGA is a contract based on trust. The interest rate may catch your eye, but the company’s financial health is what keeps your money safe. By focusing on the quality of the company over the size of the rate, you can be more certain that the promise made to you will be kept. This focus on safety is the key to using these products to protect your money.
