Multi-Year Guaranteed Annuities — MYGAs — are one of the most straightforward products I place as a California-licensed independent annuity agent. But the internet has done them a disservice. Most articles either over-complicate them or oversell them.
Here’s the honest version: a MYGA is essentially an insurance company’s version of a CD. You lock in a guaranteed interest rate for a fixed term — 3, 5, or 7 years — your principal is protected, and the interest grows tax-deferred. At the end of the term, you get it all back plus the guaranteed earnings.
MYGAs aren’t exciting. That’s the point. For the right client, they’re one of the cleanest conservative savings tools available.
In this guide, I’ll walk you through current MYGA rates, the carriers I actually recommend, who MYGAs are right for, and — equally important — when they’re not the right choice.
How a MYGA Works
When you put money into a MYGA, the insurance company guarantees a fixed interest rate for a set number of years. Unlike a variable or indexed annuity, nothing is tied to the market. The rate doesn’t go up when the S&P 500 rallies, and it doesn’t go down when it drops. What you’re quoted is what you get.
Here’s the basic structure:
- You transfer a lump sum to the insurance company (minimum typically $10,000–$25,000, varies by carrier).
- The carrier credits a guaranteed interest rate annually.
- The growth is tax-deferred — you don’t pay taxes on the interest until you withdraw it.
- At the end of the surrender period, you can renew, withdraw, or roll it into another product.
- Most MYGAs allow a 10% free withdrawal per year without penalty, but surrendering early triggers fees.
MYGA Rates in 2026: What You Should Realistically Expect
As of mid-2026, here’s the general range I’m seeing across the carriers I work with:
| Term | Typical Rate Range (mid-2026) | Best Fit For |
|---|---|---|
| 3-Year MYGA | 4.6% – 5.1% | Short-term parking, near-term liquidity need in 3 yrs |
| 5-Year MYGA | 4.9% – 5.5% | Most clients — strong rate, reasonable commitment |
| 7-Year MYGA | 5.1% – 5.6% | Long-term conservative savers, IRA rollovers |
A few important caveats about these numbers:
- Rate sheets change constantly. The carrier at the top of the list this week may not be there next month.
- The highest-rate carriers are often smaller or more aggressive insurers. That doesn’t automatically make them bad — but it’s a factor in the conversation.
- Household-name insurers (think MassMutual) typically run 25–75 basis points lower than the top of market. Some clients consider that spread worth paying for the name recognition.
The spread between MYGAs and bank CDs has narrowed compared to 2022–2023, but MYGAs still tend to outperform comparable CDs on after-tax accumulation when you account for the tax deferral benefit.
MYGA vs. CD: When Does a MYGA Win?
I get this question constantly from clients coming in with maturing CDs. The honest answer is: it depends on your timeline and tax situation. Here’s how I think about it:
| MYGA | CD | |
|---|---|---|
| Typical rate (mid-2026) | 4.9% – 5.5% (5-yr) | 3.5% – 4.5% (bank avg) |
| Tax on annual growth | Deferred until withdrawal | Taxable every year |
| Liquidity | 10% free withdrawal/yr; surrender charges apply | Fully liquid after term |
| FDIC insured? | No (state guaranty association) | Yes, up to $250K |
| Complexity | Insurance contract | Simple banking product |
| Best for | Conservative long-term accumulators | Short-term or emergency savings |
The tax deferral advantage is real but often underappreciated. If you’re in a higher tax bracket and your CD is generating annual 1099 income that you’re reinvesting anyway, the MYGA can meaningfully improve your net accumulation over 5–7 years — not because the gross rate is dramatically different, but because you’re compounding on pre-tax dollars.
My simple framing for clients: “A CD is a banking product — FDIC-insured, fully liquid, simple. A MYGA is an insurance product designed for longer-term conservative accumulation. If you might need the money next year, use a CD. If you’re planning to leave it alone for at least 3–5 years and want better growth, the MYGA conversation makes sense.”
MYGA vs. Fixed Index Annuity (FIA): Which One Is Right for You?
Both MYGAs and FIAs offer principal protection — your money can’t go below what you put in. The difference is in how growth works:
| MYGA | FIA | |
|---|---|---|
| Return type | Guaranteed fixed rate | Index-linked (S&P 500, etc.) |
| Upside potential | Fixed — you know exactly what you’ll earn | Higher potential, capped by participation rate |
| Downside protection | 100% principal guaranteed | 100% principal guaranteed (0% floor) |
| Explanation complexity | Simple — one rate, one term | More moving parts: caps, participation, spreads |
| Ideal client | Wants certainty and simplicity | Wants market participation with no loss risk |
My general rule: if a client wants to know exactly what their account will be worth at the end of 5 years, a MYGA is the right conversation. If they want the possibility of earning more if the market cooperates — and they’re comfortable with more complexity and less certainty — a FIA may be worth exploring.
MYGA is the simpler sell, and for many clients in their late 60s and 70s, simplicity has real value. They don’t want to understand caps, participation rates, and index crediting methods. They want to know: “Is my money safe and what will I earn?” A MYGA answers that question clearly.
The MYGA Carriers I Actually Work With
I’m an independent agent, so I’m not beholden to any single carrier. These are the carriers that consistently come up in my MYGA recommendations, and why:
| Carrier | Typical Strength | Kevin’s Notes |
|---|---|---|
| Oceanview Life & Annuity | 5-yr MYGA rates | Frequently aggressive on pricing. Good fit for yield-focused clients who still want a solid insurer. |
| Midland National Life | 3–5 yr, service | Strong reputation for service and clean underwriting. Consistent top-10 on rate sheets. |
| Athene Annuity | Rate competitiveness | Usually near the top across durations. Widely available. Good balance sheet story. |
| MassMutual Ascend | Balance sheet / brand | Not always highest rate — but the MassMutual name matters to more conservative clients. |
| Global Atlantic | Flexibility + rates | Good blend of competitive pricing and contract flexibility. Worth quoting on most cases. |
| Delaware Life | MYGA-FIA crossover clients | Especially useful when clients are considering both MYGA and FIA side-by-side. |
One important note: “best carrier” is not a static answer. Rate sheets move weekly. The right carrier for your client depends on term length, surrender schedule, free withdrawal provisions, state approval, and whether they care more about maximum yield or carrier pedigree. I compare current rates before every placement.
Who Is an Ideal MYGA Buyer?
In my experience, the MYGA client generally looks like this:
- Age 55–80, recently retired or within 5 years of retirement
- Conservative or recently became conservative after a market scare
- Has idle cash — a maturing CD, a savings account earning very little, an inherited IRA, or proceeds from a home sale
- Wants predictable growth, not market participation
- Doesn’t need immediate or full liquidity from this particular bucket of money
Psychologically, the MYGA buyer cares more about “don’t lose my money” than “maximize my return.” They’re not trying to beat the S&P 500. They’re replacing uncertainty with predictability — and for people who’ve spent 30 years building a nest egg, that’s a completely rational priority.
A Real Client Example (Southern California, 2024)
Details anonymized. Shared with permission.
A 69-year-old retiree came to me with about $200,000 in bank CDs coming due. The bank was offering a renewal rate around 3.8%. She was frustrated — inflation had eaten into her purchasing power, and she felt like she was falling behind standing still.
She had zero desire for market exposure. She didn’t need income from this money immediately. Her plan was to leave it untouched for at least five years and then reassess.
We moved a portion of it into a 5-year MYGA with Oceanview Life and Annuity, locking in a rate in the low-5% range at the time. The decision wasn’t purely about the rate — it was about three things:
- Tax deferral: She wasn’t getting a 1099 every year on the growth
- Certainty: She knew exactly what the account would be worth at maturity
- Simplicity: No index, no caps, no crediting method to track — just a guaranteed number
That’s the archetype. Conservative, patient, rate-conscious, and looking for a clean alternative to the bank.
California-Specific Considerations for MYGA Buyers
Suitability and DOI Scrutiny
California’s Department of Insurance tends to be stricter than most states when it comes to annuity suitability documentation — especially for clients over 65. If you’re working with a California-licensed agent, expect them to document your liquidity needs, your income sources, and why the surrender period is appropriate for your situation. This is a consumer protection, not a bureaucratic hurdle.
Replacement paperwork (replacing an existing annuity or insurance product) gets additional scrutiny. Your agent should be able to explain clearly why the new product is in your best interest.
Taxes on MYGA Withdrawals in California
California taxes MYGA gains as ordinary income when withdrawn — there’s no capital gains treatment. The good news is that growth inside the contract is tax-deferred, which is still a meaningful advantage for higher-income retirees who would otherwise be paying taxes on interest income every year.
If you’re in a lower tax bracket in retirement than you were while working, the deferral benefit compounds further — you’re delaying income to a period when you may owe less on it.
California Life and Health Guaranty Association
If an insurance company becomes insolvent, California’s guaranty association provides coverage — but there are limits. For most MYGA buyers placing $100,000–$300,000, this isn’t typically a primary concern, but clients placing larger amounts should consider diversifying across multiple carriers rather than concentrating everything with one insurer.
The Biggest MYGA Mistake (And How to Avoid It)
The most common error I see: treating a MYGA like a fully liquid savings account.
People hear “guaranteed,” “safe,” and “fixed rate” — and they assume they can freely access all their money anytime. Then they discover surrender charges, market value adjustments, and withdrawal limits.
Here’s the reality: MYGAs are designed for money you can afford to lock up for the contract term. Most allow a 10% free withdrawal annually without penalty — but surrendering early typically costs you a percentage of the contract value, and that fee doesn’t disappear just because you need the money urgently.
The second mistake is assuming “highest rate = best choice.” Sometimes the top-rate carrier has weaker service, harsher surrender terms, or less flexibility. A good MYGA placement balances rate, carrier quality, term fit, and your actual liquidity needs.
Rule of thumb I give every client: only put money into a MYGA that you genuinely won’t need for the full term. Your emergency fund, your near-term spending money, your 12-month cushion — keep those in a CD or savings account.
Frequently Asked Questions
What does MYGA stand for?
Multi-Year Guaranteed Annuity. It’s an annuity contract that credits a fixed, guaranteed interest rate for a set number of years — typically 3, 5, or 7 years.
Are MYGA rates locked in?
Yes. The rate is locked in at the time you purchase the contract. It won’t change based on market conditions during your contract term — that’s the defining feature of a MYGA.
What happens at the end of a MYGA term?
You’ll typically have a window (often 30 days) to decide: withdraw, roll into a new MYGA, or move the funds into a different product. If you do nothing, most carriers will renew at the then-current rate, which may be higher or lower than your original rate.
Can you lose money in a MYGA?
You cannot lose principal due to market performance. Your principal and credited interest are guaranteed by the insurance company. The only risk would be insurer insolvency — which is why carrier financial strength ratings matter, and why California’s guaranty association provides a backstop.
Are MYGAs subject to RMDs?
If the MYGA is held inside a qualified account (IRA, 401(k) rollover), it is subject to Required Minimum Distributions. If it’s a non-qualified contract (funded with after-tax money), there is no RMD requirement.
How is MYGA interest taxed in California?
MYGA growth is tax-deferred — you don’t pay taxes while the money compounds inside the contract. When you withdraw, gains are taxed as ordinary income by both the IRS and California. There is no capital gains treatment on annuity income in California.
Work with a California Independent Annuity Agent
I’m Kevin Edwards, a California-licensed independent annuity agent (CA License #0D42517) based in Southern California. Because I’m independent, I compare MYGAs across multiple carriers — Oceanview, Midland National, Athene, Global Atlantic, MassMutual Ascend, Delaware Life, and others — to find the right fit for your situation.
If you have a maturing CD, an IRA you’d like to reposition, or money sitting in a savings account earning less than it should be, I’m happy to walk you through what’s available and whether a MYGA makes sense for your goals. No pressure, no obligation.
Get a free MYGA quote from Kevin →
About the Author: Kevin Edwards is a California-licensed independent insurance agent (CA License #0D42517) specializing in fixed annuities, MYGAs, FIAs, and SPIAs. He works with multiple A-rated carriers to provide unbiased product comparisons for clients throughout Southern California. This article reflects his professional experience and is for educational purposes — it is not personalized investment advice.