Looking for a safe alternative to Bank CDs?
Fixed CD-Type annuities are also known as a Multi-Year Guaranteed Annuity (MYGA). MYGAs have become increasingly popular as bank CD rates have plummeted to all time lows. CD-Type Annuities (MYGA) are fixed annuity contracts issued by insurance companies.
MYGA’s are very similar to bank CDs in that they are both used as vehicles to increase savings, Both are considered low to no-risk and will likewise guarantee a specific interest rate for a specific contract’s term or time period. To check the current interest rate, click here.
MYGA’s compare very favorably to bank CDs and have some distinct advantages:
- Tax Savings – Taxes are deferred on MYGAs. You do not pay taxes until the interest is withdrawn. This allows interest to be accumulated on the entire principle over the contract term. Earnings on bank CDs are taxable in the year the interest is earned, even if you don’t withdraw your money.
- Higher Interest Rates – Typically MYGAs offer higher interest rates that their CD counterparts.
- Liquidity – If you need access to CD funds prior to maturity date, you will be assessed an interest penalty. MYGAs allow for penalty-free interest withdrawals and in some cases up to 10% annually.
- Death Settlement – If you should pass away prematurely, an MYGA will pay your beneficiary directly, similar to a life contract outside of your will or probate. This can be a significant advantage to estate planning.
Current Interest Rates*
5 Year Lock – 2.85%
6 Year Lock – 3.05%
10 Year Lock – 3.50%
(rates subject to change without notice, to verify rates click here)
* Rates disclosed by Equitrust Life Insurance Company Certainty Select Annuity (5 & 6 Year) and Guggenheim Life and Annuity Insurance Company (10 Year).