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What Is A Multi Year Guarantee or CD Type Annuity?

A MYGA is an annuity issued with a guaranteed interest rate period which is equal to the length of time that surrender charges last.
5 Year MYGA
Year 1 2 3 4 5 6
Interest Rate 5.00% 5.00% 5.00% 5.00% 5.00%  
Surrender Charges 5.00% 4.00% 3.00% 2.00% 1.00% None

Guaranteed Interest Rate Years Equals Surrender Charge Period

A Multi Year Guarantee Annuity as show above has an Interest Rate Guarantee Period of 5 Years, the guaranteed interest rate for each year is 5.00%, and is guaranteed not to change for the length of the contract.

Withdrawal Provision

The Withdrawal Provision is a feature that almost all MYGA's have. This provision allows you to withdraw a percentage of your account value or your initial premium each policy year. For example if this MYGA had a 10% Free Withdrawal Provision at the end of each year you could withdraw up to 10% of the previous years account value. For example: any money withdrawn in the third in excess of the 10% Free Withdrawal Provision would be subject to a 3.00% penalty.

Withdrawal of any funds prior to age of 59 1/2 are subject to an IRS Penalty of 10% of the funds withdrawn. This is in addition to any penalties incurred as part of the annuity contract.

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