Making the Move to MYGAs

Multi-Year Guaranteed Annuities (MYGAs) are a favored choice for individuals looking to safeguard their savings while still achieving investment growth. Often compared to bank certificates of deposit (CDs), MYGAs are appealing because they offer both protection and higher interest rates compared to CDs, along with valuable tax benefits. As the simplest form of annuity, MYGAs are accessible even to those who are cautious about annuities.

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How MYGAs Function

MYGAs are fixed-rate insurance products that provide a series of payments at a future date, typically within 3 to 10 years, including interest and the original premium. They are usually purchased with a single premium payment. If funds are withdrawn before the contract period ends, surrender charges may apply. However, most MYGAs allow policyholders to access required minimum distributions (RMDs) without penalties, although it’s important to verify this before making recommendations to clients.

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Who Should Consider a MYGA

MYGAs are ideal for clients seeking a low-risk retirement savings option that offers better rates than CDs and tax-deferred growth. Unlike CDs, which are taxable annually on earned interest if not held in an IRA or other retirement account, MYGAs allow funds to grow without immediate tax consequences. Taxes are only due when withdrawals are made.

For conservative investors who have CDs maturing, or those holding Treasury bonds or money market accounts, MYGAs offer an attractive alternative. For instance, while a maturing CD might yield between 0.6% and 3.15%, a MYGA could offer returns ranging from 3.0% to 4.92%, along with tax deferral benefits.

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How CareValue Can Assist

CareValue provides comprehensive support with our partner, Senior Market Sales^® (SMS), helping you find the best MYGA products for your clients while growing your business, typically focusing on three-, five-, and seven-year fixed MYGAs.

“Agents often seek the highest rate on a MYGA, but with our extensive carrier options and in-depth MYGA knowledge, we may find a product that better suits their needs,” says Mark Cavalieri, Associate Director of Annuity Sales at SMS. “An experienced partner can uncover the details that lead to an optimal rate, including carrier ratings, compensation, liquidity options, free partial withdrawals, and maturity options.”

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