What is a MYGA annuity?

A Multi-Year Guaranteed Annuity (MYGA) is a fixed annuity that guarantees a set interest rate for a specified term, typically 2–10 years. It is similar to a bank CD but with tax-deferred growth and typically higher rates. MYGAs are often used as a CD alternative by retirees seeking safe, predictable growth.

What are current MYGA rates?

As of April 2026, top MYGA rates from A-rated carriers range from approximately 5.30% for 2-year terms to 6.10% for 7-year terms. Rates vary by carrier, state, and premium amount. Visit our Current Annuity Rates page for the latest representative rates.

How does an income rider work?

An income rider is an optional benefit added to a fixed indexed annuity that guarantees a lifetime income stream. The rider typically includes a 'benefit base' that grows at a guaranteed roll-up rate (often 5–8% per year) during the deferral period. When you activate income, the carrier calculates your monthly payment based on the benefit base, your age, and the payout rate — and guarantees that payment for life, regardless of account value.

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Fixed Indexed Annuities (FIAs)

Q: What is a fixed indexed annuity?

A fixed indexed annuity (FIA) is an insurance product that credits interest based on the performance of a market index, such as the S&P 500, up to a cap rate or participation rate. The principal is protected from market losses — in years when the index declines, your credited rate is 0%, not negative. FIAs are designed for consumers who want market-linked growth potential with downside protection.

A fixed indexed annuity may offer the potential for index-linked growth while protecting your principal from direct market losses. Here is how they work.

What Is a Fixed Indexed Annuity?

A fixed indexed annuity (FIA) is an insurance contract issued by a licensed insurance company. When you purchase an FIA, you deposit a sum of money (your premium), and the insurance company credits interest to your account based in part on the performance of a market index — such as the S&P 500, the Nasdaq-100, or a proprietary index created by the carrier.

Importantly, your premium is not directly invested in the stock market. The insurance company uses a portion of your premium to purchase options on the index, which allows them to credit you with index-linked interest when the index performs positively. Your principal is protected from direct market losses — if the index declines, your account value does not decrease due to index performance (though fees and charges may apply depending on the contract).

How Interest Is Credited

FIAs use one or more crediting methods to determine how much index-linked interest is applied to your account. The most common methods include:

Annual Point-to-Point with Cap

Interest is calculated based on the index's gain from the start to the end of a one-year period, subject to a maximum cap rate. For example, if the cap is 8% and the index gains 12%, you may be credited 8%.

Participation Rate

You receive a specified percentage of the index's gain. For example, if the participation rate is 60% and the index gains 10%, you may be credited 6%.

Spread / Margin

A fixed percentage is subtracted from the index gain. For example, if the spread is 2% and the index gains 9%, you may be credited 7%.

Monthly Sum / Monthly Average

Interest is calculated based on monthly index changes, which can produce different results than annual point-to-point methods.

Downside Protection

One of the most frequently cited features of FIAs is downside protection. Because your premium is not directly invested in the market, a decline in the index does not reduce your account value due to market performance. In a year when the index declines, your account value typically stays flat (zero interest credited for that period) rather than declining.

This protection can be meaningful for people who are approaching or in retirement and cannot afford to absorb significant market losses at a time when they may need to begin drawing income. However, it is important to understand that this protection applies to index-related losses — fees, surrender charges, and other contract costs can still reduce your account value.

Income Riders on FIAs

Many FIAs offer optional income riders — also called guaranteed lifetime withdrawal benefits (GLWBs) — that can be added to the contract for an additional annual fee. These riders create a separate "benefit base" that grows at a guaranteed rate during the deferral period and is used to calculate lifetime income payments when you are ready to begin drawing income.

Income riders may be appropriate for people who want to create a predictable income stream in retirement that they cannot outlive, similar to a pension. The specific terms, growth rates, and payout percentages vary significantly by carrier and contract.

See our FAQ for more on income riders →

Who May Benefit from an FIA?

FIAs may be worth exploring if you are between ages 50 and 75, have retirement savings you want to protect from market downturns, and are interested in the potential for index-linked growth without direct market exposure. They are commonly used by people who:

Are rolling over a 401(k) or IRA and want to protect the balance from market losses
Want more growth potential than a CD or savings account but are not comfortable with full market risk
Are interested in creating a guaranteed income stream in retirement
Have a longer time horizon (5–10+ years) before they need to access the funds

Want to Learn More?

Download our free guide or schedule a no-cost Retirement Income Review with a licensed professional.

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This page is for educational purposes only. Fixed indexed annuities are insurance products and are not FDIC-insured. Product features, caps, participation rates, and spreads vary by carrier and contract. Consult a licensed insurance professional before making any financial decisions.