Aug 23, 2023
In this episode, The Annuity Man discussed:
What a MYGA isn’t and what it is
What is a call feature?
Locking in interest in MYGAs
A MYGA is the annuity industry’s version of a CD. It’s a Multi-Year Guaranteed Annuity. It’s not an income annuity, and it’s not annualization. It’s when you give the money to the insurance company, and they contractually guarantee an annual yield for the duration you choose.
In simple words, a call feature is if interest rates go down after you purchase a high-yielding bond or CD; some provisions allow the issuing entity to call that money back when the banks cannot give you the interest you wanted to get.
If the duration you want to lock in is less than three years, then you probably should look at CDs and treasuries. If the duration you want to lock in is three years and more, MYGAs will offer a higher contractual yield.
"MYGAS are not callable. They are guaranteed for the term that you lock in. So if you lock in a 10-year term and interest rates go drastically down, the annuity company can't call that back in. They can't pull the rug out from under you contractually. They have to honor that contractual yield that you've locked in for that long term." — Stan The Annuity Man.
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