Limited-Time High Interest Rate MYGA

What is a limited-time high interest rate MYGA?

From time to time, an insurance company will have special limited-time offer for a Multi-Year Guaranteed Annuity (MYGA) with a higher interest rate. For example, we were notified by one of our carriers that, beginning June 6, they are offering a MYGA with a 3.15%* interest rate. It’s a 5 year annuity with a minimum premium of $20,000.

How long does the limited-time MYGA offer last?

When discussing these limited-time offer MYGAs with our customers, the first question we usually get is “How long with the offer last?” To understand why we can’t really answer the question, it helps to explore why the insurance carriers have these special rate MYGAs in the first place.

Simply put, the insurance carriers often offer these limited-time higher rate MYGAs as a means of gathering a usually predetermined amount of premium to leverage bond purchases. So really the length of the “limited-time offer” usually ends up being however long it takes for the company to sell enough MYGAs to collect the premium needed for their bond purchase. Since these MYGAs have a competitive advantage with their higher than typical interest rates, demand is usually high. In our experience, the high interest rate MYGA offer is usually off the table within 2-3 weeks from its initial offer.

* This particular MYGA offer has an initial interest rate that is effective for new annuities issues as of June 6, 2016 for the first five contract years only. Thereafter, the company may declare at its sole discretion a new rate which could be lower. This initial rate is also subject to change at any time in the company’s sole discretion for new contracts. There is a 30 day window at the end of each five year guarantee period where the client may withdraw all of part of the annuity without application of surrender charged or market value adjustment. A new guarantee period and surrender charge period will begin after the end of the previous one.