MYGA Pros and Cons

What to Consider Before You Buy

A multi-year guaranteed annuity, or MYGA, provides a fixed interest rate for a specified period and helps protect the contract value from stock-market declines. In return for that predictability, your access to the money may be limited, and you may miss the opportunity to earn more if market interest rates or other investments rise.

A MYGA can be a useful part of a retirement strategy, but it is not automatically the right choice simply because it offers an attractive rate. The decision should also consider liquidity, inflation, taxes, the guarantee period, the contract’s withdrawal provisions, and the financial strength of the issuing insurance company.

MYGA pros and cons at a glance

Key takeaways

• A MYGA is a fixed deferred annuity issued by an insurance company. 
• The interest rate is generally guaranteed for the contract’s stated guarantee period. 
• The contract does not directly participate in stock-market gains or losses. 
• Earnings in a nonqualified MYGA generally accumulate tax-deferred. 
• Withdrawals may be subject to surrender charges, a market value adjustment and taxes. 
• The rate is only one part of the decision; liquidity and contract terms matter just as much. 
• A MYGA is not a bank deposit and is not insured by the FDIC. 
• All contractual guarantees depend on the claims-paying ability of the issuing insurer. 

The National Association of Insurance Commissioners describes a fixed deferred annuity as an insurance contract that accumulates value before income payments begin. The insurer guarantees minimum contract values, while surrender charges and a market value adjustment may affect the amount available when money is withdrawn early. 

What is a MYGA?

1. Guaranteed Growth: MYGAs offer a guaranteed interest rate for the duration of the contract term, ensuring your account A multi-year guaranteed annuity is a type of fixed annuity that guarantees an interest rate for a specified number of years.

You make a premium payment to an insurance company. The company credits interest at the contractually stated rate during the guarantee period. At the end of that period, the contract may offer several options, depending on its terms:

• Withdraw some or all of the value 
• Select a new guarantee period 
• Continue under a renewal rate 
• Transfer the value to another eligible product 
• Convert the contract into a stream of income 

Unlike a fixed indexed annuity, a traditional MYGA does not calculate interest based on a market index. Unlike a variable annuity, the contract value does not fluctuate based on the performance of investment subaccounts.

For a fuller explanation of the mechanics, read What Is a MYGA?

The potential advantages of a MYGA

1. A guaranteed interest rate provides predictability

The defining benefit of a MYGA is that its interest rate is generally established for a stated guarantee period.

If the contract guarantees a 5% annual effective yield for five years, for example, market volatility will not change that guaranteed yield during the term, assuming the contract is held and no transactions alter the expected value.

That predictability can make it easier to:

• Estimate future contract value 
• Plan around a specific retirement date 
• Allocate a portion of savings to a more stable strategy 
• Reduce uncertainty caused by daily market movements 

A fixed annuity promises a stated minimum rate of interest during accumulation, with the guarantees backed by the issuing insurance company. 

Hypothetical example

Suppose a consumer places $100,000 into a five-year MYGA earning a guaranteed 5% annual effective yield.

End of year	Hypothetical contract value
1	$105,000
2	$110,250
3	$115,763
4	$121,551
5	$127,628

This hypothetical assumes no withdrawals, charges or taxes during the period. It does not represent a current Oceanview rate or a promise of any specific product result.

2. The contract is protected from stock-market declines

A MYGA does not invest the contract owner’s value directly in stocks or a stock-market index.

If the S&P 500, Nasdaq or another market benchmark falls, that decline does not reduce the MYGA’s contract value simply because the market went down.

This can make a MYGA useful for someone who wants to separate a portion of retirement savings from equity-market volatility.

However, “principal protection” requires an important qualification: the amount received can still be reduced by withdrawals, surrender charges, a negative market value adjustment or other contract provisions. The protection is from market-performance losses—not from every possible reduction in value. The NAIC recommends reviewing both account value and cash surrender value because they may differ. 

3. Earnings can accumulate tax-deferred

Interest earned in a nonqualified MYGA generally remains tax-deferred until money is distributed.

That means the contract owner normally does not pay annual federal income tax on interest simply because it was credited to the annuity. The credited interest remains in the contract and can continue earning interest.

This differs from a certificate of deposit held outside a tax-qualified account, where interest is generally taxable income on an annual basis. 

Tax deferral does not mean tax-free growth. The taxable portion of a future annuity distribution is generally subject to ordinary income tax.

A MYGA purchased inside an IRA or another tax-qualified retirement account does not provide an additional tax-deferral benefit because the account already receives tax-deferred treatment.

4. MYGAs are relatively straightforward

A traditional MYGA generally has fewer moving parts than an indexed or variable annuity.

The primary terms typically include:

• Premium
• Guaranteed interest rate 
• Guarantee period 
• Surrender-charge schedule 
• Free-withdrawal provision 
• Market value adjustment, when applicable 
• Death benefit 
• Renewal or maturity options 

There is no need to select stocks, funds or an index-crediting strategy.

Simplicity does not eliminate the need to read the contract. The surrender value, MVA provisions, withdrawal rules and renewal process can still materially affect the result.

5. Different guarantee periods can support different timelines

MYGAs may be offered with different guarantee periods, allowing a consumer to select a term that more closely matches the expected use of the money.

A shorter term may offer:

• Earlier access to the full value 
• More frequent opportunities to reconsider current rates 
• Less time committed to one contract 

A longer term may offer:

• More years of rate certainty 
• Less frequent reinvestment decisions 
• Greater protection against the possibility that rates decline 

Neither is automatically better.

A shorter guarantee period may fit when…	A longer guarantee period may fit when…
You expect to need the money sooner	You do not expect to need the money for several years
You want to reconsider rates more frequently	You place a higher value on long-term certainty
You are concerned about committing at today’s rate	You are concerned rates may decline
Liquidity is a higher priority	Predictability is a higher priority

The surrender period and guarantee period should both be reviewed. They may be related, but the contract controls exactly how each works.

6. Contracts may offer limited liquidity and retirement-income options

Some MYGAs allow a contract-specified amount to be withdrawn annually without a surrender charge. Contracts may also include waivers that provide additional access after certain qualifying events, such as terminal illness or nursing-home confinement.

The percentage, timing, eligibility rules and state availability vary by contract. A withdrawal that is free from a surrender charge may still:

• Be affected by taxes 
• Reduce future interest 
• Reduce a death benefit 
• Affect future income 
• Be subject to an MVA in some contracts 

Some fixed annuities also allow the owner to convert accumulated value into income for a selected period or for life. The specific income options and consequences of annuitization should be reviewed before the contract is purchased. The NAIC notes that contracts often permit limited withdrawals and may offer several payout options. 

The potential disadvantages of a MYGA

1. Access to the money is limited

A MYGA is designed for money that can remain in the contract for the full intended term.

Withdrawing more than the contract’s free-withdrawal allowance during the surrender period can result in a surrender charge. The charge commonly declines according to a schedule and eventually reaches zero.

A hypothetical surrender schedule could look like this:

Contract year	Hypothetical surrender charge
1	9%
2	8%
3	7%
4	6%
5	5%
Later years	Continues declining to 0%

This example does not represent a specific Oceanview contract.

Before purchasing a MYGA, determine:

• How long the surrender period lasts 
• When free withdrawals begin 
• How the allowance is calculated 
• Whether an unused allowance carries forward 
• Whether a surrender charge applies to the full withdrawal or only the excess amount 
• Whether qualifying events may waive the charge 

The NAIC advises that taking money from an annuity before the surrender period ends commonly results in a surrender or withdrawal charge.

2. A market value adjustment may change the surrender value

Some MYGAs include a market value adjustment, or MVA.

An MVA is a contractual adjustment that may increase or decrease the value received from certain withdrawals or a full surrender during the MVA period. Its effect generally depends on changes in market interest rates after the contract was issued.

In simplified terms:

• If current market rates are higher than when the MYGA was issued, a negative MVA may reduce the amount received. 
• If current market rates are lower, a positive MVA may increase the amount received. 
• The contract’s formula and applicable state requirements determine the actual adjustment. 

An MVA can apply in addition to a surrender charge. The NAIC defines an MVA as an adjustment that may affect account value, cash surrender value or other contract values when money is removed at a time other than a specified benefit date. 

Read Understanding Market Value Adjustments for a more detailed explanation.

3. A fixed rate may not keep pace with inflation

Predictability is not the same as purchasing-power protection.

A MYGA’s stated rate does not automatically increase when the prices of food, housing, healthcare or other expenses rise. If inflation remains above the contract’s credited rate, the owner’s purchasing power may decline even while the dollar value of the contract increases.

For example, a contract earning 4% while inflation averages 5% would grow in nominal dollars but lose purchasing power before considering taxes.

This does not make the MYGA unsuccessful. It means the product addresses one risk—market and rate uncertainty during the guarantee term—but not every retirement risk.

A retirement strategy may need to balance:

• Stability
• Liquidity
• Income
• Inflation protection 
• Long-term growth 

4. You may miss higher rates

When you purchase a traditional MYGA, you commit to the stated rate for the guarantee period.

That is beneficial when market rates decline. It can feel less attractive if newly issued MYGAs, CDs or other alternatives later offer higher rates.

Leaving the contract early to pursue a higher rate may trigger:

• A surrender charge 
• A negative MVA 
• Tax consequences 
• A new surrender period in the replacement product 

A higher new rate does not automatically make a replacement economically beneficial. The additional return must be weighed against any charges, lost guarantees and the amount of time required to recover those costs.

5. A MYGA does not participate in stock-market growth

A MYGA’s contract value is insulated from stock-market declines, but it also does not receive stock-market gains.

If equity markets rise significantly during the guarantee period, the MYGA continues earning its stated rate rather than participating in that increase.

This is the central tradeoff:

A MYGA exchanges market upside for contractual predictability.

Someone seeking index-linked interest without direct exposure to negative index performance may instead explore a fixed indexed annuity. Unlike a MYGA, an FIA’s credited interest is based partly on index performance and is not known in advance. Crediting limits such as caps, participation rates and spreads may apply. 

6. Withdrawals may create taxes and an additional federal tax

Tax-deferred does not mean that money can always be withdrawn without a tax consequence.

For a nonqualified annuity, the IRS generally treats a nonperiodic withdrawal as coming from earnings first and principal second. The earnings portion is generally taxable. 

Certain taxable distributions taken before age 59½ may also be subject to an additional 10% federal tax unless an exception applies. 

The treatment of annuitized payments, qualified contracts, inherited contracts and exchanges can be different. A qualified tax professional should be consulted regarding individual circumstances.

7. Guarantees depend on the insurance company

A MYGA is an obligation of the issuing insurance company.

It is not:

• A bank deposit 
• An FDIC-insured certificate of deposit 
• Insured by the NCUA 
• Protected by the Securities Investor Protection Corporation 
• Guaranteed by a federal government agency 

The FDIC specifically identifies annuities as non-deposit products that are not covered by FDIC deposit insurance, even when they are offered through a bank. 

That makes the insurer’s financial strength an important part of the evaluation. Review:

• Current financial-strength ratings 
• Rating dates and outlooks 
• The rating agency’s scale 
• The issuing company named in the contract 
• Service and claims-paying history 
• Contractual guarantees and state availability 

A rating is an opinion, not a guarantee of future performance.

8. The end of the guarantee period requires a decision

A MYGA should not be evaluated only on the initial term.

Before purchasing, understand what happens when the guaranteed rate ends.

Depending on the contract, you may be able to:

• Withdraw the contract value during a specified window 
• Select a new guarantee period 
• Accept a renewal rate 
• Transfer the value through an eligible tax-free exchange 
• Begin income payments 
• Leave the contract under a contractual continuation provision 

Ask:

• How will I be notified? 
• How long is the decision window? 
• What rate applies if I take no action? 
• Will a new surrender period begin? 
• What minimum renewal rate is guaranteed? 
• Can the full value be withdrawn without an MVA or surrender charge? 
• Are there restrictions on transfers or partial withdrawals? 

The initial guaranteed rate is important, but the complete contract lifecycle matters more.

MYGA vs. CD vs. fixed indexed annuity

A MYGA is sometimes compared with a certificate of deposit because both can provide a stated rate for a stated period. They are not the same product.

Feature	MYGA	Bank CD	Fixed indexed annuity
Issued by	Insurance company	Bank or credit union	Insurance company
How interest is determined	Fixed rate for a stated guarantee period	Fixed or defined bank rate	Based partly on index performance
Direct stock-market exposure	No	No	No
Is the return known in advance?	Yes, during the guarantee term	Generally yes	No
Tax treatment outside a qualified account	Earnings generally tax-deferred until distribution	Interest is generally taxable as credited	Earnings generally tax-deferred until distribution
Early access	May involve surrender charges and an MVA	May involve an early-withdrawal penalty	May involve surrender charges and an MVA
FDIC insurance	No	Yes, when issued by an FDIC-insured bank and within applicable limits	No
Guarantees depend on	Issuing insurer’s claims-paying ability	Issuing bank and applicable deposit insurance	Issuing insurer’s claims-paying ability
Market-growth potential	None beyond stated rate	None beyond stated rate	Limited index-linked potential

FDIC insurance covers certificates of deposit issued by insured banks, subject to applicable ownership categories and coverage limits. It does not cover annuities. 

The choice should not be based on rate alone. Taxes, liquidity, insurance protection, surrender terms, time horizon and the issuer all differ.

Who might consider a MYGA?

A MYGA may be worth discussing with a licensed financial professional when you:

• Want a portion of retirement savings protected from stock-market volatility 
• Prefer a return that can be calculated in advance 
• Can leave the money in place through the surrender period 
• Have adequate liquid savings outside the annuity 
• Want tax-deferred accumulation in a nonqualified account 
• Have a specific time horizon that matches the guarantee period 
• Understand that the return will not increase if the stock market rises 
• Are comfortable relying on the claims-paying ability of the insurer 
• May want future retirement-income options 

A MYGA can serve a specific purpose without holding all of a consumer’s retirement savings.

When might a MYGA not be a good fit?

A MYGA may be less appropriate when you:

• Need unrestricted access to the money 
• Are using emergency or short-term savings 
• Expect a significant purchase or expense during the surrender period 
• Want direct participation in stock-market growth 
• Need an investment designed to respond directly to inflation 
• Are uncomfortable committing to one rate 
• Would incur substantial charges to replace an existing contract 
• Are purchasing inside a qualified account solely for additional tax deferral 
• Do not understand the MVA or surrender provisions 
• Have not reviewed the insurer’s financial strength 

The right question is not simply, “Is the rate competitive?”

It is:

Does this contract provide the right combination of certainty, access and long-term value for the role it is expected to play?

Should you choose a shorter or longer MYGA term?

The answer depends largely on which risk concerns you more.

A shorter term can reduce commitment risk

A shorter guarantee period allows the owner to reconsider available options sooner. That can be valuable when:

• Liquidity may be needed earlier 
• The interest-rate outlook is uncertain 
• The owner wants more frequent decision points 

The tradeoff is that the renewal rate may be lower when the term ends.

A longer term can reduce reinvestment risk

A longer guarantee period preserves the stated rate for more years. That can be valuable when:

• Long-term certainty is the primary objective 
• The money will not be needed during the term 
• The owner is concerned that future rates may fall 

The tradeoff is reduced flexibility if higher rates become available.

What is a MYGA ladder?

A MYGA ladder divides money among contracts with different maturity or guarantee dates rather than placing the entire amount in one term.

For example, a consumer might allocate portions of the available funds to three-, five- and seven-year contracts. This creates more frequent opportunities to reconsider rates or access maturing funds.

Laddering does not remove surrender charges, MVA exposure, tax consequences or insurer risk. Each contract must be evaluated separately, and dividing money among contracts does not guarantee a better result.

Questions to ask before buying a MYGA

Ask the licensed financial professional presenting the contract:

1. What is the guaranteed annual effective yield? 
2. How long is that rate guaranteed? 
3. How long is the surrender-charge period? 
4. What is the complete surrender-charge schedule? 
5. How much can I withdraw without a surrender charge? 
6. When do free withdrawals become available? 
7. Does the contract include an MVA? 
8. Which withdrawals are subject to the MVA? 
9. Could a negative MVA reduce the value below my original premium? 
10. What waivers are available, and what conditions apply? 
11. What death benefit will my beneficiaries receive? 
12. What happens at the end of the guarantee period? 
13. How long is the renewal or withdrawal window? 
14. What rate applies if I do nothing? 
15. Would a new surrender period begin? 
16. What minimum renewal rate does the contract guarantee? 
17. What income or annuitization options are available? 
18. How will withdrawals be taxed? 
19. Am I replacing another contract or financial product? 
20. What benefits, rates or liquidity would I give up by replacing it? 
21. How is the licensed professional compensated? 
22. What is the insurer’s current financial-strength rating? 
23. How long is the free-look period? 
24. Where are each of these provisions stated in the contract? 

MYGA buyer’s checklist

Before signing an application, confirm:

• I understand the purpose of the MYGA in my retirement strategy. 
• I have emergency savings and adequate liquid assets outside the contract. 
• The guarantee period matches my expected time horizon. 
• I understand the surrender-charge schedule. 
• I know how much I may withdraw each year. 
• I understand whether an MVA applies. 
• I know what happens when the guarantee period ends. 
• I have reviewed the current rate and the contractual minimum rate. 
• I understand the tax treatment of withdrawals. 
• I have considered inflation and the possibility that other rates may rise. 
• I understand that the MYGA will not participate in stock-market gains. 
• I have reviewed the insurer’s financial-strength rating. 
• I have compared the MYGA with relevant alternatives. 
• I have read the disclosure and illustration. 
• I know how to use the free-look period. 

A “no” does not necessarily mean the contract is inappropriate. It means more information is needed before making the decision.

A simple and transparent approach from Oceanview

Oceanview believes a fixed annuity should be understandable before it is purchased.

Oceanview offers MYGA options intended to support principal protection, guaranteed interest, tax-deferred accumulation and straightforward contract features. Available guarantee periods, rates, withdrawal provisions, product forms and state availability vary. 

Rather than relying only on a headline rate, consumers and financial professionals should review:

• The full guaranteed yield 
• The guarantee and surrender periods 
• Liquidity provisions 
• MVA treatment 
• Renewal options 
• Death benefits 
• Financial strength 
• Service and support 

Oceanview Life and Annuity Company has an A (Excellent) Financial Strength Rating from AM Best with a stable outlook, affirmed February 11, 2026. AM Best assesses Oceanview’s risk-adjusted capitalization as very strong. The rating is an opinion, is subject to change and is not a guarantee of future claims payment. 

Could a MYGA support your retirement strategy?

Explore Oceanview’s multi-year guaranteed annuity options, review current Oceanview rates, or speak with a licensed financial professional about the term, liquidity and guarantees that may fit your needs.

Current rates are for new applications, may vary by product and state, and are subject to change. 

This article does not recommend a particular product or financial strategy.

Frequently asked questions

What is the biggest advantage of a MYGA?

The primary advantage is predictability. The interest rate is guaranteed for a stated period, allowing the contract owner to calculate expected growth without direct exposure to stock-market performance.

What is the biggest disadvantage?

The main tradeoff is reduced liquidity. Taking money out during the surrender period may result in surrender charges and a market value adjustment.

Can a MYGA lose money?

The contract is not reduced by stock-market declines. However, the amount received may be lower because of withdrawals, surrender charges, an MVA, taxes or other contract provisions. Guarantees also depend on the issuing insurer.

Are MYGAs safe?

MYGAs are insurance contracts with guarantees backed by the issuing insurance company. They are not FDIC-insured deposits. “Safe” should therefore be evaluated in relation to the insurer’s financial strength, the contract terms and the owner’s need for liquidity.

Is a MYGA better than a CD?

Neither is universally better. A MYGA may provide tax-deferred growth and annuity income options, while a qualifying bank CD receives FDIC deposit insurance and may provide different liquidity and tax treatment. Compare the complete terms rather than only the advertised rates.

Does a MYGA have fees?

A MYGA may not deduct a separate annual management fee from the base contract, but surrender charges, an MVA and other provisions can affect the value received. Contract terms vary and should be reviewed carefully.

Are MYGA earnings taxable?

Earnings in a nonqualified MYGA generally accumulate tax-deferred and are taxable when distributed. The tax treatment depends on the contract type and the form of distribution.

What happens when a MYGA term ends?

The owner may have options such as withdrawing the value, selecting a new guarantee period, accepting a renewal rate, transferring the contract value or beginning income. The available choices and decision window depend on the contract.

Can I withdraw money from a MYGA?

Most contracts permit withdrawals, but amounts above the free-withdrawal allowance may be subject to a surrender charge and MVA. Taxes may also apply.

Is a MYGA FDIC insured?

No. An annuity is not a bank deposit and is not insured by the FDIC or another federal deposit-insurance program. 

Is a longer MYGA term always better?

No. A longer term provides more years of rate certainty but less flexibility. A shorter term provides an earlier decision point but exposes the owner to the possibility that future rates will be lower.

Should I purchase a MYGA inside an IRA?

An IRA already provides tax deferral, so a MYGA does not add another tax-deferral benefit. It may still provide contractual guarantees or other features, but those benefits should justify the purchase.

Important Information

Disclaimers

Guarantees are based on the claims-paying ability of the issuing insurance company. The multi-year guarantee annuity product with form number ICC19 OLA SPDA, or variations of such, are issued by Oceanview Life and Annuity Company (d/b/a Oceanview Life and Annuity Insurance Company in California; NAIC# 68446). May not be available in all states. Not available in the state of New York or Vermont. Policy form numbers and provisions may vary. Rates are guaranteed depending on the guarantee period selected at policy issue, subject to contract terms. 

The Single Premium Fixed Indexed Annuity Contract [ICC19 OLA FIA], or variations of such are issued by Oceanview Life and Annuity Company (d/b/a Oceanview Life and Annuity Insurance Company in California). May not be available in all states. Not available in the state of New York or Vermont.  Product features, limitations and availability may vary. 

OCEANVIEW ANNUITIES ARE PRODUCTS OF THE INSURANCE INDUSTRY AND NOT GUARANTEED BY ANY BANK NOR INSURED BY THE FDIC OR NCUA/NCUSIF OR ANY OTHER FEDERAL GOVERNMENTAL AGENCY. MAY LOSE VALUE. NO BANK/CREDIT UNION GUARANTEE. NOT A DEPOSIT. MAY ONLY BE OFFERED BY A LICENSED INSURANCE AGENT. GUARANTEES ARE SUBJECT TO THE CLAIM PAYING ABILITY OF THE ISSUING INSURANCE COMPANY.

Annuities issued by Oceanview Life and Annuity Company, 1331 17th Street, Suite 1050, Denver, CO 80202. In California, doing business as Oceanview Life and Annuity Insurance Company www.oceanviewlife.com.

Annuities are generally designed as long-term retirement solutions and have certain limitations. They are generally not intended to replace emergency funds, serve as income for day-to-day expenses, or support short-term savings goals. Please refer to the contract for complete details, including features, limitations, and charges.

A.M. Best Rating as of February 11, 2026, is subject to change. A (Excellent) rating is third highest of fifteen possible rating classes for financial strength. The outlook assigned to these Credit Ratings is stable.

This material is a general description intended for general public, educational use. Oceanview Life and Annuity Company is not providing investment advice for any individual or in any individual situation, and therefore nothing in this correspondence should be read as such. 

Neither Oceanview Life and Annuity Company nor any of its representatives may provide tax or legal advice. Clients should consult their own qualified tax or legal advisors.

Withdrawals in excess of any Free Partial Withdrawal amounts are subject to a Surrender Charge and Market Value Adjustment (MVA). The MVA may have the effect of increasing or decreasing the Surrender Value of the withdrawal depending on the market interest rate changes.

The IRS may impose a penalty for withdrawals prior to age 59 ½. Withdrawals may also be subject to ordinary income tax.

Contracts purchased in an IRA or other tax-qualified plan provide no additional tax-deferral benefit, since they are already afforded tax-deferred status. All annuity features, risks, limitations, and costs should be considered prior to purchasing an annuity within a tax-qualified retirement plan. For non-qualified annuities, tax deferral is not available to corporations and certain other entities.

Rates, renewal caps, and declared interest rates, will always follow contract provisions relative to minimums and maximums stated.  Oceanview determines, at its discretion, the rates, renewal caps and, declared interest rates above the contractual minimums that are guaranteed. 

Interest credited to an FIA is not the same as direct investment performance in any index or the stock market. Interest credits are determined in accordance with the contract provisions and may be limited by caps, participation rates, spreads, or other limitations. Past index performance does not predict future results.