MYGA Pros and Cons

Multi-Year Guaranteed Annuities (MYGAs) are a reliable choice for individuals seeking stable and predictable returns for their retirement savings. However, like any financial product, MYGAs come with advantages and disadvantages that should be carefully considered. Here’s a detailed look at the pros and cons of MYGAs to help you make an informed decision.

The Pros of MYGAs

1. Guaranteed Growth:
   • One of the most attractive features of an FIA is the guarantee that your initial principal is protected. Even if the market index linked to your annuity performs poorly, you will not lose your initial investment.
2. Principal Protection:
   • Unlike market-based investments, MYGAs protect your principal from market downturns, making them a low-risk option for conservative investors.
3. Tax-Deferred Earnings:
   • Interest earned on a MYGA grows tax-deferred based on the current tax code, allowing your savings to compound more efficiently over time. Taxes are only due upon withdrawal.
4. Flexible Term Options:
   • MYGAs come with a range of term lengths, typically from 3 to 10 years, allowing you to align your investment with your financial timeline and goals.
5. Simplicity:
   • MYGAs are straightforward and easy to understand, making them an accessible option for individuals new to retirement planning or seeking a low maintenance investment.
6. Penalty-Free Withdrawals:
   • Many MYGAs allow for limited penalty-free withdrawals annually, offering some liquidity in case of unexpected expenses.
7. Lifetime Income Options 
   • Fixed annuities can provide a steady income stream for life, which can be important in retirement planning. 
8. Low Fees:
   • Compared to other financial products, MYGAs generally have minimal or no ongoing fees, ensuring more of your money stays invested.

The Cons of MYGAs

1. Limited Liquidity:
   • While FIAs provide growth potential, the gains are often capped through participation rates, cap rates, or spreads. This means you may not capture the full returns of a rising market.
2. Inflation Risk:
   • MYGAs provide fixed returns, which may not keep pace with inflation over longer periods, potentially reducing your purchasing power.
3. Opportunity Cost:
   • Funds invested in a MYGA are locked in for the term length, meaning you may miss out on higher returns from other investment opportunities during that time.
4. No Market Exposure:
   • While this is a benefit for risk-averse investors, it also means you won’t benefit from potentially higher market-driven gains.
5. Taxation on Withdrawals:
   • While optional riders, such as lifetime income guarantees, can be valuable, they often come with additional fees that may reduce overall returns.

Who Should Consider a MYGA?

MYGAs are an excellent fit for individuals who:

• Value guaranteed, predictable growth without market risk.
• Have a medium to long-term financial goal and don’t need immediate access to their funds.
• Are seeking a simple, low-maintenance savings option.
• Want to diversify their portfolio with a stable and conservative product.

Making an Informed Decision

While MYGAs offer numerous benefits, they’re not suitable for everyone. It’s important to evaluate your financial goals, risk tolerance, and time horizon before committing to a MYGA. Consulting a financial professional can provide personalized advice to determine if a MYGA is right for you.

Discover the Oceanview Difference

• Financial Strength You Can Trust: Rated “A” (Excellent) by A.M. Best, showcasing our solid financial foundation, providing you with confidence regarding Oceanview’s commitment to meeting obligations.
• Simple, Transparent Retirement Solutions: Straightforward annuity products designed to help you meet your retirement objectives.
• Competitive Rates and Flexibility: Benefit from competitive rates and a variety of durations and crediting strategies.
• Client-Centric Approach: Features such as free withdrawals, nursing home and terminal illness waivers, and full liquidity for beneficiaries upon the annuitant’s death demonstrate our commitment to your financial security and peace of mind.

Disclaimers

Annuities issued by Oceanview Life and Annuity Company, 1819 Wazee Street, 2nd Floor, Denver, CO 80202. In California, doing business as Oceanview Life and Annuity Insurance Company www.oceanviewlife.com.

HARBOURVIEW 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 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 review the contract for full details.  

A.M. Best Rating as of December 11, 2024, 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. 

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.

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.

While care was taken in preparing this information and it is considered reliable, contract, application, illustration, and product disclosure language should be relied upon when contrary. The Company reserves the right to correct any typographical errors that may exist.  

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.