What to Know Before Buying a Multi-Year Guaranteed Annuity (MYGA)

A Multi-Year Guaranteed Annuity (MYGA) is a straightforward financial product offering guaranteed growth, making it an excellent choice for those seeking stability in their retirement savings. However, understanding the key features, benefits, and considerations of MYGAs is essential to making an informed decision. Here’s what you need to know before purchasing a MYGA.

1. Understand How MYGAs Work

MYGAs are a type of fixed annuity that guarantees a fixed interest rate for a set term:

• Initial Premium: You make an upfront payment to the insurance company.
• Guaranteed Interest: The insurer credits your account with a fixed interest rate for the duration of the term, typically 2 to 10 years.
• Tax Treatment: Your earnings grow tax-deferred, under the current tax code, meaning you won’t owe taxes until you withdraw funds. Withdrawals are generally taxed at ordinary income rates. 
• Payout Options: At the end of the term, you can withdraw the funds, renew the MYGA, or convert it into a lifetime income stream.

2. Know Your Financial Goals

Determine how a MYGA fits into your overall financial plan:

• Are you looking for stable, predictable growth?
• Do you want to diversify your portfolio with a low-risk product?
• Are you saving for a specific medium to long-term financial goal?

Clarifying your objectives will help you select the right term and rate.

3. Choose the Right Term Length

MYGAs offer various term lengths, typically ranging from 2 to 10 years:

• Shorter Terms: Provide more flexibility but may come with slightly lower interest rates.
• Longer Terms: Often offer higher rates but require a longer commitment.
• Select a term that aligns with your financial timeline and goals.

4. Understand Surrender Charges

MYGAs have surrender periods, during which early withdrawals may incur surrender charges:

• Surrender charges typically decrease over time.
• Be sure you won’t need access to the funds during the term to avoid penalties.
• Many MYGAs allow penalty-free withdrawals of a certain percentage annually, offering some liquidity.

5. Consider Inflation Risk

While MYGAs offer guaranteed returns, their fixed interest rates may not keep pace with inflation over longer periods. Assess whether the guaranteed rate aligns with your financial goals and provides adequate real value. 

6. Assess the Financial Strength of the Insurer

Choose a MYGA from a reputable insurance company:

• Look for strong ratings from agencies like A.M. Best.
• A financially stable insurer supports the security of your principal and interest payments.

7. Evaluate Liquidity Options

MYGAs are designed for long-term savings, but they often include features that provide some access to your funds:

• Annual penalty-free withdrawals up to a specific percentage.
• Waivers for emergencies, such as nursing home care or terminal illness, may be available.

8. Compare Rates Across Providers

Interest rates can vary between insurers:

• Compare rates and terms from multiple providers to ensure you get the best return.
• Consider the impact of compounding interest over time to maximize growth.

9. Consult a Financial Professional

While MYGAs are simple products, working with a financial professional can help you:

• Choose the right term length and features.
• Ensure the MYGA aligns with your financial goals.
• Compare products to find the best fit for your needs.

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.