12 Common Questions Clients Have About Multi-Year Guaranteed Annuities (MYGAs)
Helping clients turn uncertainty into guaranteed growth
When clients think about retirement today, one question comes up again and again: “Can I really trust that my money will be there when I need it?”
Multi-Year Guaranteed Annuities (MYGAs) answer that concern directly. They’re simple, straightforward products that provide guaranteed growth and predictable outcomes. Yet even with that simplicity, clients naturally have questions.
Below are 12 of the most common MYGA questions, along with clear ways to explain the answers.
Foundation Questions: Understanding the Basics
1. What exactly is a MYGA, and how is it different from other annuities?
A MYGA is an annuity that provides a fixed, guaranteed interest rate for a set period of time — typically 2 to 10 years. Unlike variable annuities that fluctuate with markets or indexed annuities that link to market indices, MYGAs are straightforward: your client deposits a premium, earns a guaranteed rate for the term, and knows exactly what they’ll have at the end, assuming no withdrawals are made during the term of the contract.
Think of it as the retirement-focused alternative to a bank CD — but with generally offer higher rates depending on market conditions, tax deferral on non-qualified funds, and protection benefits.
2. How much money do I need to start, and are there age restrictions?
Most MYGAs, including Oceanview’s, start with a $20,000 minimum. They’re available for a wide range of ages — often from birth to age 89. This makes them flexible planning tools for both pre-retirees and retirees.
3. What guarantee periods are available, and how do I choose?
Typical guarantee periods range from 2 to 10 years. Shorter terms (2–3 years) offer flexibility if rates rise or funds may be needed sooner. Longer terms (7–10 years) let clients lock in competitive rates over time. The 5-year option often strikes the best balance depending on the particular retirement goals of a client.
👉 Advisor role: Align the guarantee period with your client’s timeline and broader financial plan, not just the headline rate.
Money Questions: Rates, Returns, and Reality
4. How are interest rates determined, and what happens when my term ends?
MYGA rates are generally locked in at issue and don’t change during the term. At the end of the guarantee period, clients typically have a 30-day window to renew, exchange, or withdraw. If they do nothing, the carrier offers a renewal rate. If no action is taken, the contract will generally renew subject to contract terms.
5. How do MYGA returns compare to CDs and other safe investments?
MYGAs often offer higher rates than bank CDs depending on market conditions. Plus, growth compounds tax-deferred — interest isn’t taxed until withdrawal. That difference can be meaningful over time, especially for clients in higher tax brackets. (Note: Bank CDs are FDIC-insured; annuities are backed by the claims-paying ability of the issuing insurance company.)
6. What about inflation? Will my guaranteed rate keep up?
MYGA rates don’t adjust for inflation. If inflation runs higher than the guaranteed rate, purchasing power can erode. That’s why MYGAs work best as part of a diversified strategy, providing safe, guaranteed growth alongside investments that address inflation risk.
Access Questions: Liquidity and Flexibility
7. Can I access my money if I need it, and what are the penalties?
Most MYGAs allow 10% penalty-free withdrawals annually after the first year. Withdrawals above that are generally subject to surrender charges and a market value adjustment. Exceptions typically apply for RMDs, terminal illness, or nursing home confinement subject to contract terms and conditions.
8. What is a Market Value Adjustment (MVA), and should I be worried?
An MVA adjusts the surrender value if funds are withdrawn before the end of the term, based on changes in interest rates. If rates rise, the value may decrease; if rates fall, it may increase. MVAs don’t apply if the client holds the contract to the end of the guaranteed period, and they’re prohibited in some states (e.g., not permitted in California).
9. How do taxes work with MYGAs?
MYGA earnings grow tax deferred. Withdrawals are taxed as ordinary income, and distributions before age 59½ may face a 10% IRS penalty. For qualified accounts like IRAs, MYGAs provide guaranteed growth but tax deferral is not an additional benefit beyond the qualified account itself.
Strategy Questions: Fit and Future Planning
10. Who should consider MYGAs, and who shouldn’t?
MYGAs are best for clients who:
- Want guaranteed, predictable growth.
- Value safety over maximum return potential.
- Can leave funds untouched for the contract term.
They’re not ideal for clients who expect equity-like returns, need frequent liquidity, or prefer higher-risk growth strategies. Whether a MYGA is suitable depends on the client’s individual circumstances. The client’s overall financial profile, including, but not limited to, retirement goals, risk tolerance, liquidity needs, and time horizon, must be carefully reviewed.
11. How do MYGAs fit into overall retirement planning?
MYGAs provide a stable foundation. They can cover near-term retirement expenses or serve as a safe growth allocation while other assets focus on long-term growth and inflation protection. For many clients, blending MYGAs with equities and bonds can create a strong balance depending on the client’s individual situation.
12. What happens to my MYGA when I die?
Most MYGAs provide a death benefit that allows beneficiaries to receive the contract value, typically without surrender charges or MVAs. Spouses may have continuation rights, while non-spouse beneficiaries generally receive the cash value directly. This makes MYGAs straightforward for legacy planning.
The Advisor Advantage: Turning Questions into Confidence
These 12 questions are more than product details — they reflect client concerns about safety, growth, and access. The best MYGA conversations address both the technical answer and the underlying emotion driving the question.
When clients leave saying, “I know what I’m buying, and I know why it makes sense for me,” you’ve not only explained a product — you’ve built confidence in their retirement plan.
Disclaimers
FOR FINANCIAL PROFESSIONALS USE ONLY. Not to be distributed to the general public. Oceanview’s Multi-Year Guaranteed Annuity Contract [ICC19 OLA SPDA], product riders and state variations. Policy form numbers and provisions may vary. May not be available in all states. Rates are guaranteed depending on the guarantee period selected at policy issue. For clients of our Multi-Year Guaranteed Annuity contract, within 30 days prior to the end of the Initial Interest Guarantee Period, we will send you a notification informing you of the date the Guarantee Period is ending and provide the renewal rate and Surrender Charges in effect for the subsequent Guarantee Period.
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 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.
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.
As each client and prospective client’s financial needs differ, care should be taken in making any recommendation to purchase an annuity. Therefore, nothing in this document should be read as investment advice.
Neither Oceanview Life and Annuity Company nor any of its representatives may provide tax or legal advice.
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.
Issue age for all deferred annuities is the age of the last birthday of the Owner. If joint owners, age of oldest determines commission payout.
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.