Understanding the key benefits of MYGAs

A closer look at the core benefits of multi-year guaranteed annuities (MYGAs) reveal that they make a compelling addition to advisory portfolios for investors seeking fixed-income alternatives, particularly for these three client profiles.

MYGAs earn a fixed, predetermined rate of guaranteed interest over a specific time period while also offering complete principal protection – meaning, they will not decrease in value unless funds are withdrawn. Additionally, the interest earned in a MYGA is not taxed until funds are withdrawn. As a result, MYGAs are often used as an accumulation vehicle or as a fixed-income replacement within client portfolios. 

If you'd like to learn more about how MYGAs can benefit your clients, simply reach out, sign up for a webinar, or email annuities@flourish.com — we'd be happy to discuss.

1. Guaranteed principal protection

MYGAs pay a fixed, guaranteed rate over a defined term (commonly 2-7 years) and play a similar role to CDs in an investment portfolio.¹ As they are issued by insurance companies, MYGAs provide investors with guaranteed principal protection throughout the life of the investment – something stocks and bonds simply cannot deliver.

In addition, while MYGAs are typically held for the contractual term, limited penalty-free withdrawals (typically 10% per year)^‡‡ and an ability to exit the contract (typically with penalties) means clients maintain access to funds. With an allocation to MYGAs, a portion of the clients’ assets will never be marked down unless funds are withdrawn early, which can deliver powerful behavioral benefits and serve as a ballast to guard against sequence of return risk for clients in or near retirement.^††

2. Attractive, risk-adjusted returns

MYGA returns are guaranteed at the time of purchase for the entire length of the term and, because the insurance carrier credits the rate net of fees, the rate you see is the rate you get. MYGA rates are fixed, and the value of a MYGA does not change in response to changes in the overall interest rate environment. Currently, MYGAs yield a significant premium over many of the fixed income products used by RIAs today, and may offer an attractive substitute to bond ladders, brokered CDs, Treasurys, and more.

See how the top MYGA rate available through Flourish Annuities^* compares to other fixed income products used by RIAs today on our product overview page.

3. Tax-deferred growth

Finally, MYGA earnings are fully tax deferred, potentially benefiting high tax bracket clients or those looking for further tax optimization. As a result, MYGAs are a unique and powerful planning tool that can give advisors and clients more control over tax liabilities while still generating attractive yield. With potential tax cut lapses on the horizon, leveraging MYGAs for additional tax efficiency could generate significant savings for clients in the years ahead.^{^^}

Read how Curt Stowers, President of F5 Financial Planning, is using MYGAs from Flourish Annuities^* to help solve client challenges.