MYGAs with GLWBs: A flexible alternative to traditional income annuities

A flexible income solution that preserves client options and advisory fees.

When advisors think about income-focused annuities, the traditional choice of single premium immediate annuities (SPIAs) often come to mind. These products convert a lump sum into fixed payments and historically have been popular for offering higher payout rates than other conservative income options. However, SPIAs come with a few notable drawbacks.

Once the client makes the payment, the action is usually irrevocable, and the funds effectively vanish from both the client’s and advisor’s view. The lack of flexibility can be challenging and unsettling for clients, particularly if their needs or life circumstances change. Additionally, once those funds are locked into a SPIA, they effectively vanish from the client’s balance sheet — which can lead to reduced advisory fees. The client loses access to the funds, and both the client and advisor lose visibility, which can result in less comprehensive planning.

Today, there’s a new approach gaining traction — one that offers lifetime income with far more flexibility, while still allowing for the opportunity to continue charging an advisory fee on those assets. Better yet, the client doesn’t have to compromise on returns to get this added adaptability.

Multi-year guaranteed annuities (MYGAs) paired with a guaranteed lifetime withdrawal benefit (GLWB) offer a more flexible way to generate dependable retirement income. MYGAs guarantee a fixed interest rate for a set period — think of it like a certificate of deposit (CD) with insurance company backing.^††1 The addition of the GLWB rider for a fee turns the contract into a stream of income that lasts a lifetime.

Unlike many SPIAs,² which typically pay out for a specific duration or stop upon death, MYGAs with GLWBs provide guaranteed income for life while still allowing the client to maintain access to their money should circumstances change. They can offer added protection through:

Steady income stream: With a GLWB, clients receive income for the duration of their life, even if the contract value is eventually depleted. Lifetime income is calculated from a separate “benefit base” designed for income payouts, which gives clients protection against outliving their savings.
Spousal protection: Most MYGA contracts offer the valuable option for the income stream to continue uninterrupted for a surviving spouse, providing added security.
Death benefits: If there is remaining contract value when a client passes away, that amount can go to beneficiaries — something traditional SPIAs generally don’t offer. This helps alleviate a major concern some clients have with SPIAs: if they pass away shortly after transferring funds to a carrier, then the funds are effectively gone.

These features make MYGAs with GLWBs particularly appealing to clients who value income stability, added protection, and want to retain some control over their assets. That’s one reason this strategy is often referred to as “income with options.”

With MYGAs with GLWBs, there’s no financial compromise required to gain that added flexibility and protection. In fact, income rate for a MYGA with GLWB are often just as strong as what's available through a SPIA.

For example, with a leading MYGA with GLWB currently available through the Flourish Annuities^∫ marketplace, a 65-year-old client can receive a 7.30% income rate for single-life coverage as of 06/12/2025.^3< Clients who don't need to draw income immediately can typically earn an even higher growth rate for each year income is deferred. To compare, we examined illustrative rates for traditional SPIAs offered by comparably rated insurance carriers, which currently offer a 7.00% payout.⁴

Feature	MYGA w/ GLWB	Traditional SPIA
Annual income	$7,300 (7.30% payout)	$7,000 (7.00% payout)
Liquidity	Full access to account value	Irrevocable; funds surrendered
Flexibility	Withdrawals can be adjusted or stopped; potential for legacy planning	No access to principal; limited or no death benefit
Advisor Fees	Ability to bill on full account value	No ongoing advisory fees; assets removed from AUM

Of course, no solution is one-size-fits-all. While MYGAs with GLWBs offer meaningful advantages, there are other factors to consider:

Carrier fees apply. For example, the MYGA with GLWB that currently offers a 7.30% rate includes a 0.95% annual fee. However, that fee is currently balanced by an annual interest credit (2.75% for the first seven years, then 1% thereafter) designed to offset that cost.^††
Access to funds may result in reduced benefits. Clients retain access to their money, but withdrawals outside the guaranteed income may reduce future benefits.
Surrender charges and other early withdrawal fees may apply. Like most annuities, these products may impose surrender charges if clients withdraw over specified limits too early. Surrender charges usually diminish over time.‡‡ Learn more about how these charges work in Flourish's guide to annuity surrender charges.
Fee billing. Management fees can't be deducted directly from the annuity. However, advisors often handle this by billing from another account.^{^^}

Most RIAs aren’t annuity specialists — and frankly, that’s a good thing. Your clients didn’t engage you to sell them insurance products; they rely on you to provide objective, holistic advice. With Flourish Annuities, you can easily offer these powerful income strategies without the operational headaches or insurance licensing. Our platform makes it easy to access fee-based annuity products with guidance and support from licensed annuity specialists. That way, you can seamlessly integrate annuities into your planning process while staying focused on what you do best: guiding your clients’ financial lives forward.

In today’s volatile times, many clients can benefit from the assurances that only annuities are equipped to provide. But they also want access and control over their money. MYGAs with GLWBs offer a new way to meet those needs. With a more modern structure and flexible features, MYGAs with GLWBs open the door to a different kind of income planning conversation — one where the tradeoffs aren’t quite as stark. And, with Flourish Annuities, you have a platform built to help you seamlessly deliver this solution.

Rethinking income: MYGAs with GLWBs as a flexible alternative to SPIAs

Letter from Flourish CEO Max Lane:

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