MYGA Product Comparisons
Utilize the product comparisons below to understand which product makes the most sense to reach your financial goals.
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MYGA vs. CD // MYGA vs. Fixed Annuities // MYGA vs. Treasury Bonds // MYGA vs. SPIA // MYGA vs Fixed Indexed Annuities // MYGA vs. Bond Ladders
MYGA vs. CD
MYGAs and CDs are offered compared to each other as their offers can be very similar. Below you’ll see the nuances and differences of the typical offerings.
| MYGA | CD |
|---|---|
| – Usually provide higher yields with better tax benefits | – Typically lower yields compared to MYGAs, but offered for shorter terms |
| – Tax deferred growth; don’t pay taxes until you withdrawal the amount | – Interest gained from CDs are taxed annually. |
| – Common to offer a death benefit option | – Pay out the principal and interest to beneficiaries |
MYGA vs. Fixed Annuities
MYGAs are sometimes referred to as a Fixed Annuity, but there are some intricacies laid out below.
| MYGA | Fixed Annuities |
|---|---|
| – The rates offered are usually slightly higher | – Typically offer less yield, but more liquidity |
| – Less liquid as the terms are typically longer | – More liquid as some terms are as low as 1 year |
| – Surrender charges for early withdrawals (at Pillar, we only enforce surrender charges after the first year of your term) | – Also impose surrender fees, but usually decline over the span of the term |
| – Partial withdrawals may be allowed penalty-free (at Pillar, you can annually withdraw up to 10% of your account value) | – Early withdrawals may impact future income |
| – Tax-deferred growth | – Tax-deferred growth |
MYGA vs. Treasury Bonds
See the comparison between MYGAs and Treasury bonds, including tax benefits, interest rates, contracts, and more.
| MYGA | Treasury Bonds |
|---|---|
| – Generally higher yields for similar terms | – Typically lower yields for similar terms |
| – Rates are fixed for the entire term | – Interest is paid semiannually at a fixed rate based on action results |
| – Tax-deferred growth until withdrawal and taxed as ordinary income | – Interest is exempt from state and local taxes; federally taxable |
| – Less liquid and typically have surrender charges for early withdrawal | – Highly liquid that can be sold at any time on the secondary market |
| – Low risk to principal when held to term | – Low risk to principal when held to term |
| – Backed by the contract issuer and state | – Backed by the full faith and credit of the US government |
MYGA vs. SPIA
MYGAs are fixed-term investments while Single Premium Immediate Annuities (SPIA) the annuitant is immediately able to convert a lump sum into guaranteed lifetime income.
| MYGA | SPIA |
|---|---|
| – Typically do not provide any payouts during the accumulation phase | – Immediately able to begin lifetime payouts after the lump-sum premium is paid |
| – Surrender charges on withdrawals made before the end of the term (at Pillar, you can annually withdraw up to 10% of your account value) | – Severe withdrawal limits, or simply not allowed, to discourage spending down the principal. |
| – Death beneficiaries receive the pay out of the accumulation value or guaranteed minimum value | – Most SPIA income payments stop upon the annuitant’s death; some may refund the unused premium |
| – Fixed rate over the term length | – Payout rates depend on age at purchase and current fixed income rates |
MYGA vs. Fixed Indexed Annuities
At a high-level, MYGAs offer simplicity with fixed, guaranteed returns over a set period. Fixed Indexed Annuities offer a bit more flexibility.
| MYGA | Fixed Indexed Annuities |
|---|---|
| – Fixed interest rate for the length of the contract term | – Earn interest based on the performance of an index, the S&P 500 for example with capped earnings |
| – Guarantee of the principal | – Guarantee of the principal |
| – Surrender charges for early withdrawals (at Pillar, you can annually withdraw up to 10% of your account value) | – Partial withdrawals are allowed; the percentage or amount is contingent on the agreement |
| – Do not provide lifetime income payouts | – Annuitization is allowed |
| – Pay a death benefit to beneficiaries | – Common to offer living and death benefits |
MYGA vs. Bond Ladders
Which is more important to you, flexibility or guaranteed growth? Bond ladders can provide more flexibility and diversification, but MYGAs offer guaranteed and consistent returns.
| MYGA | Bond Ladders |
|---|---|
| – Guaranteed, locked-in rates of return and depend on a single insurer | – Allows for investing across multiple bonds of varying maturities |
| – Surrender charges for early withdrawals (at Pillar, you can annually withdraw up to 10% of your account value) | – Individual bonds in a ladder are liquid and can be sold on secondary markets |
| – Generally offer slightly higher rates for similar durations | – Usually provide a mix of varying yields |
| – Tax-deferred growth until withdrawal, enabling compounded growth | – Pay taxable interest yearly |
| – Fully taxed as ordinary income | – Preferential capital gain tax treatment |
See how much you can earn with a MYGA
MYGAs are considered a safe, reliable vehicle for your money because they offer guaranteed growth as they are low-risk. This is because:
- MYGAs are shielded from market downturns, guaranteeing a steady, reliable return.
- MYGAs are flexible and hands-off.
- MYGAs can come with benefits or riders that secure your money for a beneficiary if something were to happen to you.
