COMPARING A MYGA
UNDERSTANDING THE DIFFERENCES Both vehicles offer a safe way to save money, crediting higher interest rates than available through savings accounts by requiring you to “lock” your money away for a period of time. However, fixed annuities are insurance products, so guarantees and payments are based on the claims paying ability of the insurance company. Here is a comparison of some of the key features of annuities and Certificates of Deposit (CDs):
TO A BANK CD
Fixed Annuity
CD
Sold By
Insurance Companies
Banks
Size
~ $5,000 - $1,000,000
Virtually any denomination
3-10 years, but may vary by carrier and product
3 months – 10 years, but may vary by bank
Term
Vary by term and size but typically higher than CD rates
Vary by term and size but typically lower than fixed annuity rates
Interest Rates
In general, interest is taxable annually as earned
In general, contract growth is tax-deferred
Taxes
Any amount withdrawn is generally subject to a penalty
You may be allowed to withdraw a portion of the premium annually without penalty
Liquidity
A surrender charge and market value adjust- ment typically apply to any withdrawals above the free withdrawal amount*
Withdrawal Provisions
All withdrawals are charged, typically equal to a set number of days of interest
Each depositor is insured by the FDIC up to at least $250,000
FDIC Insured
No
This is a general comparison for illustrative purposes only. It is not intended as financial or tax advice. You should carefully consider your options and consult with a financial and tax professional for help determining which product is best for you. Actual details may vary depending on the insurance company, bank and/or product. *A surrender charge is equal to a percentage of the amount withdrawn that is above any free withdrawal amount. If you take a withdrawal in excess of the free withdrawal amount or surrender your contract, you may pay a surrender charge which may result in the loss of some or all of your previously earned interest and a partial loss of principal. The early withdrawal penalties under annuities are generally higher than the penalties paid under a CD. Contracts vary, refer to contract materials for specific details.
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