FREQUENTLY ASKED QUESTIONS
What is a multi-year guaranteed annuity, or MYGA? A multi-year guaranteed annuity, or MYGA, is an insurance product that provides guaranteed interest rates for a set period of time. These contracts are typically funded with a single premium payment. The insurer will credit interest to your contract’s value from the date of issue until the end of the guarantee period. They are long-term products and early withdrawals may be subject to a surrender charge and market value adjustment. What is the difference between a MYGA and other fixed interest-type products? There are a number of important differences between MYGAs and other fixed-interest types of products. Various types of financial products may make sense for your needs and this is not intended to be a comprehensive comparison. What’s important to understand about MYGAs is that they are insurance products issued by an insurance carrier. Their guarantees are backed by the financial strength and claims-paying ability of the issuing company. They are not FDIC insured. Fully review product details before making a purchasing decision. Should I put all of my money in a MYGA? No. While a MYGA offers competitive interest rates, any premium placed in a MYGA will be subject to surrender charges that decline over time and possibly a market value adjustment. Carefully consider your liquidity needs before purchasing a multi-year guaranteed annuity. What penalties will I pay if I surrender my entire contract early? Withdrawals above any free withdrawal amount including withdrawals of the entire contract value, a.k.a. “surrendering” your contract are generally subject to a surrender charge and market value adjustment. Free withdrawal amounts may vary by product. Keep in mind that any withdrawals will reduce the contract value. Additionally, withdrawals are taxed as ordinary income and, if taken prior to age 59 1/2, a 10% federal tax penalty may also apply. Before making a purchasing decision, it’s important for you to speak with a financial and tax professional to understand exactly how surrender charges, market value adjustments and taxes apply to your specific annuity contract. What is the least amount of money I need to buy a MYGA? Nassau Simple Annuity requires a minimum of a $5,000 and Nassau MYAn- nuity requires a minimum of a $10,000 premium or transfer of assets to purchase one of Nassau’s MYGA products.
Who should consider a MYGA?
Who is responsible for the MYGA’s guarantees? The issuing insurance carrier is responsible for the guarantees. Guarantees are backed by the financial strength and claims-paying ability of the issuing carrier. attractive. Assets in a MYGA are not subject to market fluctuations as they are fixed insurance products. They can be used to generate a predictable stream of income. However, the premium can generally not be withdrawn prior to the end of the guarantee period without incurring a surrender charge and possible market value adjustment. Any consumer should carefully consider his or her financial situation and potential need for liquidity in the coming years before purchasing a MYGA. Who should consider a MYGA? Generally, retirees over the age of 60 find the benefits of the product most
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