Fixed Annuity Rates
byNikhil Bhauwala
Tue Mar 12 2024
Annuities are financial instruments crafted to supply retirees with a consistent flow of income. They are available in an array of forms, each presenting distinct characteristics and advantages customized to accommodate individual retirement requirements. These annuities can be acquired from agents, insurance companies, banks, or various other financial institutions. In this article, we will look into the leading fixed annuity rates for all kinds of fixed annuities, encompassing traditional fixed annuities and Multi-Year Guaranteed Annuities (MYGAs). We will discuss specific rates and explore the factors that influence these rates, as well as the pros and cons of fixed annuities.
Fixed Annuities
Fixed annuities offer a guaranteed interest rate for a predetermined period, providing a stable and secure income for retirees. When comparing fixed annuity rates, consider the following factors:
- Contract term
The length of the contract will affect the interest rate offered. Longer terms usually provide higher interest rates. However, tying up your money for an extended period can also increase the risk of inflation eroding your purchasing power over time.
- The financial strength of the issuing company
The credit rating and financial stability of the insurance company are essential as they guarantee the payment of the annuity. Look for companies with strong financial ratings from independent agencies like A.M. Best, Standard & Poor's, or Moody's.
- Additional features
Some fixed annuities offer optional benefits such as inflation protection or death benefits, which may impact the interest rate. These riders can provide added security but often come at an additional cost.
Advantages
- A Guaranteed Income Stream for a Set Period of Time
Fixed annuities provide a stable income stream that doesn't fluctuate with market conditions.
- Low investment risk
The principal is protected, and returns are guaranteed, making fixed annuities a safer investment option.
- Protection of principal
The initial investment remains intact, regardless of market fluctuations.
Disadvantages
- Limited growth potential
The returns on fixed annuities are generally lower than other investment options due to their conservative nature.
- Inflation risk
Over time, inflation may erode the purchasing power of the fixed income stream, reducing its value in real terms.
- Less flexibility than other types of annuities
Fixed annuities typically have limited options for withdrawal and payout structures.
Strategies for Finding The Best Fixed Annuity Rates
- Compare Rates
Shop around and compare rates from multiple insurance companies.
- Shorter-Term Contracts
Consider shorter-term contracts, as they may offer higher rates in a rising interest rate environment.
- Optional Riders
Evaluate the benefits of optional riders and weigh their costs against the added security they provide.
Best Fixed Annuity Rates (Updated as of March 2023)
When it comes to fixed annuities, Multi-Year Guaranteed Annuities (MYGAs) and Traditional fixed annuities are two popular types of annuities, each with its own features and benefits. The primary difference between traditional fixed annuities and Multi-Year Guaranteed Annuities (MYGAs) lies in the interest rate guarantee period.
MYGAs offer a fixed interest rate for the entire term of the contract, usually ranging from 3 to 10 years. This provides the annuitant with a predictable, stable return on their investment throughout the contract term, but with limited flexibility in adapting to changing market conditions. On the other hand, Traditional fixed annuities guarantee a minimum interest rate for a short term, typically one year. After this period, the insurance company may adjust the interest rate periodically, subject to a guaranteed minimum rate.
The below table describes the best annuity rates for MYGAs, updated as of March 2023. It is important to know that lower-rated companies tend to offer higher rates to compensate for the additional risk that an annuitant takes (remember that annuities are beneficial only as long as the companies providing them maintain solvency). So, I will be mentioning the top MYGA rates for 1) Annuities that are A-rated and above and 2) Annuities that are rated below A separately.
Best Rated MYGAs (Only A-rated and above) as of February 2024
| Product Name | Annuity Type | Issuing Company | Ratings | Guarantee Period (Years) | Annual Yield |
|---|---|---|---|---|---|
| Synergy Choice 5 | Multi-Year Guarantee Annuity | Aspida Life Insurance Company | A- (AM Best), Comdex 58 | 5 | Up to 5.35% |
| MYGA Plus 5 | Multi-Year Guarantee Annuity | Ibexis Life & Annuity Insurance Company | A- (AM Best) | 5 | Up to 5.51% |
| Palladium MYG Annuity 7 | Multi-Year Guarantee Annuity | American National Insurance Company | A (AM Best), A (S&P), A (Fitch), Comdex 76 | 7 | Up to 5.45 |
| Platinum Assure Series 6 | Multi-Year Guarantee Annuity | Americo Financial Life & Annuity Insurance Company | A (AM Best), A3 (Moody's), Comdex 71 | 6 | 5.55% |
| Multi-Select 8 | Multi-Year Guarantee Annuity | Oxford Life Insurance Company | A (AM Best) | 8 | 5.45% |
| Milestone MYGA 5 | Multi-Year Guarantee Annuity | Sagicor Life Insurance Company | A- (AM Best) | 5 | Up to 5.30% |
| Athene MaxRate 5 | Multi-Year Guarantee Annuity | Athene Annuity & Life Company | A (AM Best), A+ (S&P), A1 (Moody's), A+ (Fitch), Comdex 82 | 5 | 5.20% |
| ECAccumulate 5 | Multi-Year Guarantee Annuity | SBLI - The Savings Bank Mutual Life Insurance Company of Massachusetts | A (AM Best), A- (S&P), Comdex 72 | 5 | 4.50% |
| RetireMax Secure 5 | Multi-Year Guarantee Annuity | Life Insurance Company of the Southwest (LSW) | A+ (AM Best) | 5 | 5.30% |
| Product | Company | AM Best | Minimum Premium | Years | Guaranteed Yield |
|---|---|---|---|---|---|
| Ibexis MYGA Plus | Ibexis Life | A- | $100,000 | 5 | 5.80% |
| Synergy Choice | Aspida | A- | $100,000 | 7 | 5.60% |
| ECAccumulate | SBLI | A | $25,000 | 5 | 5.50% |
| Palladium MYGA | American National | A | $250,000 | 6 | 5.45% |
| Platinum Assure | Americo Financial | A | $25,000 | 5 | 5.40% |
| Multi Select | Oxford Life | A | $20,000 | 6 | 5.35% |
| Milestone MYGA | Sagicor Life | A- | $100,000 | 5 | 5.30% |
| RetireMax Secure | LSW | A+ | $100,000 | 5 | 5.25% |
| Athene MaxRate | Athene | A | $100,000 | 7 | 5.25% |
| HarbourView | Oceanview Life | A- | $80,000 | 6 | 5.20% |
| FG Guarantee Platinum | Fidelity and Guarantee Life | A- | $20,000 | 7 | 5.15% |
| GuaranteeShield | American Equity | A- | $100,000 | 5 | 4.90% |
Exhibit 2: Best Rated MYGAs (Only rated below A) as of 13th April 2023
Note that I have listed one MYGA product of each annuity company that offers the highest rate. It is possible that multiple products of the same company may offer higher rates. For example, Nassau MY Annuity 7 offers 5.45% for 7 years, and Nassau MY Annuity 5 offers 5.35% for 5 years, which is higher than many of the MYGAs listed above. It is also important to understand that these rates tend to change frequently, and may vary from state to state. You should check with your annuity provider the exact rate on the day you sign up for an MYGA.
Best Rated Traditional Fixed Annuities as of 13th April 2023
Unlike MYGAs, Traditional fixed annuities guarantee a minimum interest rate for a short term, typically one year. After this period, the insurance company may adjust the interest rate periodically, subject to a guaranteed minimum rate.
| Product | Company | AM Best | Minimum Premium | Years | First Year Guaranteed Yield | Guaranteed Minimum Term Yield* |
|---|---|---|---|---|---|---|
| Apollo-MVA | Reliance Standard Life Insurance | A++ | $5,000 | 7 | 6.30% | 4.58% |
| Apollo-SP | Reliance Standard Life Insurance | A++ | $5,000 | 7 | 6.15% | 4.43% |
| American Pathway Fixed | American General Life Insurance | A | $100,000 | 7 | 5.36% | 4.35% |
| Liberty Select | Liberty Bankers Life Insurance | A- | $5,000 | 7 | 5.25% | 3.96% |
| Liberty Choice | Liberty Bankers Life Insurance | A- | $5,000 | 5 | 4.75% | 3.95% |
| Century Plus | American National Insurance | A | $100,000 | 10 | 8.40% | 3.89% |
| Wealth Quest Citadel Diamond | Amercian National Insurance | A | $100,000 | 7 | 5.60% | 3.60% |
| FlexPlus | Guaranty Income Life Insurance | A- | $5,000 | 10 | 2.90% | 2.90% |
| Eagle 8 | United Heritage Life Insurance | A- | $8,000 | 10 | 6.00% | 2.62% |
| SageChoice | Sagicor Life Insurance | A- | $2,000 | 6 | 2.00% | 2.00% |
Exhibit 3: Best Rated Traditional Fixed Indexed Annuities as of 23rd March 2023
Note that the Guaranteed Minimum Term Yield, is the yield (including bonuses if applicable), up to the first penalty free full withdrawal window, assuming the current base interest rate remains unchanged for the duration of the term.
Conclusion
In conclusion, this in-depth guide has examined various fixed annuity rates, encompassing traditional fixed annuities and MYGA rates, along with their distinct pros and cons. When seeking the most suitable fixed annuity rates for each annuity category, it’s crucial to take into account not just the rates, but also the factors influencing them and their alignment with your retirement objectives and financial conditions.
By comprehending the distinct features and advantages of each fixed annuity type, you can make a well-informed decision regarding the most appropriate product for your requirements. Remember that annuities are long-term investments and should be viewed as a component of a holistic retirement strategy. It’s always wise to consult with a financial advisor to confirm that an annuity is the optimal choice for your unique needs and situation. In doing so, you can confidently establish a retirement income plan that offers financial stability and tranquility during your golden years.