Nassau MYAnnuity 5X/7X MYGA Review

The features of the Nassau MYAnnuity 5X/7X Multi-Year Guaranteed Annuity (MYGA) remain consistent across both term durations, with the only variations being the interest rates and the withdrawal charge schedule associated with each term.

Product Policy

How does the Nassau MYAnnuity MYGA policy work?

The Nassau MYAnnuity MYGA is structured to provide fixed, predictable growth over a chosen period, making it a suitable option for investors looking for security and stability. This annuity offers two term options: 5 and 7 years, with a unique interest rate assigned to each term. These rates ensure that the policyholder knows exactly how much their investment will grow over the selected period.

Let’s have a look at the Nassau MYAnnuity MYGA Annuity rate sheet (as of November 2024) to understand how the earnings are determined.

5-Year Term: 5.05%
7-Year Term: 5.10%

Please note that these rates apply to the standard 10% free withdrawal feature. If you anticipate not needing withdrawals during your annuity term, the company offers the option to select a 0% free withdrawal tier. This option provides a slightly higher rate as compensation for foregoing free withdrawals.

5-Year Term: 5.25%
7-Year Term: 5.30%

The MYGA’s interest rate is locked in at the start of the contract and remains fixed for the entire term, ensuring a steady accumulation of funds. At the end of the selected period, the policyholder has several options: they may withdraw the accumulated funds, renew for another term (with rates based on prevailing conditions), or roll the funds into another financial vehicle.

Key Mechanics of the Nassau MYAnnuity MYGA Policy

Interest Rate Lock: Once the policyholder selects a term, the corresponding interest rate is guaranteed for the duration of that term, providing clear expectations for growth.
Principal Protection: As a fixed annuity, the Nassau MYAnnuity MYGA guarantees the protection of the principal, meaning that the initial investment is secure and unaffected by market volatility.
Withdrawal Charge Schedule: The policy includes a withdrawal charge schedule, which varies according to the selected term. If the policyholder needs to access their funds before the term ends, they may incur a penalty. However, many MYGAs, including Nassau MYGAs, often allow a penalty-free withdrawal of a certain percentage of the account value each year, typically up to 10%.

To understand how the Nassau MYAnnuity MYGA works, let’s look at a hypothetical example:

Suppose an investor, Karen, is 60 years old and is planning to retire soon. She wants a low-risk investment to grow her funds predictably over time. After researching her options, Karen decided to invest $100,000 in the Nassau MYAnnuity MYGA with a 7-year term and 0% free withdrawal tier, which offers a fixed interest rate of 5.30% for that period.

1. Interest Accumulation

With her $100,000 initial investment, Karen can calculate her future value at the end of the 5-year term using the 5.30% annual interest rate:

Year 1: $100,000 * (1 + 5.30%) = $105,300
Year 2: $105,300 * (1 + 5.30%) ≈ $110,881
Year 3: $110,881 * (1 + 5.30%) ≈ $116,758
Year 4: $116,758 * (1 + 5.30%) ≈ $122,946
Year 5: $122,946 * (1 + 5.30%) ≈ $129,462
Year 6: $129,462 * (1 + 5.30%) ≈ $136,323
Year 7: $136,323 * (1 + 5.30%) ≈ $143,548

After seven years, her investment would grow to approximately $143,548, thanks to the fixed annual interest rate of 5.30%.

2. Principal Protection

Because the Nassau MYAnnuity MYGA is a fixed annuity, Karen’s initial $100,000 is fully protected from market losses. Regardless of what happens in the stock or bond markets, her principal remains secure, and she continues to earn the 5.30% fixed rate annually.

3. Withdrawal Options at the End of the Term

At the end of the 7-year term, Karen has several choices:

Withdraw the Full Amount: Karen can withdraw the full $143,548 without any surrender charges, giving her access to her accumulated funds.
Renew for Another Term: Karen can choose to renew her MYGA for another term with Nassau, though the new interest rate will depend on the prevailing rates at that time.
Roll Over to Another Financial Product: Karen can transfer her funds into another investment or retirement product, if she desires.

Riders

The Nassau MYAnnuity MYGA comes with two riders at no additional cost, providing policyholders with flexibility and support during critical life events.

Terminal Illness Waiver: After the first contract anniversary, if the contract owner is diagnosed with a terminal illness and is not expected to live more than 6 months, any applicable Market Value Adjustment (MVA) and surrender charges will be waived on withdrawals. The terminal illness must be diagnosed by a qualified physician after the contract’s issue date, and proof of the diagnosis must be provided to Nassau Life and Annuity Company.
Nursing Home Confinement Waiver: After the first contract anniversary, if the contract owner requires nursing home confinement, any applicable MVA and surrender charges will be waived on withdrawals. To qualify, the confinement must last at least 90 consecutive days or include no more than a 6-month break if spread over multiple periods. The confinement must be prescribed by a qualified physician as medically necessary, and proof must be provided to the company during confinement or within 90 days afterward.

Surrender/Early Withdrawal Charge

Should your needs change unexpectedly, and you need to take an excess withdrawal (a withdrawal that is above the free withdrawal amount available in a given contract year), you may be entitled to access additional monies, although certain charges and penalties may apply. Any amount withdrawn in excess of the remaining free withdrawal amount is subject to a Surrender Charge. Below is the Surrender Charge schedule for the Nassau MYAnnuity MYGA.

Market Value Adjustments - In case you need to surrender your policy, a Market Value Adjustment (MVA) will be applied to the portion of the withdrawal or surrender that exceeds the free withdrawal amount during the withdrawal charge period.

Contract/Administrative Charge

The Nassau MYAnnuity MYGA levies no annual contract or administrative fees.

Benefits vs. Disadvantages of MYGA Compared to a Traditional Fixed Annuity

MYGAs and traditional fixed annuities both cater to conservative investors but with slightly different structures. MYGAs are ideal for those who want a predictable rate over a fixed term and are comfortable with the limited liquidity during that period. In contrast, traditional fixed annuities may offer a bit more flexibility in terms of rate adjustments or income options but typically lack the defined multi-year guarantee MYGAs provide. Here’s a breakdown:

Benefits of MYGA

Guaranteed Interest Rates for Specific Terms
MYGA: MYGAs provide a guaranteed interest rate over a fixed term, such as 3, 5, or 7 years, allowing investors to lock in predictable returns for a specified period.
Traditional Fixed Annuity: Traditional fixed annuities also offer guaranteed interest, but these rates are often set for a shorter duration (e.g., one year) and may reset annually based on prevailing rates.
Benefit: MYGAs offer more stability over a multi-year horizon, protecting against interest rate fluctuations, which is particularly beneficial in a low or falling interest rate environment.
Flexibility with Term Lengths
MYGA: MYGAs provide the flexibility to choose from different terms (e.g., 3, 5, 7, 10 years), depending on the investor's needs and market outlook.
Traditional Fixed Annuity: Traditional fixed annuities do not typically offer fixed terms with guaranteed rates over multi-year periods.
Benefit: MYGAs allow investors to align their investments with specific time horizons, such as short-term goals or bridge periods before retirement.

Disadvantages of MYGA

Interest Rate Risk Over the Long-Term
MYGA: While MYGAs lock in rates for a specific term, they may be less advantageous if interest rates rise significantly during the term, as policyholders are bound to the initial rate until maturity.
Traditional Fixed Annuity: Traditional fixed annuities may offer rate adjustments periodically, which could benefit policyholders in a rising interest rate environment.
Disadvantage: MYGAs might not benefit from increasing rates mid-term, whereas traditional fixed annuities may adjust rates periodically, providing some adaptability to market changes.
Lower Growth Potential Compared to Market-Linked Annuities
MYGA: MYGAs have a fixed interest rate and are not linked to market performance, limiting the growth potential.
Traditional Fixed Annuity: Similarly, traditional fixed annuities are also fixed, but they may sometimes offer interest rate adjustments that allow for slightly higher yields over time.
Disadvantage: Both MYGAs and traditional fixed annuities limit growth potential compared to market-linked annuities or other investment options, which may not be ideal for younger investors with higher risk tolerance.

Company Details

You must always keep in mind that, unlike CDs, annuities are not guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other federal insurance agency. An annuity's "guarantee" is only as strong as the insurance company that issues the annuity, so it is always important to assess the issuing company before buying an annuity.

Nassau Life and Annuity Company

Nassau Life and Annuity Company is an insurance provider that specializes in offering retirement products, particularly annuities. The company is headquartered in Hartford, Connecticut, and has a long history dating back 170 years. Nassau Financial Group, which includes Nassau Life and Annuity Company, serves 374,000 policyholders and contract holders.

Nassau Life offers a variety of annuity products, including indexed annuities and multi-year guaranteed annuities (MYGAs). Their product lineup is designed to cater to different retirement needs, such as protecting savings, delivering guaranteed income, or covering health care costs. The company is known for providing low minimum premiums, highly customizable contracts, and strong customer service

It is rated as follows by the rating agencies:

Although the rating is not the best, it is not even that bad. It is considered to be strong and stable financially. As of June 2024, some of the financial highlights for Nassau Life and Annuity Company include its:

$24.3 billion Assets Under Management
$1.5 billion of total adjusted capital
106% solvency ratio

Going by the operating history, financial numbers, and ratings, we can safely gauge that you can trust your savings with Nassau Life and Annuity Company.

Conclusion

With the advancements in healthcare and technology, the average American today lives longer than ever. So, it’s very important to have a retirement corpus that can grow safely and steadily and have the ability to provide a fixed stream of income during the retirement years. This not only helps you mitigate the risk of outliving your income but also ensures that you continue to live a decent life even in your retirement.

The Nassau MYAnnuity MYGA offers a competitive solution for individuals seeking a secure, predictable way to grow their savings. With guaranteed interest rates over the selected term, tax-deferred growth, and flexible withdrawal options, it caters to those prioritizing stability and financial security. However, it is important to note that Nassau's credit ratings are not among the highest in the industry, which may be a concern for very conservative investors. Such individuals might benefit from exploring other options with higher-rated insurers. While Nassau MYAnnuity MYGA provides a straightforward and reliable structure, potential buyers should assess their long-term financial goals and consult with a trusted advisor to determine if it aligns with their investment strategy.

We understand that choosing the right annuity can be a complex decision, influenced by a myriad of factors such as market conditions, individual financial goals, and evolving life circumstances. To better serve you in this critical decision-making process, we regularly conduct in-depth reviews of various annuity products, examining features, costs, and potential benefits. Dive deeper into our extensive reviews.