Can I Buy a MYGA Direct?

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••• Like to prove people wrong if they say you can't do it yourself? Choose an annuity on your own at Photo by: Kevin Kozicki / Image Source / Getty Images

When I was younger I remember my parents and grandparents buying CDs at the bank. The benefit of owning CDs was their money received guaranteed interest payments for a specific period of time. The guarantee ranged from 6 months to 5 years in duration. When I was 22 years old and fresh out of college I started working in the financial services business as a financial planner and the most popular products I recommended to clients were CDs and fixed rate annuities.

Why? These products made people comfortable because they couldn’t lose money and were guaranteed a specific rate of interest on their money. It wasn’t uncommon back then to get 6% interest, but thanks to the Federal Reserve holding interest rates near zero for the last six years those rates no longer exist. We don’t hear quite as much about CDs or fixed rate annuities today. In fact, many investors are taking on greater risk with their money in order to obtain higher “yields”. Sometimes this works and sometimes it doesn’t

Annuities Like MYGAs Offer Guaranteed Rates of Interest Similar to CDs

There is a popular fixed rate annuity known as MYGA (Multiple-Year-Guaranteed-Annuity). What makes it so popular? It brings back the appeal of CDs. The guaranteed rate of interest for a specific number of years is attractive to those not wanting the risk of the markets. For individuals who ​want fixed guaranteed risk on their money, with no market risk of fluctuation, this is a great alternative.

The range to own an MYGA is from 3-10 years.

Guarantees Do Come with a Price

As with any product or investment, there are always drawbacks. MYGAs are no different. The biggest issue is access to your funds during the period you commit to the fixed annuity. If you need to withdraw the money, there are penalties involved.

Because the annuity company is going to give you guarantees they will charge you a fee if you take the money out. Receiving guarantees comes with a price in anything and the same is true with ​a MYGA.

Check the Company's Comdex Score

Another drawback could be the credit rating of the annuity company. Just like money in a bank you want to make sure you use a company that will stay in business long enough to return your principle and interest earned. I would only deal with the highest rated insurance companies. Downloading the Comdex score on annuity companies is the easiest way to assure yourself of where the company stands by their credit ratings. You can do that for free at the Stan The Annuity Man website.

You Can Determine Quickly if an MYGA Will Work for You

Getting a quote today is simple. offers you the ability to run the highest yielding annuities within each maturity range and sort them by the highest credit rating of the companies. That means in just a few minutes you can determine if an MYGA works for you.

Interest Rates Are No Longer High Like in the 80's

The greatest challenge is not finding quality companies that offer MYGAs, it’s preventing yourself from throwing up when you see the interest rates for the contracts.

That is why it is important to remember the Federal Reserve has set interest rates currently at 0.25%. The ten-year treasury bond which is the benchmark for CDs, mortgages, and annuities, is yielding 1.7% in early 2016. You always have to keep your expectations in check when looking at fixed rate guaranteed investments.

Protect Your Principal with Contractual Guarantees

I am frequently asked about the alternatives. There are plenty of companies that are more than willing to offer you a dream come true yield, but they usually turn into a nightmare versus a dream. Use the ten-year treasury bond as your benchmark for risk. The higher the yield quoted above this benchmark, the greater the risk of the investment as it relates to your principal. Will Rogers once said, “I am more concerned about the return of my principal than the return on my principal.” Wise words to live by.


Coauthored by Jim Farrish