MYGA vs CD: Which is Right for You?

Hi, I’m Stan The Annuity Man, America’s Annuity Agent, licensed in all 50 states. Today, we’re breaking down a question I get all the time:

What’s the difference between Multi-Year Guaranteed Annuities (MYGAs) and Certificates of Deposit (CDs)? Which one should you choose?

Let’s get to the truth.

CDs: The Classic Option

First off, I don’t sell CDs—but I love them. CDs are simple, safe, and insured by the FDIC. That “F” in FDIC? It stands for federal, which means the government will tax you and collect enough money to cover depositors in the event a bank ever fails.

With CDs, you get:

• Principal protection 
• A guaranteed yield for a set term
• No moving parts, no market risk, no annual fees

You can even ladder CDs with short durations, such as 6 months, 1 year, or 2 years, to keep your money flexible.

The problem? Yields. At the time of this blog, CD rates are skinny compared to what they were back in the Jimmy Carter days, when you could snag 8–12%. Those days are gone, and we’re probably not seeing them again in our lifetime.

MYGAs: The Annuity Industry’s Version of a CD

Now let’s talk MYGAs. A Multi-Year Guaranteed Annuity is the annuity industry’s answer to a CD. It works the same way—contractual principal protection and a guaranteed rate for a set term—but it’s issued by a life insurance company, not a bank.

Why do people choose MYGAs?

• Higher yields than CDs (as of now)
• Tax deferral in non-IRA accounts (you don’t pay taxes until you withdraw)
• Flexible use in IRAs, Roth IRAs, and non-qualified accounts
• Ability to transfer at the end of the term into another MYGA or even into an income annuity via a tax-free 1035 exchange

In other words, you can keep rolling your money forward without triggering a taxable event.

Which Is Safer: MYGA or CD?

CDs are safer on paper because of FDIC insurance. MYGAs rely on the Claims-Paying Ability of the issuing life insurance company. That’s why it’s essential to work with a licensed agent who can compare carriers and ensure you’re with a reputable company.

Neither one is “better” across the board. They both fall under the P in my P.I.L.L. framework:

• P – Principal Protection
• I – Income for Life
• L – Legacy
• L – Long-Term Care

Both CDs and MYGAs are excellent tools for principal protection, depending on your needs.

Taxes: A Key Difference

Here’s where CDs and MYGAs really diverge.

• CDs (non-IRA) – You pay taxes on interest every year, whether you take it or not.
• MYGAs (non-IRA) – Interest grows tax-deferred until you pull it out.

That tax deferral can be a significant advantage if you want to keep more money compounding without the annual tax hit.

Using CDs and MYGAs Together

It’s not an either/or decision. In fact, many people use both:

• Short-term CDs for liquidity and FDIC protection
• Longer-term MYGAs for higher yields and tax deferral

That’s a smart, balanced approach.

Bottom Line

If you want to compare live MYGA rates 24/7, you can do that directly on my site at The Annuity Man. Just choose your state and duration, and you’ll see the top available rates.

Remember—annuities and CDs are not about chasing returns. They’re about protecting principal and locking in guarantees. And sometimes, that’s exactly what your retirement portfolio needs.

Download Your FREE MYGA Owner’s Manual – Straightforward facts, no sales fluff.

Book a Call with The Annuity Man team – Let’s walk through your specific situation and see if a MYGA makes sense.

Because at the end of the day, it’s about the truth, the contracts, and what fits your plan. Period.