What Happens at the End of a MYGA Term?

Hi, my name is Stan The Annuity Man, America's Annuity Agent, licensed in all 50 states—yours included. Yes, I do sell annuities when they’re appropriate and suitable. I encourage you to visit The Annuity Man to get all my books. You can download them for free, and you can also schedule a one-on-one call with us. We will listen to your specific situation, and we’ll have the guts to tell you if you don’t need an annuity. Yes, that’s true.

Today's Topic: Multi-Year Guarantee Annuities (MYGAs)

Today, we’re diving into Multi-Year Guarantee Annuities (MYGAs), the annuity industry's version of a CD. A lot of people say, "I hate all annuities, Stan."

I ask, "Do you like CDs?"

"Love them," they say.

"Great! Then, you love MYGAs because they're the annuity industry's version of a CD."

MYGAs are fixed-rate annuities. They work similarly to CDs, but a few key differences make MYGAs more attractive. We’ll dive into those details and discuss what happens if you purchase a MYGA and reach the end of the term. What are your options at the end of that period? Let’s explore all of that.

Understanding MYGAs

MYGAs are fixed-rate annuities that work just like a CD but with some important advantages. If you visit The Annuity Man, we have a live feed of the best MYGA rates specific to your state. MYGAs are issued by life insurance companies, and these companies are regulated and approved at the state level.

For example, the rates in Nebraska will differ from those in Florida. On our site, you can input your state and desired duration, like a 5-year or 3-year MYGA, and see the top rates available. We also provide a yield-to-maturity column so you can evaluate how the rates compare, like 3.4% or 2.6%. MYGAs are influenced by the life insurance company’s portfolio and the need for them to make money while providing you with a yield.

However, MYGAs are very competitive for durations of three years or more. For shorter periods, CDs (Certificates of Deposit) offer higher yields. Now, I don’t sell CDs—I’m Stan The Annuity Man, not Stan The CD Man. I encourage you to visit The Annuity Man to search for the best MYGA rates.

What Happens After the Term Ends?

Let’s take a 30,000-foot view. You’ve purchased a MYGA from Stan The Annuity Man. You’ve filled out the paperwork and committed your money to a 5-year term at a 3% rate. What happens over those five years?

First of all, no annual fees, no moving parts. The agent receives a commission at the time of application. This is a one-time commission, typically between 0.5% and 2%, depending on the carrier and duration. You’ll receive a 3% interest rate annually during those five years.

But what happens when those five years are up? Well, here's where we come in. We'll reach out to you about 60 days before the maturity date. You'll have three choices when the term ends:

1. Take the money back with interest, or transfer it to another IRA (yes, you can buy MYGAs in IRAs and non-IRAs).
2. Transfer to another MYGA. If you want, we’ll shop all carriers for the best rates available, and we can transfer the funds. If it’s an IRA-to-IRA transfer, it’s a non-taxable event. For non-IRA assets, it’s a 1035 exchange.
3. Convert it to an income annuity. If you want income, we can help you shop for the highest contractual guarantee with an Immediate Annuity or a Deferred Income Annuity (for future income).

These are your three options. No matter which you choose, you maintain full control of the asset.

MYGA Rules and Carrier Differences

Let’s talk about what happens at the end of your MYGA. Not all annuity companies are the same, and that’s where we come in. Some carriers will automatically renew your MYGA but may lock you into a surrender charge. We never let that happen. We’ll be in touch with you long before the renewal date.

If you don’t return our call, some carriers may automatically lock you into a lower rate. But don’t worry, we’re on top of it. We’ll be in touch with you at least 60 days before the maturity date. We’ll make sure you get the best deal possible.

Different carriers have different rules. Some may require you to decide 30 days before the policy matures. Others might need it 30 days after maturity. Confusing, right? Wouldn’t it be easier if all the rules were the same? Unfortunately, they’re not. But that’s why you need us—we know the rules for each carrier and contract type and can help you navigate them.

How We Help

When you purchase a MYGA, the product is customizable based on your needs. You need to tell us exactly what you want to achieve. Ask yourself the two key questions:

1. What do I want the money to contractually do?
2. When do I want those contractual guarantees to happen?

With a MYGA, you’ll want to protect your principal, avoid paying fees, and secure a guaranteed annual interest rate. It’s similar to buying a CD, but with more flexibility at the end of the term. The end-of-term rules are where we really come in to help. We ensure that everything happens just how you want it to—whether transferring your money, cashing it in, or converting to a lifetime income option.

Conclusion

In summary, purchasing a Multi-Year Guarantee Annuity is a straightforward process. You decide on the rates, fill out the paperwork, and you’re set. But where we truly add value is at the end of the term. We’re here to guide you through the rules, help you transfer your money, and ensure you get the highest contractual guarantees.

At The Annuity Man, we make sure you have all the tools you need. Visit us, check out the best MYGA rates for your state, and schedule a call with us. We’ll help you every step of the way.