When clients ask about safe, predictable investment options, many advisors default to Certificates...
Why MYGAs Are a Better Alternative to Low-Yield CDs
Many conservative clients have money sitting in Certificates of Deposit (CDs)—not because they’re thrilled with the returns, but because they want safety and predictability. The problem? CD yields are often underwhelming, especially after taxes and inflation.
That’s where Multi-Year Guarantee Annuities (MYGAs) shine.
MYGAs provide the same principal protection clients expect from CDs—but with higher rates, tax-deferred growth, and income options they simply can’t get from a bank product.
CDs vs. MYGAs: A Head-to-Head Comparison
| Feature | CDs | MYGAs |
|---|---|---|
| Principal Protection | ✅ Yes | ✅ Yes |
| Guaranteed Rate | ✅ Yes | ✅ Yes – often higher than CDs |
| Tax-Deferred Growth | ❌ No | ✅ Yes |
| Early Withdrawal Penalties | ✅ Yes | ✅ Yes (but more flexible in many cases) |
| Income Stream Option | ❌ No | ✅ Yes – annuitization or structured income available |
| Death Benefit | ❌ No | ✅ Yes – passes directly to beneficiaries |
| Market Risk | ❌ No | ❌ No |
Why MYGAs Make Sense for CD Investors
1. Better Rates, Same Guarantees
MYGAs typically offer higher interest rates than CDs over the same time frame—especially in the 3-, 5-, and 7-year terms. And like CDs, the rate is locked in for the full term.
2. Tax Deferral = Higher Effective Yield
Unlike CDs, which send a 1099 every year, MYGAs grow tax-deferred. That means your clients keep more of their earnings, compounding their interest until they decide to withdraw.
3. Retirement-Friendly Flexibility
MYGAs allow penalty-free Required Minimum Distributions (RMDs), and many offer 5%–10% annual withdrawal options without fees. Clients can access their funds without completely cashing out or losing all growth.
4. Income Options When Ready
At the end of the term, clients can:
-
Renew into a new guarantee period
-
Roll into another annuity
-
Start income payouts
-
Withdraw some or all funds
This gives them control without locking up money for life.
5. Built-In Legacy Benefits
MYGAs can offer a death benefit that bypasses probate and goes directly to beneficiaries—unlike CDs, which may be tied up in an estate or taxed as interest income.
Best Clients for MYGAs
✅ CD and money market holders aged 55+
✅ IRA rollovers or 1035 exchanges
✅ Clients with safe money earning less than inflation
✅ People who don’t need immediate access to funds
✅ Anyone looking to preserve principal and earn more than a bank CD
Final Word: Same Safety. More Value.
MYGAs offer everything CD clients love—safety, predictability, and guaranteed growth—with added tax benefits and income potential.
If your clients are sitting on maturing CDs, idle cash, or conservative IRA assets, now’s the time to talk about MYGAs as a strategic upgrade.
Let the banks offer 1–2%.
You can offer safety and smart growth.
Need help finding the right MYGA for a case? I can run quotes, provide illustrations, or help you craft a script for that next CD rollover conversation. Just ask!
