What fees do you pay in buying a MYGA?

There are no direct or recurring fees associated with buying a MYGA. The crediting rate offered is net of all expenses incurred by the insurance company, including the distributor’s commission. This means that your money will accumulate at the stated, guaranteed interest rate without any deductions or charges. Assuming you plan to keep all of your money invested until the MYGA matures, the only numbers you need to worry about are

(1) the amount you invest,
(2) the guaranteed interest crediting rate, and
(3) the length of the contract.

As with any product, the seller needs to cover their expenses and leave room for a profit for the sale to make sense. With a MYGA, all expenses incurred by the insurance company, including the commission they pay to the agent, broker, or advisor who sells you the product, are reflected in the crediting rate they offer. Assuming you do not make any premature withdrawals, there are no future charges or fees that will affect your interest gain.

If you do wind up wanting to withdraw money from the contract prior to maturity, you will need to know (1) how much money you can withdraw without incurring any penalties, (2) the surrender charge rate schedule for chargeable withdrawals, and (3) the penalties imposed by the government if you make withdrawals prior to age 59½.

Finally, MYGAs have optional riders which provide additional benefits but cost you in the form of a lower crediting rate. We generally do not recommend adding any riders and instead just using annuities for their principal guarantees.

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Learn more about MYGAs and how they work in the MYGA Guide.