When you're comparing fixed annuities, it's tempting to sort by one number and pick the highest one. That number is a headline, not the whole story. Two products can advertise the exact same rate and deliver meaningfully different outcomes once you factor in how long that rate is actually guaranteed, what it costs to touch your money early, and how interest is credited in the first place. Here's what's actually worth checking before the rate on the page becomes a rate in your contract.
Is the Rate Guaranteed for the Full Term — Or Just Year One?
This is the single most important thing the headline number doesn't tell you. A true MYGA locks its rate for the entire term you select — a 5-year MYGA at 6.00% pays 6.00% every year for 5 years, full stop. Some other fixed-rate products, however, only guarantee an attractive rate for the first year, then reset to a lower "current" rate afterward, often called a renewal rate. If a product's headline rate looks unusually high compared to everything else on the market, the first question to ask is simple: guaranteed for how long?
How Is Interest Actually Credited?
Not every MYGA credits interest the same way. Most compound annually — interest earns interest, the way most people assume. A smaller number of carriers credit simple interest instead, crediting a flat percentage of your original deposit every year rather than a compounding balance. Neither approach is inherently better, but a simple-interest rate and a compound-interest rate aren't directly comparable at face value. We covered the exact math on this in our full breakdown of compound vs. simple interest MYGAs — it's essential reading before comparing two products that look similar on the surface.
What Does It Cost to Access Your Money Early?
Every fixed annuity carries a surrender charge schedule — a declining penalty for withdrawing more than the allowed free-withdrawal amount before the term ends. These schedules vary meaningfully by carrier and product: some decline gradually over 5-7 years, others front-load a steeper penalty. Most contracts also allow a penalty-free withdrawal each year, commonly up to 10% of the account value — but the exact percentage, and whether it's based on the original deposit or the current balance, differs by product. This is a real cost of ownership that a headline rate says nothing about.
Does the Contract Have a Market Value Adjustment (MVA)?
Some MYGAs include an MVA — a provision that can increase or decrease your surrender value based on how interest rates have moved since you purchased the contract, if you withdraw beyond the free amount during the surrender period. Non-MVA contracts don't carry this risk. It doesn't make one type of contract better than the other, but it's a structural difference that matters if there's any real chance you'll need the money early.
What's the Carrier's Financial Strength Rating?
A guarantee is only as strong as the company standing behind it. AM Best, S&P, and Moody's all rate insurance carriers on claims-paying ability — and that rating is public information worth checking before you commit, regardless of how attractive the rate looks.
The takeaway: The headline rate is a reasonable place to start comparing — it's a terrible place to stop. Full-term guarantee, crediting method, surrender schedule, MVA presence, and carrier strength all shape what a contract is actually worth to you. A slightly lower rate with a cleaner structure often outperforms a flashier headline number once you look past it.
Want the full picture on a specific product? Contact Devin for a plain-English breakdown of exactly what you'd be signing up for — not just the rate on the page.