MYGA vs a Fixed Annuity: What is the Difference?
People often search MYGA and fixed annuity as though they were two competing products to choose between. They are not. A MYGA is a type of fixed annuity. The clearer question is not which one, but how the two terms relate, and that is what this page explains.
What a Fixed Annuity Is
A fixed annuity is a contract with an insurance company that credits a guaranteed rate of interest, set by the contract rather than by market performance. Because the rate does not depend on the market, the account value does not fall when markets fall. Fixed annuity is the broad category.
What a MYGA is
A multi-year guaranteed annuity, or MYGA, is a fixed annuity in which a single interest rate is guaranteed for a set number of years chosen at purchase. MYGA is a specific type within the fixed annuity category.
Where the confusion comes from
Not every fixed annuity guarantees its rate the same way. Some fixed annuities credit a rate the insurance company can reset periodically, often each year, subject to a minimum stated in the contract. With those, you know the floor but not the exact rate for future years.
A MYGA removes that uncertainty by locking one rate for the entire guarantee period. So when someone compares a MYGA to a fixed annuity, what they are usually comparing is a multi-year locked rate against a fixed annuity whose rate can change over time. Both are fixed annuities. They differ in how long the rate is guaranteed.
A simple way to hold it in your head
Every MYGA is a fixed annuity. Not every fixed annuity is a MYGA. In everyday use, the terms multi-year guaranteed annuity, MYGA, and fixed-rate annuity are often used to mean the same thing, which adds to the confusion.
Frequently asked questions
Is a MYGA a fixed annuity? Yes. A MYGA is a type of fixed annuity that guarantees a single rate for a set number of years.
What is the difference between a MYGA and a fixed annuity? A MYGA guarantees one rate for the full term. Some other fixed annuities credit a rate that can reset periodically. Both are fixed annuities.
