Need direction_understanding MYGA(multi-year guaranteed annuity

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EvelynTroy
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Need direction_understanding MYGA(multi-year guaranteed annuity

Post by EvelynTroy »

Not wanting to hijack a previous thread on MYGA vs CD's thought I would post a separate topic on MYGA.
I am conservative / low risk investor 80% of my fixed income portfolio is invested in bank/credit union CD's. FWIW, age 73, single, and absolutely no reason to take risk on the equity or fixed income sides of the portfolio.
Now that we have these paltry returns on CD's I'm looking for a good, safe alternative.
I would like direction please on learning about MYGA's that would be considered reliable source(s). Perhaps there are websites that some of you are familiar with that were particularly helpful for you?

Alternatively if you have thoughts on why perhaps I should just steer clear of this product that too would be appreciated.

Thanks. Evelyn
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by investor.saver1 »

I don't have an opinion nor do I know much about MYGA annuities. If I were considering one here's the track I would take.

You'll be lending your money to an insurance company for a stipulated term. They typically have severe penalties if you need to cash out. Be certain you know the terms of the annuity contract. What is the credit rating of the insurance company? If the insurance company goes bankrupt, you may have difficulty getting your money back. States typically have insurance against this situation. You'll need to check with your state to verify the insurance company you buy from is approved by the state insurance agency and what the limits of coverage are. High rates of interest are a flag in my opinion. Some insurance companies are difficult to reach...give them a call and talk with them. Ask them about their annuity. Why would an insurance company pay a higher than market interest rate if they had a less expensive source of capital. Check to see what highly rated insurance companies are paying vs the insurance company you are considering and ask yourself why. Google the name of the insurance company asking if they are good to work with. Check with the BBB in the city where the insurance company is located to see what grade they have been assigned. Just things to check out.
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EvelynTroy
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by EvelynTroy »

Thank you for your reply.
I will copy and save your suggestions for things to check out.
I don't know enough yet, to know if I'm serious about considering a MYGA.
I just had a large IRA- CD mature and the proceeds are sitting in my Schwab cash account and need to be put to use.
Just looking for options.

Evelyn
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by Flobes »

Here you'll find a good explanation of MYGAs:
MYGAs vs CDs

You can also order a free book MYGA Owners Manual as well as other books about other types of annuities.

It's Stan The Annuity Man website. I learned about Stan here on the Forum, where he's cited as a reliable, knowledgable, high-integrity guy. I've not done any business with him (yet!), but I have ordered and read a few of his free books. Information is well presented. He's never called me to try to sell.
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by EvelynTroy »

All good to know Flobes. I had seen the Stan The Annuity Man and wondered how reliable/credible he was - so this is very helpful.
Any idea what the fee might be of Stan works with you to help you?
I'm going to get the book.
Appreciate the heads-up Flobes.
Evelyn
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by indexfundfan »

I have moved money from matured CDs to MYGAs. I purchased MYGAs mostly through Blueprint Income

https://www.blueprintincome.com/fixed-annuities

MYGAs are CD-like products. And if you hold them to maturity, you will get the advertised rate (APY), just like a CD.

The major differences with CDs are

1. Severe penalties if you withdraw the money from MYGAs before maturity.

2. No FDIC/NCUA insurance on MYGAs. MYGAs are backed by the annuity issuer, with additional backing from your state's insurance guaranty fund (coverage varies, depending on the state). The guaranty fund is nowhere as strong as FDIC/NCUA.

3. For a taxable account, taxes on MYGAs can be deferred until withdrawal. Interests on CDs are taxable each year, whether you withdraw them or not.
Last edited by indexfundfan on Sat Sep 19, 2020 7:01 pm, edited 1 time in total.
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illumination
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by illumination »

I've been more curious about these also, they almost seem too good to be true.
When I hear the word "annuity" I usually run in the other direction.

I also have a few basic questions:

Can they be owned inside a trust?

So if the state guarantee were say $250k, could a husband and wife each have one in their name and have $500k protection?

Are there any sales commissions that (typically) come out of it?

Any tactics or companies to watch out for?

Anyone have any bad experiences with them?
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by indexfundfan »

illumination wrote: Sat Sep 19, 2020 7:01 pm Can they be owned inside a trust?

So if the state guarantee were say $250k, could a husband and wife each have one in their name and have $500k protection?

Are there any sales commissions that (typically) come out of it?

Any tactics or companies to watch out for?

Anyone have any bad experiences with them?
I think there are advantages NOT to own it in a trust. I can't recall it off hand.

You can double up the guarantee with different ownership. State insurance guaranty varies by state. Here's a very nice (third party) summary

https://www.annuityadvantage.com/resour ... ociations/

There are sales commissions, but the advertised rates you see are what you get (commission already factored in the rates quoted). Blueprint Income actually displays the commission it earns with each MYGA.

As far as annuities go, MYGAs are about as "transparent" as you can get.
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by Stinky »

indexfundfan wrote: Sat Sep 19, 2020 6:53 pm I have moved money from matured CDs to MYGAs. I purchased MYGAs mostly through Blueprint Income

https://www.blueprintincome.com/fixed-annuities

MYGAs are CD-like products. And if you hold them to maturity, you will get the advertised rate (APY), just like a CD.

The major differences with CDs are

1. Severe penalties if you withdraw the money from MYGAs before maturity.

2. No FDIC/NCUA insurance on MYGAs. MYGAs are backed by the annuity issuer, with additional backing from your state's insurance guaranty fund (coverage varies, depending on the state). The guaranty fund is nowhere as strong as FDIC/NCUA.

3. For a taxable account, taxes on MYGAs can be deferred until withdrawal. Interests on CDs are taxable each year, whether you withdraw them or not.
This is a good summary of the differences compared to CDs. One additional item that I would mention is that there is a 10% tax penalty on the interest earned on any annuity (including MYGAs) if the interest is paid out to the owner before age 59.5.

I've looked at the websites for Stan The Annuity Man, immediateannuities.com, and blueprintincome.com, all of which sell MYGAs. I find that the Blueprint Income site is the easiest to navigate, especially if you are targeting a specific term for your MYGA.

I've bought several policies to form a "MYGA ladder" from Blueprint Income.
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by EvelynTroy »

IndexFundFan, and Stinky -
Appreciate your thoughts and experience with the MYGA. So very helpful.
Just to note I have another large CD maturing in Dec.
I'm going to start reading and understanding what at this point looks to be a good alternative to CD's for my needs.
Thanks again.
Evelyn
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by HueyLD »

illumination wrote: Sat Sep 19, 2020 7:01 pm I've been more curious about these also, they almost seem too good to be true.
When I hear the word "annuity" I usually run in the other direction.

I also have a few basic questions:

Can they be owned inside a trust?
Yes a trust can own MYGA, but caution is needed.

See this article from Kitces. https://www.kitces.com/blog/trust-owner ... annuities/
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by EvelynTroy »

I've been gathering information, making notes to understand the MYGA's.
Been doing comparisons on blueprintincome.com of Best ratings, vs interest rates, vs terms for my state Missouri.
Feel like I'm gaining a good understanding. I also ordered the Stan the Annuity Guy booklet.

Its clear the lower rated the insurance company will have lower interest rates for the given terms vs. a higher rated company.
I was thinking to stick with A or higher rated companies. My question - how do you judge the difference between say a B++ company and an A rated company? They don't seem to have a lot of meaning for me.

If you were investing around $150K would you purchase one or ladder maybe 3 - how would you structure the ladder amounts? This is IRA money.

These MYGA's are intriguing and in terms of safety giving up the FDIC/NCUA federal insurance is a big step for me, but I'm definitely leaning towards purchasing. Just for so long had the "if its too good to be true..." mantra in my head - in this environment is does seem like "too good to be true."

Thanks for your ideas and thoughts.
Evelyn
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by Stinky »

EvelynTroy wrote: Wed Sep 23, 2020 11:00 am I've been gathering information, making notes to understand the MYGA's.
Been doing comparisons on blueprintincome.com of Best ratings, vs interest rates, vs terms for my state Missouri.
Feel like I'm gaining a good understanding. I also ordered the Stan the Annuity Guy booklet.

Its clear the lower rated the insurance company will have lower interest rates for the given terms vs. a higher rated company.
I was thinking to stick with A or higher rated companies. My question - how do you judge the difference between say a B++ company and an A rated company? They don't seem to have a lot of meaning for me.

If you were investing around $150K would you purchase one or ladder maybe 3 - how would you structure the ladder amounts? This is IRA money.

These MYGA's are intriguing and in terms of safety giving up the FDIC/NCUA federal insurance is a big step for me, but I'm definitely leaning towards purchasing. Just for so long had the "if its too good to be true..." mantra in my head - in this environment is does seem like "too good to be true."

Thanks for your ideas and thoughts.
Evelyn
So, looking back, you're 73 years old, single, and have most all of your money in bank CDs. You have IRA money that you're looking to invest.

I looked at the Missouri Guaranty fund website. I couldn't find anywhere that definitively said what the limits are for annuities. I think that it's $250,000 of cash surrender benefits, but please don't take my word for it. Before you make a purchase, you ought to confirm with your agent or your guaranty fund. If the guaranty fund limit is for $250k of surrender benefits, you should be pretty well covered, and I wouldn't be uncomfortable with buying from a B++ company.

I would be more concerned about some of the contract provisions. I like to use the Blueprint Income website, as it contains a lot of product information. If I put in a $100,000 premium in Missouri, for a 5 year MYGA, I find that the highest interest rate comes from Atlantic Coast Life, a B++ company, at 3.35%. But, if you click through on the product, you'll see that there are no withdrawals permitted without incurring a surrender charge. That might be a problem for you if you foresee a need for liquidity during the five year term, or even if you need to take RMDs from this annuity.

Compare Atlantic Coast to Americo, an A rated company, that has a rate of 3.20% for a five year MYGA. That product allows a 10% penalty-free withdrawal every year, which will help out with your RMDs.

All things considered, I would probably take a little lower rate with Americo to get the higher rating and the 10% free withdrawals.

It's entirely your call as to whether you put it all into one MYGA or buy multiple MYGAs. Some products may offer a modestly higher interest rate for a minimum deposit of $100k. You can think about how your would structure a CD ladder - and then apply that logic to whether or not you do a MYGA ladder. And remember that the surrender charges on MYGAs are typically much higher than the early withdrawal provisions on CDs.

Hope that this helps. Post back with more questions.
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by EvelynTroy »

Stinky wrote: Wed Sep 23, 2020 12:00 pm
EvelynTroy wrote: Wed Sep 23, 2020 11:00 am I've been gathering information, making notes to understand the MYGA's.
Been doing comparisons on blueprintincome.com of Best ratings, vs interest rates, vs terms for my state Missouri.
Feel like I'm gaining a good understanding. I also ordered the Stan the Annuity Guy booklet.

Its clear the lower rated the insurance company will have lower interest rates for the given terms vs. a higher rated company.
I was thinking to stick with A or higher rated companies. My question - how do you judge the difference between say a B++ company and an A rated company? They don't seem to have a lot of meaning for me.

If you were investing around $150K would you purchase one or ladder maybe 3 - how would you structure the ladder amounts? This is IRA money.

These MYGA's are intriguing and in terms of safety giving up the FDIC/NCUA federal insurance is a big step for me, but I'm definitely leaning towards purchasing. Just for so long had the "if its too good to be true..." mantra in my head - in this environment is does seem like "too good to be true."

Thanks for your ideas and thoughts.
Evelyn
So, looking back, you're 73 years old, single, and have most all of your money in bank CDs. You have IRA money that you're looking to invest.

I looked at the Missouri Guaranty fund website. I couldn't find anywhere that definitively said what the limits are for annuities. I think that it's $250,000 of cash surrender benefits, but please don't take my word for it. Before you make a purchase, you ought to confirm with your agent or your guaranty fund. If the guaranty fund limit is for $250k of surrender benefits, you should be pretty well covered, and I wouldn't be uncomfortable with buying from a B++ company.

I would be more concerned about some of the contract provisions. I like to use the Blueprint Income website, as it contains a lot of product information. If I put in a $100,000 premium in Missouri, for a 5 year MYGA, I find that the highest interest rate comes from Atlantic Coast Life, a B++ company, at 3.35%. But, if you click through on the product, you'll see that there are no withdrawals permitted without incurring a surrender charge. That might be a problem for you if you foresee a need for liquidity during the five year term, or even if you need to take RMDs from this annuity.

Compare Atlantic Coast to Americo, an A rated company, that has a rate of 3.20% for a five year MYGA. That product allows a 10% penalty-free withdrawal every year, which will help out with your RMDs.

All things considered, I would probably take a little lower rate with Americo to get the higher rating and the 10% free withdrawals.

It's entirely your call as to whether you put it all into one MYGA or buy multiple MYGAs. Some products may offer a modestly higher interest rate for a minimum deposit of $100k. You can think about how your would structure a CD ladder - and then apply that logic to whether or not you do a MYGA ladder. And remember that the surrender charges on MYGAs are typically much higher than the early withdrawal provisions on CDs.

Hope that this helps. Post back with more questions.
I've added your thoughtful and helpful reply Stinky to my notes.
Like you I had decided the Americo (A rated) 5 yr. one would be a good choice.
I've learned few more things - understand Market Value Adjustment (MVA), and see in the details at BluePrint Income there are or may be other additional benefits connected to a MYGA like the Nursing Home adjustment rider. And the surrender charges as you noted.

Regarding the Missouri Guaranty Fund - I saw on a secondary site $250,000, but I couldn't find it on actual Mo Guaranty Fund site. I'll ask about this to be sure.

I'm going to talk to BluePrint Income folks tomorrow morning on the phone. See if they see a better option for a 5 yr. MYGA than the Americo one.
Or perhaps a good 4 yr. one.

No questions right now. Thanks again for the help and direction.
Evelyn
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by indexfundfan »

EvelynTroy wrote: Wed Sep 23, 2020 11:00 am I've been gathering information, making notes to understand the MYGA's.
Been doing comparisons on blueprintincome.com of Best ratings, vs interest rates, vs terms for my state Missouri.
Feel like I'm gaining a good understanding. I also ordered the Stan the Annuity Guy booklet.

Its clear the lower rated the insurance company will have lower interest rates for the given terms vs. a higher rated company.
I was thinking to stick with A or higher rated companies. My question - how do you judge the difference between say a B++ company and an A rated company? They don't seem to have a lot of meaning for me.

If you were investing around $150K would you purchase one or ladder maybe 3 - how would you structure the ladder amounts? This is IRA money.

These MYGA's are intriguing and in terms of safety giving up the FDIC/NCUA federal insurance is a big step for me, but I'm definitely leaning towards purchasing. Just for so long had the "if its too good to be true..." mantra in my head - in this environment is does seem like "too good to be true."

Thanks for your ideas and thoughts.
Evelyn
Please also review this thread, where I try to quantify the rating risk based on historical data.

viewtopic.php?p=5435915#p5435915
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by EvelynTroy »

indexfundfan wrote: Wed Sep 23, 2020 4:55 pm Please also review this thread, where I try to quantify the rating risk based on historical data.

viewtopic.php?p=5435915#p5435915
Thanks indexfundfan - this is helpful information, and I'm reading it carefully. In that thread was also a link to another discussion MYGAs When Nearing Retirement. Very nice job and quantifying the rating risk. You provided a nice rule of thumb based on the chart:
Personally, I am setting myself the limitation that the insurer should have a historical impairment rate of not more than 2%. That means, the insurer rating should be no worse than the following :

2-yr : B+
3-yr : A-
4-yr : A-
5-yr : A
6-yr : A
7,8,9-yr : A+
10-yr and longer : A++


As an aside, I noticed something Stinky said, in one of these discussions that will stick with me - such a good thing -
(I hope to learn at least one new thing from this Forum every day. This is my learning for today)
Can't go wrong with that.

Thanks again. Evelyn

PS I have a phone conference this a.m. with Blueprint Income folks.
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by indexfundfan »

I'm glad that you found it useful. By the way, the rate of that 5-yr 3.2% Americo MYGA is decreasing to 3.05% on 10/5 (applications must be submitted even earlier).
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by Oilcans »

I am following this thread with interest because I also am interested in purchasing a MYGA. Don't have much to add except to say that my mother purchased an annuity from Guarantee Security Insurance Company many years ago. I felt it was a good product and put a lot of emphasis on the rating which I believe was an A. About five years after purchase she received a letter from the Florida attorney general or insurance commissioner (again this was many years ago and I have forgotten a lot) and the company was bankrupt or something. After several years my mother did receive some of her money back. So I guess I'm saying just be aware of where your money is going.
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by indexfundfan »

Oilcans wrote: Thu Sep 24, 2020 9:07 am I am following this thread with interest because I also am interested in purchasing a MYGA. Don't have much to add except to say that my mother purchased an annuity from Guarantee Security Insurance Company many years ago. I felt it was a good product and put a lot of emphasis on the rating which I believe was an A. About five years after purchase she received a letter from the Florida attorney general or insurance commissioner (again this was many years ago and I have forgotten a lot) and the company was bankrupt or something. After several years my mother did receive some of her money back. So I guess I'm saying just be aware of where your money is going.
Thanks for sharing. Was your mother made whole? Did it take several years for this to happen?
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by Stinky »

Oilcans wrote: Thu Sep 24, 2020 9:07 am I am following this thread with interest because I also am interested in purchasing a MYGA. Don't have much to add except to say that my mother purchased an annuity from Guarantee Security Insurance Company many years ago. I felt it was a good product and put a lot of emphasis on the rating which I believe was an A. About five years after purchase she received a letter from the Florida attorney general or insurance commissioner (again this was many years ago and I have forgotten a lot) and the company was bankrupt or something. After several years my mother did receive some of her money back. So I guess I'm saying just be aware of where your money is going.
Here’s some information on Guarantee Security. It looks like it entered receivership in the early 1990s.

https://www.nolhga.com/companies/public ... 271/GAID/1

I’m also interested to know if your mother was made whole. I suspect that she was (maybe with a delay) but would love to get any facts that you have.
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by Stinky »

Stinky wrote: Thu Sep 24, 2020 9:17 am
Oilcans wrote: Thu Sep 24, 2020 9:07 am I am following this thread with interest because I also am interested in purchasing a MYGA. Don't have much to add except to say that my mother purchased an annuity from Guarantee Security Insurance Company many years ago. I felt it was a good product and put a lot of emphasis on the rating which I believe was an A. About five years after purchase she received a letter from the Florida attorney general or insurance commissioner (again this was many years ago and I have forgotten a lot) and the company was bankrupt or something. After several years my mother did receive some of her money back. So I guess I'm saying just be aware of where your money is going.
Here’s some information on Guarantee Security. It looks like it entered receivership in the early 1990s.

https://www.nolhga.com/companies/public ... 271/GAID/1

I’m also interested to know if your mother was made whole. I suspect that she was (maybe with a delay) but would love to get any facts that you have.
One more comment about how life insurance companies are (hopefully) more secure today than they were in the early 1990s.

Back in the late 1980s, the "hot" product was the single premium deferred annuity (SPDA), a product similar to today's MYGA. Also, the "hot" thing in the investment area was the "junk bond", popularized by Drexel and Michael Milken. I know that a number of companies, especially Executive Life, First Capital, and Fidelity Bankers, loaded up on both SPDAs and junk bonds.

At the time, the regulatory environment didn't have a standardized way a determining how much capital a life insurance company needed to have in order to stay in business. Also, insurers weren't required to hold more capital to back a "risky" asset like a junk bond.

The companies mentioned above all went insolvent in the early 1990s due to too many junk bonds. In response, the regulators introduced a concept called "risk based capital", which is a formula-driven approach to determining how much capital a life insurance company needs to have. More risky assets (like junk bonds) required more capital.

RBC calculations have been strengthened by the regulators over the years, and continue to be in place today.

I don't know if Guarantee Security had the same junk bond issues that Executive Life had. But the timing of the Guarantee Security insolvency fits nicely into the Executive Life timeframe.

I feel a lot better buying a MYGA today than I would have felt buying an SPDA in the early 1990's, because I know that the insurance companies are much better regulated.
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by Oilcans »

I think Stinky sums it up correctly. Like I said I have forgotten most of what happened that many years ago but do think it was a SPDA and also recollect that junk bonds were an item back in those days.

Sorry but I don't remember if my mother was made whole. Only remember that she received quarterly payments. I used to have a file on the entire case and looked for it but think I threw it out about four years ago when she passed away.
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by EvelynTroy »

A follow-up to the discussion -
I made application today @ blueprintincome.com for the Americo - 3.20% - 5 years MYGA.
Over the last several days I've followed the discussion(s) here, made study notes, did other reading, and made the decision that this particular MYGA, and the instruments in general will work for me.
- The MYGA seems straightforward regarding how they work. I understand the information presented.
- Felt the safety of the investment, and the America MYGA with an A rating was fine. I'm comfortable with how these insurance companies are regulated, the Guaranty Fund protection, and the likelihood of insolvency is small.
- I phoned my Missouri Guaranty Association and the benefit level is $250,000
- This one allows withdrawals as well as the Death Benefit and Nursing Home Benefit if needed.
- I think I should be fine with completing the application before October 1 to lock in the higher 3.20% rate.
- I asked about modestly higher interest rate for a $100K minimum - this product does have that feature.
- I also understand the surrender charges - if I needed this money it would be under dire, drastic circumstances.
- I was comfortable with blueprintincome.com - easy application process, answered my questions, no phone wait, and website is intuitive to navigate.
- If something drastic should cause me to change my mind before the application is completed I have time to withdraw.

I'm glad I just went ahead and made the decsion to move forward - couldn't see any solid reason not to.
Thanks again indexfundfan, stinky and other contributors - your help and direction is greatly appreciated. I will continue to learn. I have another CD maturing 12/2020 so a bit of a leg up now on my understanding.

Stay safe and healthy - Evelyn
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by Stinky »

EvelynTroy wrote: Thu Sep 24, 2020 11:56 am A follow-up to the discussion -
I made application today @ blueprintincome.com for the Americo - 3.20% - 5 years MYGA.
Over the last several days I've followed the discussion(s) here, made study notes, did other reading, and made the decision that this particular MYGA, and the instruments in general will work for me.
- The MYGA seems straightforward regarding how they work. I understand the information presented.
- Felt the safety of the investment, and the America MYGA with an A rating was fine. I'm comfortable with how these insurance companies are regulated, the Guaranty Fund protection, and the likelihood of insolvency is small.
- I phoned my Missouri Guaranty Association and the benefit level is $250,000
- This one allows withdrawals as well as the Death Benefit and Nursing Home Benefit if needed.
- I think I should be fine with completing the application before October 1 to lock in the higher 3.20% rate.
- I asked about modestly higher interest rate for a $100K minimum - this product does have that feature.
- I also understand the surrender charges - if I needed this money it would be under dire, drastic circumstances.
- I was comfortable with blueprintincome.com - easy application process, answered my questions, no phone wait, and website is intuitive to navigate.
- If something drastic should cause me to change my mind before the application is completed I have time to withdraw.

I'm glad I just went ahead and made the decsion to move forward - couldn't see any solid reason not to.
Thanks again indexfundfan, stinky and other contributors - your help and direction is greatly appreciated. I will continue to learn. I have another CD maturing 12/2020 so a bit of a leg up now on my understanding.

Stay safe and healthy - Evelyn
Excellent decision!

I just wish that Americo sold business in my state. I’d buy one too.
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rich126
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by rich126 »

Someone mentioned laddering vs. buying one at $150K. In my limited looking, many seem to start at $100K as the minimum. I've seen some lower but the rates were not as good so keep that in mind.

I searched online but ended up buying it through my CPA. He is also a FA and has a financial firm. Since the commision is already included, he gets some money and I don't lose anything. And since he has answered a number of questions previously for me w/o any fees I thought it was fair. He was also able to clarify a few things about them as well.

I only bought one for $100K for 3 yrs. Parting testing out the process. I expect I will be retired at that point so it can cover my expenses for a couple of years. I think mine was for 2.7% but they have dropped lower than that in the last few months.

I guess I'm a little confused as to what happens when the maturity date comes around in 3 years. Do they notify me and ask what to do with the money? Do I have to initiate the conversation? I know some banks (online) will autoroll the money if you don't tell them "no" ahead of time so I want to be careful to avoid that.

My other concern is that so many people are moving this way that triggers an instinctive, "slow down and make sure it is ok" feeling.
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indexfundfan
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by indexfundfan »

EvelynTroy wrote: Thu Sep 24, 2020 11:56 am - This one allows withdrawals as well as the Death Benefit and Nursing Home Benefit if needed.
- I asked about modestly higher interest rate for a $100K minimum - this product does have that feature.
I have also bought the Americo MYGA. It's interesting to note that the Nursing Home Benefit is included in this MYGA without an additional rate penalty. But I wasn't aware that you get a higher rate for a $100k minimum.

One other thing to note about this policy is that after maturity, it does not automatically renew. The policy will continue to earn a minimum rate of 1.5%. Some other MYGAs would automatically renew (and possibly starting another withdrawal penalty schedule).
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by indexfundfan »

rich126 wrote: Thu Sep 24, 2020 12:31 pm I guess I'm a little confused as to what happens when the maturity date comes around in 3 years. Do they notify me and ask what to do with the money? Do I have to initiate the conversation? I know some banks (online) will autoroll the money if you don't tell them "no" ahead of time so I want to be careful to avoid that.
It all depends on the policy. I have seen some that auto-renews (and possibly starting a new surrender penalty schedule). That Americo policy will let the funds stay "liquid" for withdrawal, while earning a minimum of 1.5% in the meantime. Read your policy contract.

PS. I should add that all MYGAs will let you withdraw the money on maturity without penalty. The above are for cases when you do not actively contact the insurer and tell them what you would like to do with the money.
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Stinky
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by Stinky »

indexfundfan wrote: Thu Sep 24, 2020 12:48 pm
rich126 wrote: Thu Sep 24, 2020 12:31 pm I guess I'm a little confused as to what happens when the maturity date comes around in 3 years. Do they notify me and ask what to do with the money? Do I have to initiate the conversation? I know some banks (online) will autoroll the money if you don't tell them "no" ahead of time so I want to be careful to avoid that.
It all depends on the policy. I have seen some that auto-renews (and possibly starting a new surrender penalty schedule). That Americo policy will let the funds stay "liquid" for withdrawal, while earning a minimum of 1.5% in the meantime. Read your policy contract.

PS. I should add that all MYGAs will let you withdraw the money on maturity without penalty. The above are for cases when you do not actively contact the insurer and tell them what you would like to do with the money.
If the product that rich126 purchased is sold by blueprintincome.com, he can get the details about maturity provisions from that website.
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EvelynTroy
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by EvelynTroy »

indexfundfan wrote: Thu Sep 24, 2020 12:45 pm
EvelynTroy wrote: Thu Sep 24, 2020 11:56 am - This one allows withdrawals as well as the Death Benefit and Nursing Home Benefit if needed.
- I asked about modestly higher interest rate for a $100K minimum - this product does have that feature.
I have also bought the Americo MYGA. It's interesting to note that the Nursing Home Benefit is included in this MYGA without an additional rate penalty. But I wasn't aware that you get a higher rate for a $100k minimum.

One other thing to note about this policy is that after maturity, it does not automatically renew. The policy will continue to earn a minimum rate of 1.5%. Some other MYGAs would automatically renew (and possibly starting another withdrawal penalty schedule).
I apologize indexfundfan - I wrote that wrong. The Americo MGYA does NOT offer any higher interest rate for 100K minimum. Typing error.
I too thought the nursing home benefit was very nice perk. I also liked that it does not automatically renew.
I just received the blueprint income follow-up with a couple questions for my app, and the template for the additional suitability questions that Americo requires. My person at Blueprint is the co-owner/founder Matthew Carey.

Thanks. Evelyn
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by indexfundfan »

EvelynTroy wrote: Thu Sep 24, 2020 12:59 pm I apologize indexfundfan - I wrote that wrong. The Americo MGYA does NOT offer any higher interest rate for 100K minimum. Typing error.
I too thought the nursing home benefit was very nice perk. I also liked that it does not automatically renew.
I just received the blueprint income follow-up with a couple questions for my app, and the template for the additional suitability questions that Americo requires. My person at Blueprint is the co-owner/founder Matthew Carey.

Thanks. Evelyn
No worries. Americo is probably due for a rating update. The last three AM Best rating updates were done near the end of Sept 2019, 2018 and 2017. I will post an update when the rating comes out (I have been periodically checking the AM Best site).
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by aristotelian »

OP, remember that higher yields of the last few years were in a higher expected inflation environment. Maybe you do not need the yield you think you do. Sounds like you are thinking about changing your plan in response to market conditions. I don't know the first thing about MYGA's but I do know that staying the course is usually the better option.
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by EvelynTroy »

aristotelian wrote: Thu Sep 24, 2020 1:22 pm OP, remember that higher yields of the last few years were in a higher expected inflation environment. Maybe you do not need the yield you think you do. Sounds like you are thinking about changing your plan in response to market conditions. I don't know the first thing about MYGA's but I do know that staying the course is usually the better option.
You may be right aristotelian.
I don't think I'm changing my plan, but maybe I'm not thinking about it correctly. I believe I'm staying the course, just seeking a better path on the fixed income part of the course. I feel like I'm doing the same thing I've always done when a CD matures, search for the best yield and term. Going forward market conditions could change drastically, i.e. my stock holdings could plummet and stay that way for a long time, interest rates on fixed income could go much lower.

My asset allocation is:
U.S. Stocks - 30%
International Stocks - 10%
Fixed Income - 60%
Of the fixed income allocation 75% of that is in bank/credit union CD's and 25% is in Schwab U.S. Aggregate Bond ETF (SCHZ), and iShares Ultra Short Term Bond ETF (ICSH)
I am some out of balance by my thresholds - thought it was ok just to let things be as they are for awhile.

No, I don't "need" the yield. I've given some thought to purchasing this MGYA and for me there doesn't seem to be much trade-off. I'm trading the FDIC/NCUA insurance for the Guaranty Fund of Missouri Insurance. If I hold to maturity I will receive the guaranteed rate just like a CD. In my view the risk for the higher yield is acceptable.

Feel like I made a good choice for me. I've stayed the course via my asset allocation. But I see what you are saying. Thanks for your thoughts on this.

Evelyn
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Stinky
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by Stinky »

EvelynTroy wrote: Thu Sep 24, 2020 8:45 pm I don't think I'm changing my plan, but maybe I'm not thinking about it correctly. I believe I'm staying the course, just seeking a better path on the fixed income part of the course. I feel like I'm doing the same thing I've always done when a CD matures, search for the best yield and term.
I agree. You’re not changing your plan. You’re just adjusting how you’re holding a portion of the fixed income side of your portfolio - from CDs to MYGAs. You’re looking for higher yield, with appropriate safety.

You’re making a good decision.
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EvelynTroy
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by EvelynTroy »

Stinky wrote: Thu Sep 24, 2020 9:12 pm
EvelynTroy wrote: Thu Sep 24, 2020 8:45 pm I don't think I'm changing my plan, but maybe I'm not thinking about it correctly. I believe I'm staying the course, just seeking a better path on the fixed income part of the course. I feel like I'm doing the same thing I've always done when a CD matures, search for the best yield and term.
I agree. You’re not changing your plan. You’re just adjusting how you’re holding a portion of the fixed income side of your portfolio - from CDs to MYGAs. You’re looking for higher yield, with appropriate safety.

You’re making a good decision.
You said it better than my rambling around did Stinky.

Evelyn
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by indexfundfan »

indexfundfan wrote: Thu Sep 24, 2020 1:10 pm
EvelynTroy wrote: Thu Sep 24, 2020 12:59 pm I apologize indexfundfan - I wrote that wrong. The Americo MGYA does NOT offer any higher interest rate for 100K minimum. Typing error.
I too thought the nursing home benefit was very nice perk. I also liked that it does not automatically renew.
I just received the blueprint income follow-up with a couple questions for my app, and the template for the additional suitability questions that Americo requires. My person at Blueprint is the co-owner/founder Matthew Carey.

Thanks. Evelyn
No worries. Americo is probably due for a rating update. The last three AM Best rating updates were done near the end of Sept 2019, 2018 and 2017. I will post an update when the rating comes out (I have been periodically checking the AM Best site).
Just thought to update that Americo has been re-affirmed with an AM Best A rating and a "stable" outlook today.

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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by EvelynTroy »

Thanks Indexfundfan for the rating update. Looks good.
My application has been approved by Americo and they are now requesting the transfer of funds from my brokerage account.
Everything has moved along smoothly without any snags, or surprises. Oh, one surprise, guess its not that big a deal, but was surprised that Americo does not have any sort of online portal to check your balances. BluePrint Income will give me that information anytime I have a need for it.
The owner/founder of BluePrint, Matt C. is the one directing my application - said they have addressed this as a concern with Americo.

I've received good personal, individual attention from real people through the process via emails and phone calls. Thought that was reassuring.

So far I'm thinking when my 12/2020 CD matures I will purchase another MYGA.

Stay safe - Evelyn
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EvelynTroy
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by EvelynTroy »

As a follow-up to this discussion on understanding MYGA's -
Perhaps of interest, from this personal finance blog that I have followed for some years are two postings.
One gives explanation of what MYGA's are, how they work, nice explanation of State Guarantee Associations and so on.
https://www.mymoneyblog.com/myga-fixed- ... -cds.html
The next one provides the writers actual purchase experience, statements received, of his MYGA purchase in 2015. Also explains the options he had and his renewal process with his 3 year MYGA.

https://www.mymoneyblog.com/example-myg ... ience.html

Hope you find these references helpful.
Stay safe - Evelyn
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by CWRadio »

One more question to think about:

If I buy a MYGA from a IRA for 3 years. At the end of the 3 years will the MYGA insurance company automatically transfer the money back to my IRA? Is there a fee to do the transfer? If not how does it work?
Paul
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Stinky
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by Stinky »

CWRadio wrote: Fri Oct 30, 2020 9:39 am One more question to think about:

If I buy a MYGA from a IRA for 3 years. At the end of the 3 years will the MYGA insurance company automatically transfer the money back to my IRA? Is there a fee to do the transfer? If not how does it work?
Paul
I’ve reached out to the folks at Blueprint Income, where I’ve purchased my MYGAs inside my iRA. They tell me that all of their insurers will do a trustee to trustee transfer upon maturity. No fee for that transfer.

I don’t know about the “automatic” part. With all of the MYGAs I’ve seen, you need to make a decision in the 30 days prior to expiry of the guarantee period. You can stay with same insurer for another guarantee period, roll to another insurer, get a check, transfer to another trustee, etc.
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by Super Hans »

indexfundfan wrote: Thu Sep 24, 2020 12:45 pm
One other thing to note about this policy is that after maturity, it does not automatically renew. The policy will continue to earn a minimum rate of 1.5%. Some other MYGAs would automatically renew (and possibly starting another withdrawal penalty schedule).
My Americo MYGA issued in mid-September only has a 1% minimum rate. I don't know when that changed; I still managed to get the 3.2% guarantee for five years. Regardless, the 1% option could be nice to have in five years. Do any other life carriers have a similar structure instead of the auto-renew? I'd like to buy some more like this.
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by Stinky »

Super Hans wrote: Mon Nov 02, 2020 4:05 pm
indexfundfan wrote: Thu Sep 24, 2020 12:45 pm
One other thing to note about this policy is that after maturity, it does not automatically renew. The policy will continue to earn a minimum rate of 1.5%. Some other MYGAs would automatically renew (and possibly starting another withdrawal penalty schedule).
My Americo MYGA issued in mid-September only has a 1% minimum rate. I don't know when that changed; I still managed to get the 3.2% guarantee for five years. Regardless, the 1% option could be nice to have in five years. Do any other life carriers have a similar structure instead of the auto-renew? I'd like to buy some more like this.
What happens at the end of the guarantee period depends on the contract and the insurer. Some renew at the “current rate”, with a guaranteed minimum of 1% or so. Others automatically roll into a new guarantee period at the then-current rate.

You can get a brief summary of the options at the Blueprint Income website. Click on the “Details” for the product you’re looking at, then scroll down to “maturity options”.
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by Super Hans »

Stinky wrote: Mon Nov 02, 2020 4:16 pm * * *
What happens at the end of the guarantee period depends on the contract and the insurer. Some renew at the “current rate”, with a guaranteed minimum of 1% or so. Others automatically roll into a new guarantee period at the then-current rate.

You can get a brief summary of the options at the Blueprint Income website. Click on the “Details” for the product you’re looking at, then scroll down to “maturity options”.
Thanks! I had clicked on "details" there, but I didn't scroll down far enough.
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by Tony-S »

This has been a great read. I think a 5 year MYGA from my IRA is in my near future.
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EvelynTroy
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by EvelynTroy »

Tony-S wrote: Fri Jan 01, 2021 12:57 pm This has been a great read. I think a 5 year MYGA from my IRA is in my near future.
I agree Tony-S - this discussion along with two others on MYGA's have been oh so helpful to me as well.

An update on my most recent purchase - the 3 year, future fund at https://canvasannuity.com/#/home
I didn't realize when doing the application/purchase towards the end when you fund that you had an option to send a personal check via the U.S mail, as opposed to them withdrawing from your checking account. I chose to send the personal check.
Also as IndexFund Fan pointed out, CanvasAnnuity is speedy.

Good luck on any future MYGA.
Evelyn
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gasman
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by gasman »

Question about MYGAs:

Given that interest rates are where they are why do insurance companies issue these things as opposed to going to the bond market and issue bonds or a bank for funding?
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by HueyLD »

gasman wrote: Sat Jan 02, 2021 8:27 am Question about MYGAs:

Given that interest rates are where they are why do insurance companies issue these things as opposed to going to the bond market and issue bonds or a bank for funding?
Not every company can issue bonds because it involves a lot of upfront underwriting cost and ongoing maintenance cost.

In addition, insurance companies are in the business of issuing insurance and annuity products and they know how to make money in their core business.

That’s why there are surrender charges and market value adjustments to discourage early withdrawals for MYGAs. However, MYGAs do not have other ongoing fees unlike some annuity products.
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by Hebell »

Good experience with Stan the Annuity man thus far. I knew what I wanted. An A+ rated jumbo annuity (3 year MYGA). Had a phone consult at 2 pm yesterday, completed paperwork via Zoom between 430pm - 5pm. Received Digisigner paperwork to electronically sign at 10 pm, asked for a minor correction at 10:15 p.m., had the revised paperwork at 10:30 p.m. and signed it then. Received an email at 11:00 a.m. this morning that the insurer had received it, and a 2:00 p.m. response that the insurer had accepted it. I hope to have my paperwork from the insurer mailed to me within three to five days, and expect to see the electronic funds transfer from my after tax account in the immediate future. So essentially all of this was done in 24 hours.
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EvelynTroy
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by EvelynTroy »

Hebell wrote: Thu Jan 07, 2021 10:02 pm Good experience with Stan the Annuity man thus far. I knew what I wanted. An A+ rated jumbo annuity (3 year MYGA). Had a phone consult at 2 pm yesterday, completed paperwork via Zoom between 430pm - 5pm. Received Digisigner paperwork to electronically sign at 10 pm, asked for a minor correction at 10:15 p.m., had the revised paperwork at 10:30 p.m. and signed it then. Received an email at 11:00 a.m. this morning that the insurer had received it, and a 2:00 p.m. response that the insurer had accepted it. I hope to have my paperwork from the insurer mailed to me within three to five days, and expect to see the electronic funds transfer from my after tax account in the immediate future. So essentially all of this was done in 24 hours.
Thanks for sharing your experience Hebell - its helpful knowing others experiences. This was great service.
I've not purchased one from STAM.

Stay safe. Evelyn
gips
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Re: Need direction_understanding MYGA(multi-year guaranteed annuity

Post by gips »

i’ve looked at mygas and my position is that like many financial services products, they are predicated on obfuscating risk to the consumer. i know there has been thoughtful analysis on the forum to quantify risk but market structure is efficient and a 3% return in this market is the best indicator these policies entail quite a bit of hidden risk.

best,
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