Purchasing MYGAs (multi year guaranteed annuities) - mega thread

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Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

Information on Annuity Advantage and Stan the Annuity Man is included in a post near the bottom of the third page of this thread. Immediateannuities.com is discussed near the top of the fourth page.

Over the last few months, I've purchased multi-year guaranteed annuities (MYGAs) from each of Blueprint Income, Gainbridge, and Canvas, as I constructed a "MYGA ladder" (similar to a CD ladder). For the benefit of anyone who is considering purchasing MYGAs. I decided to compare and contrast the products and service on each of these platforms,

(To learn more about MYGAs, search the Forum for "MYGA", as there have been multiple recent threads on this topic. There is also an article in the Wiki. A one sentence summary - a MYGA, also known as a "CD annuity", can offer an attractive interest rate relative to a bank CD, and comes with the caveats of (a) state guaranty fund protection rather than FDIC insurance and (b) punishingly high surrender charges on most products.)

Blueprint Income (www.blueprintincome.com)
I chose to go with Blueprint for the majority of my purchases. Blueprint acts as an agent for over two dozen insurance companies. In my opinion, Blueprint's website is more user-friendly and has much more information than other agents like Stan the Annuity Man and Immediate Annuities, so I used Blueprint exclusively.

Positives -
--- Over two dozen insurers have products available through Blueprint. These companies have AM Best ratings ranging from A++ to B+. In general, lower rated companies pay higher interest rates. This choice of companies allows folks to decide on the combination of interest rate and financial strength rating that best fits their situation.
--- Products are available for every duration from 2 years to 10 years. Note that not all companies sell products at all durations.
--- Blueprint's website is very user friendly and easy to navigate, and contains a deep body of information on every product offered. It's easy to compare and contrast products on the website. In my view, this is a major advantage over the other annuity agents mentioned above.
--- The application for either a "taxable" or "IRA" annuity can be completed fully online. The Blueprint team then follows up with an email to confirm the choices indicated in the online application.
--- Blueprint's customer service is excellent. I chose to communicate exclusively through email, and always found the Blueprint team to be very responsive to my questions and comments. The Blueprint team is very knowledgeable about what they are selling. The reviews submitted by buyers are extremely positive, and those who chose to call the Blueprint team seemed to be very happy with the phone service.

Negatives -
--- The timeline for purchasing annuities through an independent agency like Blueprint is longer than for purchasing through a "controlled" agent like Canvas and Gainbridge. All of my purchases through Blueprint were IRA annuities, so they each involved the additional time-consuming step of the insurance company reaching out to Vanguard to "pull" money from my IRA. The shortest time between application date and policy effective date was two weeks. The longest time between application and policy effective was six weeks, because the insurance company lost the fax (I didn't know that anybody still used fax machines). I'm certain that taxable annuities, which are funded through a check or ACH transfer, would move faster, but probably not as fast as with Canvas and Gainbridge.



Canvas (www.canvasannuity.com) and Gainbridge (www.gainbridge.life)
Both of these agencies are closely associated with a single insurance company, and sell only the products of that insurance company. Canvas works with Puritan Life, and Gainbridge works with Guggenheim Life. Both of these companies are rated B++ by AM Best.

Positives -
--- Both companies currently offer interest rates than are generally higher than the vast majority of rates offered by companies on Blueprint.
--- Both have very fast processing for taxable MYGAs. Presuming that the funds are in your checking account, Canvas can deliver a fully issued and in force policy within 10 minutes of starting the application. Gainbridge goes through a little slower process of verifying bank accounts, but can issue a policy within 2-3 days.

Negatives -
--- Both agencies are offering products issued by only one company.
--- Gainbridge does not currently offer IRA annuities, but says that they plan to within the next year or so.
--- Canvas doesn't indicate on their website that IRA annuities are available. However, they told me in an email that they do offer them. I am in the middle of purchasing an IRA annuity through them, and find that their current process is very manual. After an initial phone interview to determine "suitability", they emailed me an entirely manual application that needed to be printed out, completed, and scanned back to them. They also requested a notarized form to verify my identity, which was not requested by any of the companies represented by Blueprint Income. I expect that Canvas will be improving their process for IRA annuities in the future.
Last edited by Stinky on Fri May 28, 2021 4:11 pm, edited 3 times in total.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by IowaFarmBoy »

Thanks for the excellent information, Stinky! I've been looking at MYGAs and this is a great summary.

I've got a question about MYGAs that are purchased as IRA annuities. What happens at maturity? Does Blueprint have an easy mechanism to re-invest in another MYGA? Or is it easy to move the money back to your IRA? I wouldn't want to be forced to take it as a distribution at that point.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by HueyLD »

Thank you for sharing your insightful experience and comments, Mr. Stinky. I think readers who are interested in MYGAs will benefit greatly from your posts.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by Stinky »

IowaFarmBoy wrote: Thu Dec 31, 2020 8:37 am Thanks for the excellent information, Stinky! I've been looking at MYGAs and this is a great summary.

I've got a question about MYGAs that are purchased as IRA annuities. What happens at maturity? Does Blueprint have an easy mechanism to re-invest in another MYGA? Or is it easy to move the money back to your IRA? I wouldn't want to be forced to take it as a distribution at that point.
Blueprint has told me that all of their insurers can arrange a trustee to trustee transfer back to Vanguard (or whoever your primary IRA is with) at maturity.

I’m sure you could also renew with the existing insurance company for a new term, if their terms were attractive.

I don’t know about a transfer from Insurer A to Insurer B for a new MYGA. Blueprint probably could answer that question.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by EfficientInvestor »

Thanks, Stinky! This is great info. I have been leaning towards putting some of my MIL's taxable account into a MYGA. The Canvas rates look quite attractive and I like how they give you the option between the Future Fund or Flex Fund.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by HueyLD »

Stinky wrote: Thu Dec 31, 2020 8:57 am
IowaFarmBoy wrote: Thu Dec 31, 2020 8:37 am Thanks for the excellent information, Stinky! I've been looking at MYGAs and this is a great summary.

I've got a question about MYGAs that are purchased as IRA annuities. What happens at maturity? Does Blueprint have an easy mechanism to re-invest in another MYGA? Or is it easy to move the money back to your IRA? I wouldn't want to be forced to take it as a distribution at that point.
Blueprint has told me that all of their insurers can arrange a trustee to trustee transfer back to Vanguard (or whoever your primary IRA is with) at maturity.

I’m sure you could also renew with the existing insurance company for a new term, if their terms were attractive.

I don’t know about a transfer from Insurer A to Insurer B for a new MYGA. Blueprint probably could answer that question.
One should be able to transfer the funds into a different type of annuity without facing a tax penalty by using a 1035 exchange.

When opening a new MYGA account, it always asks if you want to transfer the money from another insurance product elsewhere.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by whyamihere »

HueyLD wrote: Thu Dec 31, 2020 9:35 am
Stinky wrote: Thu Dec 31, 2020 8:57 am
IowaFarmBoy wrote: Thu Dec 31, 2020 8:37 am Thanks for the excellent information, Stinky! I've been looking at MYGAs and this is a great summary.

I've got a question about MYGAs that are purchased as IRA annuities. What happens at maturity? Does Blueprint have an easy mechanism to re-invest in another MYGA? Or is it easy to move the money back to your IRA? I wouldn't want to be forced to take it as a distribution at that point.
Blueprint has told me that all of their insurers can arrange a trustee to trustee transfer back to Vanguard (or whoever your primary IRA is with) at maturity.

I’m sure you could also renew with the existing insurance company for a new term, if their terms were attractive.

I don’t know about a transfer from Insurer A to Insurer B for a new MYGA. Blueprint probably could answer that question.
One should be able to transfer the funds into a different type of annuity without facing a tax penalty by using a 1035 exchange.

When opening a new MYGA account, it always asks if you want to transfer the money from another insurance product elsewhere.
The experience is very similar to the IRA trustee-to-trustee transfer. These 1035 exchanges may require a "wet ink" signature and the original paperwork to be mailed.

People escaping under-performing and un-needed permanent life insurance policies can also exchange into a MYGA but you can't go annuity to life insurance.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by CWRadio »

Great information Stinky.

You stated you were building a ladder of MYGA from your IRA. How many MYGA are part of the ladder.
Can you please explain what happens when the term of the lower year MYGA expires and it is part of the ladder? Does it automatically become part of the ladder again as Fidelity does for it CD ladder application?
What happen to the interest made on the laddered MYGA?

Thanks Paul
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by Hebell »

As we pull RMDs, we will be building out a three-year myga ladder that just keeps rolling forward.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by Stinky »

CWRadio wrote: Thu Dec 31, 2020 10:04 am Great information Stinky.

You stated you were building a ladder of MYGA from your IRA. How many MYGA are part of the ladder.
Can you please explain what happens when the term of the lower year MYGA expires and it is part of the ladder? Does it automatically become part of the ladder again as Fidelity does for it CD ladder application?
What happen to the interest made on the laddered MYGA?

Thanks Paul
Paul,

I’ve built a ladder of MYGAs from 2 years to 8 years. They comprise about 10% of my invested assets and about one-half of my fixed income allocation. I have a view that interest rates will be low for a long time, and I think that a 3.50% interest rate from Canvas on a 7 year MYGA is very attractive.

When MYGAs mature, I plan to decide whether to reinvest in a new MYGA or roll back into my Vanguard IRA bond fund. I’ll make that decision based on interest rates at that time.

I plan to leave the interest to accumulate within the MYGA. I’ll make sure that the MYGA principal plus accrued interest with any single company doesn’t exceed state guaranty fund limits.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by HueyLD »

CWRadio wrote: Thu Dec 31, 2020 10:04 am Great information Stinky.

You stated you were building a ladder of MYGA from your IRA. How many MYGA are part of the ladder.
Can you please explain what happens when the term of the lower year MYGA expires and it is part of the ladder? Does it automatically become part of the ladder again as Fidelity does for it CD ladder application?
What happen to the interest made on the laddered MYGA?

Thanks Paul
Are you under 59 1/2? Early withdrawal tax penalty may apply.

However, if you roll over the entire balance, there will be no income and thus no EWP to report on your tax returns.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by BolderBoy »

Jonathan Clements https://humbledollar.com/ likes MYGAs, too. In a newsletter he sent out in the last 3-4 months he described setting up a MYGA ladder for himself.

Unfortunately his website doesn't seem to search specifically enough for me to find that newsletter to link here.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by indexfundfan »

Stinky wrote: Thu Dec 31, 2020 7:46 am Canvas (www.canvasannuity.com) and Gainbridge (www.gainbridge.life)
Both of these agencies are closely associated with a single insurance company, and sell only the products of that insurance company. Canvas works with Puritan Life, and Gainbridge works with Guggenheim Life. Both of these companies are rated B++ by AM Best.

Positives -
--- Both companies currently offer interest rates than are generally higher than the vast majority of rates offered by companies on Blueprint.
--- Both have very fast processing for taxable MYGAs. Presuming that the funds are in your checking account, Canvas can deliver a fully issued and in force policy within 10 minutes of starting the application. Gainbridge goes through a little slower process of verifying bank accounts, but can issue a policy within 2-3 days.

Negatives -
--- Both agencies are offering products issued by only one company.
--- Gainbridge does not currently offer IRA annuities, but says that they plan to within the next year or so.
--- Canvas doesn't indicate on their website that IRA annuities are available. However, they told me in an email that they do offer them. I am in the middle of purchasing an IRA annuity through them, and find that their current process is very manual. After an initial phone interview to determine "suitability", they emailed me an entirely manual application that needed to be printed out, completed, and scanned back to them. They also requested a notarized form to verify my identity, which was not requested by any of the companies represented by Blueprint Income. I expect that Canvas will be improving their process for IRA annuities in the future.
Thanks for the writeup. I'm interested to take up Canvas when my CD matures in Jan.

You mentioned that a notarized form is needed to verify identity, but you also said they could issue a policy very quickly (10 minutes). Is the notarized form only needed for qualified funds? Or also for non-qualified funds (taxable)?
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by Wiggums »

Thanks for the wonderful information, Stinky! This is something that i’ve been considering. I believe that you can withdraw 10% after the first year without penalty.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by HueyLD »

Wiggums wrote: Thu Dec 31, 2020 11:39 am Thanks for the wonderful information, Stinky! This is something that i’ve been considering. I believe that you can withdraw 10% after the first year without penalty.
Penalty free withdrawals (aka free withdrawals) are company specific. Every company seems to have its own rules and there is not a universal answer.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by HueyLD »

indexfundfan wrote: Thu Dec 31, 2020 11:28 am
Stinky wrote: Thu Dec 31, 2020 7:46 am Canvas (www.canvasannuity.com) and Gainbridge (www.gainbridge.life)
Both of these agencies are closely associated with a single insurance company, and sell only the products of that insurance company. Canvas works with Puritan Life, and Gainbridge works with Guggenheim Life. Both of these companies are rated B++ by AM Best.

Positives -
--- Both companies currently offer interest rates than are generally higher than the vast majority of rates offered by companies on Blueprint.
--- Both have very fast processing for taxable MYGAs. Presuming that the funds are in your checking account, Canvas can deliver a fully issued and in force policy within 10 minutes of starting the application. Gainbridge goes through a little slower process of verifying bank accounts, but can issue a policy within 2-3 days.

Negatives -
--- Both agencies are offering products issued by only one company.
--- Gainbridge does not currently offer IRA annuities, but says that they plan to within the next year or so.
--- Canvas doesn't indicate on their website that IRA annuities are available. However, they told me in an email that they do offer them. I am in the middle of purchasing an IRA annuity through them, and find that their current process is very manual. After an initial phone interview to determine "suitability", they emailed me an entirely manual application that needed to be printed out, completed, and scanned back to them. They also requested a notarized form to verify my identity, which was not requested by any of the companies represented by Blueprint Income. I expect that Canvas will be improving their process for IRA annuities in the future.
Thanks for the writeup. I'm interested to take up Canvas when my CD matures in Jan.

You mentioned that a notarized form is needed to verify identity, but you also said they could issue a policy very quickly (10 minutes). Is the notarized form only needed for qualified funds? Or also for non-qualified funds (taxable)?
Stinky,

Did Canvas require paper form and notarization because they could not verify your identity, or was it done because of qualified money?
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by Stinky »

HueyLD wrote: Thu Dec 31, 2020 11:53 am Stinky,

Did Canvas require paper form and notarization because they could not verify your identity, or was it done because of qualified money?
It seems that additional verification is required for IRA annuities in general. Also, there are additional “suitability” questions for IRA annuities.

With Blueprint, the verification was just a picture of my driver license. I submitted the picture several times, one for each company.

With Canvas, the information package requested a notarized form. I would not be able to get a form notarized for a while because of COVID, so I chose to send them copies of my drivers license, passport, and birth certificate, and asked that they accept those in lieu of the notarized form. They accepted my documents. (I didn’t need to offer a sworn statement from my mother or my kindergarten teacher :D )

EDIT - I believe that paper forms are required by Canvas because they’re early in the process of offering qualified annuities. I expect that they will automate the process if they decide to make a bigger splash in the qualified market.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by Stinky »

HueyLD wrote: Thu Dec 31, 2020 11:46 am
Wiggums wrote: Thu Dec 31, 2020 11:39 am Thanks for the wonderful information, Stinky! This is something that i’ve been considering. I believe that you can withdraw 10% after the first year without penalty.
Penalty free withdrawals (aka free withdrawals) are company specific. Every company seems to have its own rules and there is not a universal answer.
That’s absolutely correct. A number of companies in Blueprint don’t have free withdrawals as a “standard” feature. Withdrawals could be enabled by a rider added at issue, and the rider cost would reduce the credited rate.

Similarly, many companies pay out the full accumulation value if the annuitant dies during the policy term, but some pay out just the surrender value. Again, a rider can be added to the more restrictive policies.

These are both important points to consider as you assess buying a MYGA.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by indexfundfan »

Stinky wrote: Thu Dec 31, 2020 1:08 pm With Blueprint, the verification was just a picture of my driver license. I submitted the picture several times, one for each company.
That's interesting. I assume you "re-applied" for each MYGA at Blueprint?

I only "applied" for the first MYGA. For subsequent MYGAs, I just emailed Kristin which one I wanted and she pulled the required information from what they already had.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by capjak »

I purchased 3 MYGAs this year starting in May 2019 all from Stan the Annuity Man. Process start to finish was about 7 days for first 2. Some of it depends on the Insurance company as the third is going to be 3 weeks.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by Stinky »

indexfundfan wrote: Thu Dec 31, 2020 6:08 pm
Stinky wrote: Thu Dec 31, 2020 1:08 pm With Blueprint, the verification was just a picture of my driver license. I submitted the picture several times, one for each company.
That's interesting. I assume you "re-applied" for each MYGA at Blueprint?

I only "applied" for the first MYGA. For subsequent MYGAs, I just emailed Kristin which one I wanted and she pulled the required information from what they already had.
Yes, that’s correct. I reapplied through the website for each individual annuity. I never talked to anyone at Blueprint.

I guess I could have saved some time if I had just picked up the phone and talked to Kristin. :oops:
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by Pandemic Bangs »

Spouse recently bought a MYGA through Bluepoint with IRA dollars. Process was pretty straightforward. There were some errors in the paperwork that necessitated reissuing. And then there was some after-the-fact recognition of their error that resulted in our getting an entirely new set of documents (same rate). A little disconcerting...

Our biggest concerns are: 1) solvency of the insurer; and 2) remembering to react within the very narrow rollover window years hence at maturity (maybe one week before it locks in again?).
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by nalor511 »

If you buy a myga with taxable dollars (not IRA), then when it's matured do you have to roll the whole thing into a new myga (1035 exchange) to avoid tax penalties for not being over 59 years old, or do you just have to roll the earnings (not the principle)?

Sounds like a good idea to get extra tax sheltered space for those earnings, but, not if I can't have back my principle after the term expires, because who knows what rates will be then
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by Stinky »

Pandemic Bangs wrote: Thu Dec 31, 2020 6:45 pm Our biggest concerns are: 1) solvency of the insurer; and 2) remembering to react within the very narrow rollover window years hence at maturity (maybe one week before it locks in again?).
On the insurer solvency, hopefully you can get some comfort from the insurer’s rating and the state guaranty fund protection. Rarely does an insurer go insolvent, and the guaranty funds provide solid protection (up to their limits) when an insurer does go broke.

On the renewal, I think that most insurers provide 30 days advance notice of the maturity date. Further, I expect that Blueprint will be in touch with you, probably more than 30 days in advance of maturity. Blueprint should want to do all they can to keep a customer happy - plus, they stand to earn a new commission if you re-up with a new MYGA.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by Stinky »

nalor511 wrote: Thu Dec 31, 2020 6:57 pm If you buy a myga with taxable dollars (not IRA), then when it's matured do you have to roll the whole thing into a new myga (1035 exchange) to avoid tax penalties for not being over 59 years old, or do you just have to roll the earnings (not the principle)?

Sounds like a good idea to get extra tax sheltered space for those earnings, but, not if I can't have back my principle after the term expires, because who knows what rates will be then
Yes, there is a 10% tax penalty on any withdrawals from a taxable annuity prior to age 59.5. So, for example, if you buy a 5 year MYGA at age 50, you’ll need to do a 1035 exchange of the whole annuity (principal plus interest) into another annuity to avoid the tax penalty.

But look at the bright side. Let’s say that you buy a 5 year MYGA paying 2.50%. If you pay a 10% tax penalty, that would reduce the effective interest rate to 2.25%. That’s still an attractive rate compared to a CD.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by nalor511 »

Stinky wrote: Thu Dec 31, 2020 7:17 pm
nalor511 wrote: Thu Dec 31, 2020 6:57 pm If you buy a myga with taxable dollars (not IRA), then when it's matured do you have to roll the whole thing into a new myga (1035 exchange) to avoid tax penalties for not being over 59 years old, or do you just have to roll the earnings (not the principle)?

Sounds like a good idea to get extra tax sheltered space for those earnings, but, not if I can't have back my principle after the term expires, because who knows what rates will be then
Yes, there is a 10% tax penalty on any withdrawals from a taxable annuity prior to age 59.5. So, for example, if you buy a 5 year MYGA at age 50, you’ll need to do a 1035 exchange of the whole annuity (principal plus interest) into another annuity to avoid the tax penalty.

But look at the bright side. Let’s say that you buy a 5 year MYGA paying 2.50%. If you pay a 10% tax penalty, that would reduce the effective interest rate to 2.25%. That’s still an attractive rate compared to a CD.
If you take it out after 5 years your interest earned is about 12.5% total over those 5 years (ignoring compounding), so a 10% penalty almost wipes out 5yr of interest, unless the penalty is not factored on principal
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by Stinky »

nalor511 wrote: Thu Dec 31, 2020 7:23 pm
Stinky wrote: Thu Dec 31, 2020 7:17 pm
nalor511 wrote: Thu Dec 31, 2020 6:57 pm If you buy a myga with taxable dollars (not IRA), then when it's matured do you have to roll the whole thing into a new myga (1035 exchange) to avoid tax penalties for not being over 59 years old, or do you just have to roll the earnings (not the principle)?

Sounds like a good idea to get extra tax sheltered space for those earnings, but, not if I can't have back my principle after the term expires, because who knows what rates will be then
Yes, there is a 10% tax penalty on any withdrawals from a taxable annuity prior to age 59.5. So, for example, if you buy a 5 year MYGA at age 50, you’ll need to do a 1035 exchange of the whole annuity (principal plus interest) into another annuity to avoid the tax penalty.

But look at the bright side. Let’s say that you buy a 5 year MYGA paying 2.50%. If you pay a 10% tax penalty, that would reduce the effective interest rate to 2.25%. That’s still an attractive rate compared to a CD.
If you take it out after 5 years your interest earned is about 12.5% total over those 5 years (ignoring compounding), so a 10% penalty almost wipes out 5yr of interest, unless the penalty is not factored on principal
No - the tax penalty is 10% of interest earned. Not 10% of principal plus interest.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by indexfundfan »

nalor511 wrote: Thu Dec 31, 2020 7:23 pm
Stinky wrote: Thu Dec 31, 2020 7:17 pm
nalor511 wrote: Thu Dec 31, 2020 6:57 pm If you buy a myga with taxable dollars (not IRA), then when it's matured do you have to roll the whole thing into a new myga (1035 exchange) to avoid tax penalties for not being over 59 years old, or do you just have to roll the earnings (not the principle)?

Sounds like a good idea to get extra tax sheltered space for those earnings, but, not if I can't have back my principle after the term expires, because who knows what rates will be then
Yes, there is a 10% tax penalty on any withdrawals from a taxable annuity prior to age 59.5. So, for example, if you buy a 5 year MYGA at age 50, you’ll need to do a 1035 exchange of the whole annuity (principal plus interest) into another annuity to avoid the tax penalty.

But look at the bright side. Let’s say that you buy a 5 year MYGA paying 2.50%. If you pay a 10% tax penalty, that would reduce the effective interest rate to 2.25%. That’s still an attractive rate compared to a CD.
If you take it out after 5 years your interest earned is about 12.5% total over those 5 years (ignoring compounding), so a 10% penalty almost wipes out 5yr of interest, unless the penalty is not factored on principal
No. The penalty is only on the earnings; it does not apply to the principal.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by nalor511 »

Stinky wrote: Thu Dec 31, 2020 7:25 pm
nalor511 wrote: Thu Dec 31, 2020 7:23 pm
Stinky wrote: Thu Dec 31, 2020 7:17 pm
nalor511 wrote: Thu Dec 31, 2020 6:57 pm If you buy a myga with taxable dollars (not IRA), then when it's matured do you have to roll the whole thing into a new myga (1035 exchange) to avoid tax penalties for not being over 59 years old, or do you just have to roll the earnings (not the principle)?

Sounds like a good idea to get extra tax sheltered space for those earnings, but, not if I can't have back my principle after the term expires, because who knows what rates will be then
Yes, there is a 10% tax penalty on any withdrawals from a taxable annuity prior to age 59.5. So, for example, if you buy a 5 year MYGA at age 50, you’ll need to do a 1035 exchange of the whole annuity (principal plus interest) into another annuity to avoid the tax penalty.

But look at the bright side. Let’s say that you buy a 5 year MYGA paying 2.50%. If you pay a 10% tax penalty, that would reduce the effective interest rate to 2.25%. That’s still an attractive rate compared to a CD.
If you take it out after 5 years your interest earned is about 12.5% total over those 5 years (ignoring compounding), so a 10% penalty almost wipes out 5yr of interest, unless the penalty is not factored on principal
No - the tax penalty is 10% of interest earned. Not 10% of principal plus interest.
So to be clear, can you withdraw the principal at maturity and just 1035 the interest? Because I thought you said no, but maybe I misunderstood

Maybe you meant that you can either 1035 the whole sum, or take out the whole sum and lose 10% of your interest
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by Stinky »

nalor511 wrote: Thu Dec 31, 2020 7:33 pm Maybe you meant that you can either 1035 the whole sum, or take out the whole sum and lose 10% of your interest
Yes, that’s a correct statement.

Sorry if my prior post was unclear.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by Explorer »

Stinky - Thanks for starting a comprehensive thread on this topic.

I have one basic question: what happens when the MYGA holder passes away before the term is complete?
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by indexfundfan »

Explorer wrote: Thu Dec 31, 2020 7:47 pm Stinky - Thanks for starting a comprehensive thread on this topic.

I have one basic question: what happens when the MYGA holder passes away before the term is complete?
Most MYGAs have the "death benefit", meaning your beneficiary is allowed to surrender the policy without surrender charges. I always make sure the "death benefit" is included in a policy.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by HueyLD »

indexfundfan wrote: Thu Dec 31, 2020 7:58 pm
Explorer wrote: Thu Dec 31, 2020 7:47 pm Stinky - Thanks for starting a comprehensive thread on this topic.

I have one basic question: what happens when the MYGA holder passes away before the term is complete?
Most MYGAs have the "death benefit", meaning your beneficiary is allowed to surrender the policy without surrender charges. I always make sure the "death benefit" is included in a policy.
In addition to surrender charge free death benefit, some policies also allow surrender charge free withdrawals for critical illness, terminal illness and nursing home care. You have to read the policy to know the exact definitions of such illnesses.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by Explorer »

Thanks for the responses on death benefit...indexfundfan & HueyLD.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by Stinky »

capjak wrote: Thu Dec 31, 2020 6:18 pm I purchased 3 MYGAs this year starting in May 2019 all from Stan the Annuity Man. Process start to finish was about 7 days for first 2. Some of it depends on the Insurance company as the third is going to be 3 weeks.
I looked at Stan the Annuity Man's website. He has a few more insurers that sell through him than Blueprint, so there is a broader selection there.

I believe that the interest rate that the customer earns is the same, no matter which agent you use.

The place where I think that Blueprint Income excels over Stan the Annuity Man and Immediateannuities.com is the depth of the product information available through the website. Blueprint has a comprehensive drill-down, describing all product features, for each of the 100+ products on its website. I don't believe that the other two websites have such comprehensive information on each product - if they have it, I sure can't find it.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by nalor511 »

Where do you guys rate myga on ease of purchase, and rollover (1035), as compared to direct (not brokered) CDs? Thanks for all the Q&A!
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by Stinky »

nalor511 wrote: Thu Dec 31, 2020 8:42 pm Where do you guys rate myga on ease of purchase, and rollover (1035), as compared to direct (not brokered) CDs? Thanks for all the Q&A!
In all candor, I've never bought a CD of any type, so I can't comment. Maybe others can weigh in.

Also, I've never done a 1035 exchange. Ask me again in two years and I'll tell you all about it. :D
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by HueyLD »

nalor511 wrote: Thu Dec 31, 2020 8:42 pm Where do you guys rate myga on ease of purchase, and rollover (1035), as compared to direct (not brokered) CDs? Thanks for all the Q&A!
The ease of transactions depends on the types of money. Qualified funds (retirement money) will always be more complicated and time consuming and non-qualified funds (taxable accounts) should generally be easier and faster.

It also depends on the financial institutions. Some institutions can move money fast because their systems are capable of doing electronic transactions in both push and pull. Some institutions require a check for deposit and that can slow down the process.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by scubablue »

I have purchased several MYGAs from both Blueprint & Gainbridge over the last few months. Agree totally with the plus and minus experiences with both companies. One point with Gainbridge vs Blueprint- upon maturity Blueprint will assist with a 1035 exchange into any product (company) they represent. With Gainbridge, it appears one can only roll over into another Guggenheim Life product or cash out. Still, both companies provide great options for fixed income, and I plan on further purchases as CDs mature.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

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Another thing to mention is that not all insurers sell in all states. Puritan Life (Canvas) is licensed to sell in only 35 states, and Guggenheim Life (Gainbridge) sells in 46 states.

Blueprint has products available in every state, but the selection of companies varies by state of residence of the purchaser. One state that has an especially limited supply of products is New York. NY has historically had more conservative insurance regulations than any other state, and many companies have chosen to not sell business in New York. The companies that do sell in NY are mostly the larger, higher rated companies that usually pay lower interest rates than many companies in the MYGA marketplace.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by HueyLD »

scubablue wrote: Fri Jan 01, 2021 1:05 pm I have purchased several MYGAs from both Blueprint & Gainbridge over the last few months. Agree totally with the plus and minus experiences with both companies. One point with Gainbridge vs Blueprint- upon maturity Blueprint will assist with a 1035 exchange into any product (company) they represent. With Gainbridge, it appears one can only roll over into another Guggenheim Life product or cash out. Still, both companies provide great options for fixed income, and I plan on further purchases as CDs mature.
Section 1035 exchange is a federal law and I believe it is allowed in the law to permit exchanging one annuity for another, as long as the person who holds the contract doesn’t change.

Guggenheim MYGAs also offer annuitization option at the end of the guaranteed period.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by Woot! »

Thanks to Stinky for his terrific post.

I recently purchased a 3 Year MYGA through Annuity Advantage, an agency that operates very similarly to Blueprint Income, offering a large number of MYGAs on a user-friendly website. I'd recommend them. They answered every one of my numerous questions and patiently walked me step-by-step through the process. For each insurance company, they provided comprehensive information on their financials beyond the basic financial safety ratings, income and earnings, and assets and liabilities. This allowed a deeper dive into each insurance company's financials: invested asset distributions, 5-year investment yields, non-performing assets, and bond quality holdings.

With respect to Stinky's remarks on the timeline for purchasing annuities, one thing I'd clarify about both Blueprint Income and Annuity Advantage: a lot of the speed (or lack thereof) depends upon the insurance company you purchase your MYGA contract from. For instance, my MYGA, purchased through Annuity Advantage, was completed posthaste. Within a couple of days of electronically filing the application and suitability questionnaire, I was able to fund my annuity purchase, and within a day of funding I was given a policy number and my contract began. About another week or so after that, a copy of the contract arrived electronically for me to review the fine print. My agent said that was unusually fast because the insurance company (American Equity) operates as if it's the 21st century, whereas many insurance companies issuing MYGAs are stuck in the 20th century with fax machines, USPS-only, and nearly everything done manually. So, the timeline and application process can vary, and you might want to ask your agent about their experience with the particular insurance company and factor it into your decision tree if it matters to you.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by Hebell »

I am planning in the coming week, to do a side-by-side comparison of the same annuities through Stan the annuity man, blueprint, annuity advantage and one more.

It will be interesting to see if we can discern any difference in commissions to the provider, by comparing rates. Hopefully there will be enough MyGAs to compare.

I have to say, while I prefer the computer interface of blueprint, I have been very pleased with stan the annuity man's customer service, and literature that he sent. He also has more choices, but that should fall out in my analysis as well.

We've entered retirement, the husband will still be drawing a large income for 3 years. This lets us build out an after-tax myga portfolio plus iBonds ladder and use tips and a stable value fund inside the 401K and IRAs.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by Stinky »

Woot! wrote: Fri Jan 01, 2021 3:29 pm Thanks to Stinky for his terrific post.

I recently purchased a 3 Year MYGA through Annuity Advantage, an agency that operates very similarly to Blueprint Income, offering a large number of MYGAs on a user-friendly website. I'd recommend them.
And thank you for describing your experience with Annuity Advantage.

It will be just under two years until my first laddered MYGA falls off the top (or is it the bottom) of the ladder. I’ll definitely look at Annuity Advantage at that time.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by Stinky »

Hebell wrote: Fri Jan 01, 2021 3:50 pm I am planning in the coming week, to do a side-by-side comparison of the same annuities through Stan the annuity man, blueprint, annuity advantage and one more.

It will be interesting to see if we can discern any difference in commissions to the provider, by comparing rates. Hopefully there will be enough MyGAs to compare.

I have to say, while I prefer the computer interface of blueprint, I have been very pleased with stan the annuity man's customer service, and literature that he sent. He also has more choices, but that should fall out in my analysis as well.

We've entered retirement, the husband will still be drawing a large income for 3 years. This lets us build out an after-tax myga portfolio plus iBonds ladder and use tips and a stable value fund inside the 401K and IRAs.
Thanks for your message.

Please post back in this thread as you complete your purchase analysis and process. I’ll be interested to hear what you learn.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by Wrench »

Stinky wrote: Thu Dec 31, 2020 7:46 am Over the last few months, I've purchased multi-year guaranteed annuities (MYGAs) from each of Blueprint Income, Gainbridge, and Canvas, as I constructed a "MYGA ladder" (similar to a CD ladder). For the benefit of anyone who is considering purchasing MYGAs. I decided to compare and contrast the products and service on each of these platforms,

(To learn more about MYGAs, search the Forum for "MYGA", as there have been multiple recent threads on this topic. There is also an article in the Wiki. A one sentence summary - a MYGA, also known as a "CD annuity", can offer an attractive interest rate relative to a bank CD, and comes with the caveats of (a) state guaranty fund protection rather than FDIC insurance and (b) punishingly high surrender charges on most products.)

Blueprint Income (www.blueprintincome.com)
I chose to go with Blueprint for the majority of my purchases. Blueprint acts as an agent for over two dozen insurance companies. In my opinion, Blueprint's website is more user-friendly and has much more information than other agents like Stan the Annuity Man and Immediate Annuities, so I used Blueprint exclusively.

Positives -
--- Over two dozen insurers have products available through Blueprint. These companies have AM Best ratings ranging from A++ to B+. In general, lower rated companies pay higher interest rates. This choice of companies allows folks to decide on the combination of interest rate and financial strength rating that best fits their situation.
--- Products are available for every duration from 2 years to 10 years. Note that not all companies sell products at all durations.
--- Blueprint's website is very user friendly and easy to navigate, and contains a deep body of information on every product offered. It's easy to compare and contrast products on the website. In my view, this is a major advantage over the other annuity agents mentioned above.
--- The application for either a "taxable" or "IRA" annuity can be completed fully online. The Blueprint team then follows up with an email to confirm the choices indicated in the online application.
--- Blueprint's customer service is excellent. I chose to communicate exclusively through email, and always found the Blueprint team to be very responsive to my questions and comments. The Blueprint team is very knowledgeable about what they are selling. The reviews submitted by buyers are extremely positive, and those who chose to call the Blueprint team seemed to be very happy with the phone service.

Negatives -
--- The timeline for purchasing annuities through an independent agency like Blueprint is longer than for purchasing through a "controlled" agent like Canvas and Gainbridge. All of my purchases through Blueprint were IRA annuities, so they each involved the additional time-consuming step of the insurance company reaching out to Vanguard to "pull" money from my IRA. The shortest time between application date and policy effective date was two weeks. The longest time between application and policy effective was six weeks, because the insurance company lost the fax (I didn't know that anybody still used fax machines). I'm certain that taxable annuities, which are funded through a check or ACH transfer, would move faster, but probably not as fast as with Canvas and Gainbridge.



Canvas (www.canvasannuity.com) and Gainbridge (www.gainbridge.life)
Both of these agencies are closely associated with a single insurance company, and sell only the products of that insurance company. Canvas works with Puritan Life, and Gainbridge works with Guggenheim Life. Both of these companies are rated B++ by AM Best.

Positives -
--- Both companies currently offer interest rates than are generally higher than the vast majority of rates offered by companies on Blueprint.
--- Both have very fast processing for taxable MYGAs. Presuming that the funds are in your checking account, Canvas can deliver a fully issued and in force policy within 10 minutes of starting the application. Gainbridge goes through a little slower process of verifying bank accounts, but can issue a policy within 2-3 days.

Negatives -
--- Both agencies are offering products issued by only one company.
--- Gainbridge does not currently offer IRA annuities, but says that they plan to within the next year or so.
--- Canvas doesn't indicate on their website that IRA annuities are available. However, they told me in an email that they do offer them. I am in the middle of purchasing an IRA annuity through them, and find that their current process is very manual. After an initial phone interview to determine "suitability", they emailed me an entirely manual application that needed to be printed out, completed, and scanned back to them. They also requested a notarized form to verify my identity, which was not requested by any of the companies represented by Blueprint Income. I expect that Canvas will be improving their process for IRA annuities in the future.
One other comment: Gainbridge and Canvas MYGAs are not available in all states. The former in 46 out of 50, the latter, only 35 out of 50. I believe Blueprint has some offerings in all states.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by cheese_breath »

Stinky wrote: Thu Dec 31, 2020 7:17 pm
nalor511 wrote: Thu Dec 31, 2020 6:57 pm If you buy a myga with taxable dollars (not IRA), then when it's matured do you have to roll the whole thing into a new myga (1035 exchange) to avoid tax penalties for not being over 59 years old, or do you just have to roll the earnings (not the principle)?

Sounds like a good idea to get extra tax sheltered space for those earnings, but, not if I can't have back my principle after the term expires, because who knows what rates will be then
Yes, there is a 10% tax penalty on any withdrawals from a taxable annuity prior to age 59.5. So, for example, if you buy a 5 year MYGA at age 50, you’ll need to do a 1035 exchange of the whole annuity (principal plus interest) into another annuity to avoid the tax penalty.
So they're not really like CDs then?
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by nalor511 »

cheese_breath wrote: Fri Jan 01, 2021 5:32 pm
Stinky wrote: Thu Dec 31, 2020 7:17 pm
nalor511 wrote: Thu Dec 31, 2020 6:57 pm If you buy a myga with taxable dollars (not IRA), then when it's matured do you have to roll the whole thing into a new myga (1035 exchange) to avoid tax penalties for not being over 59 years old, or do you just have to roll the earnings (not the principle)?

Sounds like a good idea to get extra tax sheltered space for those earnings, but, not if I can't have back my principle after the term expires, because who knows what rates will be then
Yes, there is a 10% tax penalty on any withdrawals from a taxable annuity prior to age 59.5. So, for example, if you buy a 5 year MYGA at age 50, you’ll need to do a 1035 exchange of the whole annuity (principal plus interest) into another annuity to avoid the tax penalty.
So they're not really like CDs then?
They're like CDs that are only guaranteed by the statutory insurance protection in your state, have heavy EWP from the company, and have a 10% tax penalty on the interest if you don't roll the whole sum into another one on maturity

Right now they pay higher rates than CDs, hence the attractiveness for yield chasers
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by Stinky »

cheese_breath wrote: Fri Jan 01, 2021 5:32 pm
Stinky wrote: Thu Dec 31, 2020 7:17 pm
nalor511 wrote: Thu Dec 31, 2020 6:57 pm If you buy a myga with taxable dollars (not IRA), then when it's matured do you have to roll the whole thing into a new myga (1035 exchange) to avoid tax penalties for not being over 59 years old, or do you just have to roll the earnings (not the principle)?

Sounds like a good idea to get extra tax sheltered space for those earnings, but, not if I can't have back my principle after the term expires, because who knows what rates will be then
Yes, there is a 10% tax penalty on any withdrawals from a taxable annuity prior to age 59.5. So, for example, if you buy a 5 year MYGA at age 50, you’ll need to do a 1035 exchange of the whole annuity (principal plus interest) into another annuity to avoid the tax penalty.
So they're not really like CDs then?
“CD annuity” is a colloquial term, coined by the insurance industry, to describe a product that pays a fixed rate for a fixed period of time, and then matures with principal and interest available to the purchaser.

Kinda like a CD.

But clearly not a bank CD, for many reasons cited in this thread and elsewhere.
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Re: Purchasing MYGAs - Blueprint Income vs. Gainbridge vs. Canvas

Post by formerlybroke »

Hebell wrote: Fri Jan 01, 2021 3:50 pm
It will be interesting to see if we can discern any difference in commissions to the provider, by comparing rates. Hopefully there will be enough MyGAs to compare.
Speaking as a former senior executive at an insurance carrier who sold annuities, and who was actively involved in both the rate setting process and the negotiation of commissions to dealers/agents, there is nothing to be learned about commissions paid by a provider by looking that their offering rates.

Just wishing to save you some time in your analysis. :happy
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