Purchasing MYGAs (multi year guaranteed annuities) - mega thread

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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

Zosima wrote: Sun Jul 31, 2022 7:29 pm Aspida, a relatively newer entrant to the MYGA space with an A- rating, offers 5-year MYGAs at 4.65% (albeit with no withdrawal option) and 4.55% with a drawal option. They also offer 7-year rates up to 4.8%.
See my post about Aspida from about a week ago.
viewtopic.php?p=6791259#p6791259

Note that Aspida MYGA products are currently not available in many of the most populous states.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by indexfundfan »

As expected, the Gainbridge MYGA rates dropped today. Across the board drop of 50 basis points for 3-yr through 7-yr terms, and 45 basis points drop for 8-yr through 10-yr terms. New rates are

3-yr 3.90%
5-yr 4.00%
7-yr 4.05%

The new rates, for the agent-sold versions from Guggenheim (<$250k), are

3-yr 3.70%
5-yr 3.80%
7-yr 3.90%

I think these are down 30 basis points.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by rich126 »

What happens if a person gets a 5 YR MYGA and passes away after a year or two? Does the beneficiary inherit the MYGA and the remaining term of the MYGA?

Actually although slightly off-topic, does a multi-year CD work the same way?
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by tj »

rich126 wrote: Mon Aug 01, 2022 1:31 pm What happens if a person gets a 5 YR MYGA and passes away after a year or two? Does the beneficiary inherit the MYGA and the remaining term of the MYGA?

Actually although slightly off-topic, does a multi-year CD work the same way?
My understanding is CDs can be kept or broken without penalty, though perhaps it depends on bank
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by HueyLD »

rich126 wrote: Mon Aug 01, 2022 1:31 pm What happens if a person gets a 5 YR MYGA and passes away after a year or two? Does the beneficiary inherit the MYGA and the remaining term of the MYGA?
As with a lot of insurance policies, it depends.

The contract should clearly spell out the amount of benefits payable under each circumstance. Below are general rules and specific language in the contract may contradict the general rules.

(1). Only the surviving spouse can elect to continue the contract.

(2). Other beneficiaries are paid the death benefit as indicated in the contract.

(3). If the (late) owner has selected a settlement option to be applied to the death benefit, then the death benefit will be made pursuant to the settlement option selected by the (late) owner.
Last edited by HueyLD on Mon Aug 08, 2022 5:32 pm, edited 1 time in total.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

rich126 wrote: Mon Aug 01, 2022 1:31 pm What happens if a person gets a 5 YR MYGA and passes away after a year or two? Does the beneficiary inherit the MYGA and the remaining term of the MYGA?

Actually although slightly off-topic, does a multi-year CD work the same way?
I believe that the beneficiary will receive the proceeds at the death of the MYGA annuitant. For many products, the death benefit is the full account value including accrued interest. But for some products, the death benefit is the surrender value, and an extra cost rider must be added to the contract to get the full account value at death.

I think that most MYGAs allow for spousal continuation of the contract to its natural maturity.

There is variation amongst contracts and insurers on this issue, just as there is on free partial withdrawals and other contractual provisions. A buyer must familiarize himself what his contract offers.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by peke9898 »

The below is from https://www.malifega.org/FAQ
Annuities
$250,000 in the present value of annuity benefits including net cash surrender and net cash withdrawal values. With respect to each payee of a structured settlement annuity (or beneficiary or beneficiaries of the payee if deceased) $250,000 in the present value of annuity benefits in the aggregate, including net cash surrender and net cash withdrawal values.

MYGA of $250,000 per person per company is the maximum amount that is guaranteed by MA Guaranty Association. Am I looking at the correct amount?
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

peke9898 wrote: Tue Aug 02, 2022 6:38 am The below is from https://www.malifega.org/FAQ
Annuities
$250,000 in the present value of annuity benefits including net cash surrender and net cash withdrawal values. With respect to each payee of a structured settlement annuity (or beneficiary or beneficiaries of the payee if deceased) $250,000 in the present value of annuity benefits in the aggregate, including net cash surrender and net cash withdrawal values.

MYGA of $250,000 per person per company is the maximum amount that is guaranteed by MA Guaranty Association. Am I looking at the correct amount?
Yes, I believe that you’re interpreting it correctly.

$250k of annuity surrender value per person per company.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by peke9898 »

Stinky wrote: Tue Aug 02, 2022 7:05 am
peke9898 wrote: Tue Aug 02, 2022 6:38 am The below is from https://www.malifega.org/FAQ
Annuities
$250,000 in the present value of annuity benefits including net cash surrender and net cash withdrawal values. With respect to each payee of a structured settlement annuity (or beneficiary or beneficiaries of the payee if deceased) $250,000 in the present value of annuity benefits in the aggregate, including net cash surrender and net cash withdrawal values.

MYGA of $250,000 per person per company is the maximum amount that is guaranteed by MA Guaranty Association. Am I looking at the correct amount?
Yes, I believe that you’re interpreting it correctly.

$250k of annuity surrender value per person per company.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by webtrojan »

Looking at a Brighthouse 5 year MYGA on Blueprint. In looking at the product information under Riders and Features, how do you know which features are included in the annuity at no additional charge and ones that available for purchase? For instance, the Death Benefit. Is it included in the product or not?
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by bog007 »

Zosima wrote: Sun Jul 31, 2022 7:29 pm
bog007 wrote: Sun Jul 31, 2022 12:11 pm canvas still at 4.6

https://canvasannuity.com/
Aspida, a relatively newer entrant to the MYGA space with an A- rating, offers 5-year MYGAs at 4.65% (albeit with no withdrawal option) and 4.55% with a drawal option. They also offer 7-year rates up to 4.8%.
I like 3 years at 4.6
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by indexfundfan »

webtrojan wrote: Tue Aug 02, 2022 12:19 pm Looking at a Brighthouse 5 year MYGA on Blueprint. In looking at the product information under Riders and Features, how do you know which features are included in the annuity at no additional charge and ones that available for purchase? For instance, the Death Benefit. Is it included in the product or not?
If it is not clear from the website, ask the agent. At Blueprint, I have emailed them and received prompt replies.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by webtrojan »

indexfundfan wrote: Tue Aug 02, 2022 12:29 pm
webtrojan wrote: Tue Aug 02, 2022 12:19 pm Looking at a Brighthouse 5 year MYGA on Blueprint. In looking at the product information under Riders and Features, how do you know which features are included in the annuity at no additional charge and ones that available for purchase? For instance, the Death Benefit. Is it included in the product or not?
If it is not clear from the website, ask the agent. At Blueprint, I have emailed them and received prompt replies.
Yes, I will definitely do that. Thanks!
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

webtrojan wrote: Tue Aug 02, 2022 12:19 pm Looking at a Brighthouse 5 year MYGA on Blueprint. In looking at the product information under Riders and Features, how do you know which features are included in the annuity at no additional charge and ones that available for purchase? For instance, the Death Benefit. Is it included in the product or not?
Look at the “Death Benefit Provisions” section on the Blueprint website. It tells you what is in the “base” contract with the credited rate shown on the site.

FWIW, here’s what that section shows for my state on the Brighthouse 5 year contract:

Death Benefit Provisions:
Should you pass away before the end of your contract, your beneficiary will receive the greater of the accumulated value of the annuity including interest or the minimum withdrawal value without any charges or fees.
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APR or APY

Post by aXlniM5gE9rBs »

Hello -

Are fixed rate MYGA annuities normally quoted on an APY or APR basis?

Blueprint uses the term "rate" without specifying APR or APY. Canvas' brochure also mentions "rate."

AnnuityAdvantage uses the term "annual yield."

With rates so low, the APR and APY are nearly identical, but still curious.

I wrote to Blueprint, but curious if there is an industry standard. I searched this thread and saw APY used a few times, no APR mention. Thanks.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by indexfundfan »

It's APY. Just take a look at any of the illustrations on Blueprint. E.g. $100,000 with Americo 7-yr @4.5%. The illustration shows an ending value of $136,086.

With a calculator $100,000 x (1.045)^7 = $136,086.18.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by aXlniM5gE9rBs »

indexfundfan wrote: Tue Aug 02, 2022 8:32 pm It's APY. Just take a look at any of the illustrations on Blueprint. E.g. $100,000 with Americo 7-yr @4.5%. The illustration shows an ending value of $136,086.

With a calculator $100,000 x (1.045)^7 = $136,086.18.
Thanks, yes, I never even paid attention to those illustrations.

Maybe this is one difference between Bank advertising and Annuity advertising. I think banks are required to quote and specify APY, to make it easier to compare bank savings products.

It makes sense insurance companies would want to cite the highest rate. I asked Blueprint if APR or APY was being cited for a specific annuity, and was told how the interest is credited, but was not told if the advertised rate is APY or APR.

Thanks.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

aXlniM5gE9rBs wrote: Tue Aug 02, 2022 8:50 pm It makes sense insurance companies would want to cite the highest rate. I asked Blueprint if APR or APY was being cited for a specific annuity, and was told how the interest is credited, but was not told if the advertised rate is APY or APR.

Thanks.
Insurance companies don’t think in terms of APY or APR. They think in terms of simple interest.

A $100,000 MYGA at a 3% quoted interest rate will earn $3,000 in the first year.

What could be simpler?
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by aXlniM5gE9rBs »

Stinky wrote: Tue Aug 02, 2022 9:11 pm
aXlniM5gE9rBs wrote: Tue Aug 02, 2022 8:50 pm It makes sense insurance companies would want to cite the highest rate. I asked Blueprint if APR or APY was being cited for a specific annuity, and was told how the interest is credited, but was not told if the advertised rate is APY or APR.

Thanks.
Insurance companies don’t think in terms of APY or APR. They think in terms of simple interest.

A $100,000 MYGA at a 3% quoted interest rate will earn $3,000 in the first year.

What could be simpler?
Well, the contract I received had a multi-paragraph description, as to how the interest is calculated and credited/compounded daily, that is what prompted my inquiry.

So, the APR and APY, are definitely different.

And I would think most fixed annuities have to credit daily, in case the annuity is surrendered early.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by HueyLD »

APR and APY are bankers terms. APR is used in loans and APY is used in deposits.

Both are regulatory definitions that intend to allow comparison of rates among different banks/CUs no matter how often the interest is compounded. And APR includes some loan fees as an APR intends to show the total cost of a credit.

Insurance companies, as Stinky indicated upthread, uses simple interest approach. However, many such contracts do compound annually, meaning that at each anniversary date, the cumulative interest is added to principal and the new year’s simple interest is based on the new principal.

Numeric example for a $100k five year MYGA at 3.00% stated interest:

100000*1.03=103,000.00<<<<<<value at the end of year 1
103000*1.03=106,090.00<<<<<<value at the end of year 2
106090*1.03=109,272.70<<<<<<value at the end of year 3
109272.70*1.03=112,550.88<<<value at the end of year 4
112550.88*1.03=115927.41<<<<value at the end of year 5

Or you can use this equation 100000*(1+0.03)^5=115,927.41
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by aXlniM5gE9rBs »

HueyLD wrote: Wed Aug 03, 2022 2:57 am APR and APY are bankers terms. APR is used in loans and APY is used in deposits.
APY is math.

whether a credit card or a CD or a simple fixed rate MYGA annuity, if the simple interest rate is 12% and the interest is compounded monthly, the APY is 12.68%.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by HueyLD »

You missed my point of “regulatory.”

As an example, APY came into existence because bankers were using whatever yield numbers they chose without regard to how the interest was calculated. And in those days, NationsBank (who acquired BofA and took the BofA name) was the biggest offender. They advertised a rate of 5% but it was 5% on 88% of the balance which they did not disclose in their ads. After a while and many complaints, the banking regulators stepped in and prescribed a specific APY formula which every bank/CU must disclose whenever the word “rate” was used.

Anyway, it was a history that I was involved in implementing as a banker and it was quite a task to reprogram everything.

O.k., enough of banking history.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by aXlniM5gE9rBs »

HueyLD wrote: Wed Aug 03, 2022 8:34 am You missed my point of “regulatory.”

As an example, APY came into existence because bankers were using whatever yield numbers they chose without regard to how the interest was calculated. And in those days, NationsBank (who acquired BofA and took the BofA name) was the biggest offender. They advertised a rate of 5% but it was 5% on 88% of the balance which they did not disclose in their ads. After a while and many complaints, the banking regulators stepped in and prescribed a specific APY formula which every bank/CU must disclose whenever the word “rate” was used.

Anyway, it was a history that I was involved in implementing as a banker and it was quite a task to reprogram everything.

O.k., enough of banking history.

I did not miss your point of regulatory, and in fact had made the same point previously. "banks are required to quote and specify APY, to make it easier to compare bank savings products."

I merely wrote the concept of APY versus APY applies to all fixed income.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by HueyLD »

My final comment on “regulatory.”

APY disclosure is only required of banks and CUs. Insurance companies are not regulated by banking regulators and thus not required to disclose APY.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by aXlniM5gE9rBs »

HueyLD wrote: Wed Aug 03, 2022 9:38 am My final comment on “regulatory.”

APY disclosure is only required of banks and CUs. Insurance companies are not regulated by banking regulators and thus not required to disclose APY.
Thank you Mr. Huey, for agreeing with my original comment.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Chardo »

The interest on a MYGA is a simple annual amount. If you imvest 100k at 4%, you will have 104k at the end of the contract year. The following year you will get 4% of 104k. Throughout they year, the carrier can choose how to allocate the amount and value the contract each day. They might divide by 360 days, or 365 days, or 366 days. There is no requirement. The policy administration system will be coded according to the carrier's guidelines. So, hypothetically, if you surrender or die on any given day during the contract year, the value that day could vary microscopically depending on the carrier.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by aXlniM5gE9rBs »

Chardo wrote: Wed Aug 03, 2022 5:56 pm The interest on a MYGA is a simple annual amount. If you imvest 100k at 4%, you will have 104k at the end of the contract year. The following year you will get 4% of 104k. Throughout they year, the carrier can choose how to allocate the amount and value the contract each day.
Of course the annuity is a contract, and the insurer calculates the daily value, based on the terms of the contract. The insurer has to choose its calculation method, before selling the annuity.

In the annuity I am citing, the insurer definitely uses daily compounding, that because of math, results in an A.P.Y., higher than the simple interest rate.
What is the Interest Crediting Method?
Interest is credited to the Contract Value daily. It is calculated as:
(1) The Contract Value after any transaction occurring since the prior daily interest calculation; multiplied by
(2) The daily interest rate; calculated as [(1 + applicable annual interest rate) ^ (1 / days of the year) - 1]
The net result is, the interest rate is calculated, and compounded daily. That prompted my question, is the quoted rate the simple interest rate, or the A.P.Y.

Obviously, it would be easier if all annuities were quoted using A.P.Y., as banks are required, that resulted in some weird tangent yesterday.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by webtrojan »

Aspida MYGAs (rated A-) apparently are now available for Texas residents -- they just recently are listed on Blueprint website. They offer no withdrawal, interest only withdrawal, or 10% withdrawal options, with reduction in interest rates for the ability to withdraw. They seem to have the highest rates out there. However, their Death Benefit Provision is stated as:

Death Benefit Provisions:
Should you pass away before the end of your contract, the cash surrender value of the annuity, will be passed to your beneficiary without any charges or fees. A death benefit rider can be added at an additional cost to allow your beneficiary to receive the full account value, including interest.

With Gainbridge, Canvas, Brighthouse, and most of the others, the full account value including accumulated interest is passed to the beneficiary and not an additional charge.

Am I understanding this correctly? Wouldn't this be a major consideration to not considering Aspida? Any idea how much a rider would be to add this option?
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

webtrojan wrote: Fri Aug 05, 2022 1:35 pm Aspida MYGAs (rated A-) apparently are now available for Texas residents -- they just recently are listed on Blueprint website. They offer no withdrawal, interest only withdrawal, or 10% withdrawal options, with reduction in interest rates for the ability to withdraw. They seem to have the highest rates out there. However, their Death Benefit Provision is stated as:

Death Benefit Provisions:
Should you pass away before the end of your contract, the cash surrender value of the annuity, will be passed to your beneficiary without any charges or fees. A death benefit rider can be added at an additional cost to allow your beneficiary to receive the full account value, including interest.

With Gainbridge, Canvas, Brighthouse, and most of the others, the full account value including accumulated interest is passed to the beneficiary and not an additional charge.

Am I understanding this correctly? Wouldn't this be a major consideration to not considering Aspida? Any idea how much a rider would be to add this option?
Good to see that Aspida is now approved in Texas. I know that the company is licensed in 48 states (all but CT and NY), and I expect that they’ve filed their MYGA policy form in all licensed states. TX must have just approved the policy form.

I have already asked Blueprint about the rider charge to make the death benefit be the full accumulated value. The answer is a 0.10% reduction to the credited rate in all years. So the top rate, which is 4.80% for a seven year MYGA with no free withdrawals, would be 4.70% with the rider.

I’m definitely considering Aspida when I have a MYGA maturing in September.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by webtrojan »

Stinky wrote: Fri Aug 05, 2022 1:42 pm
webtrojan wrote: Fri Aug 05, 2022 1:35 pm Aspida MYGAs (rated A-) apparently are now available for Texas residents -- they just recently are listed on Blueprint website. They offer no withdrawal, interest only withdrawal, or 10% withdrawal options, with reduction in interest rates for the ability to withdraw. They seem to have the highest rates out there. However, their Death Benefit Provision is stated as:

Death Benefit Provisions:
Should you pass away before the end of your contract, the cash surrender value of the annuity, will be passed to your beneficiary without any charges or fees. A death benefit rider can be added at an additional cost to allow your beneficiary to receive the full account value, including interest.

With Gainbridge, Canvas, Brighthouse, and most of the others, the full account value including accumulated interest is passed to the beneficiary and not an additional charge.

Am I understanding this correctly? Wouldn't this be a major consideration to not considering Aspida? Any idea how much a rider would be to add this option?
Good to see that Aspida is now approved in Texas. I know that the company is licensed in 48 states (all but CT and NY), and I expect that they’ve filed their MYGA policy form in all licensed states. TX must have just approved the policy form.

I have already asked Blueprint about the rider charge to make the death benefit be the full accumulated value. The answer is a 0.10% reduction to the credited rate in all years. So the top rate, which is 4.80% for a seven year MYGA with no free withdrawals, would be 4.70% with the rider.

I’m definitely considering Aspida when I have a MYGA maturing in September.

Stinky - Thanks for your reply! You have been so very helpful in this thread. I would consider Aspida now with the rider. However, I would take the additional .10% reduction as well to be able to withdraw the interest in case I need to take some into income for a particular year. So that would make their 5 year MYGA approx. 4.45.% (4.35% if you chose the 10% withdrawal option rather than just the interest earned option). The 5 year Brighthouse is 4.3% with the death provision and 10% withdrawal ability, so I'm considering that one too. Aspida has only $2.3B vs Brighthouse $227B assets under management. I would think that a plus for "A" rated Brighthouse? I already have Gainbridge and Canvas annuities.

Thanks again for your contribution to this informative thread!
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

webtrojan wrote: Fri Aug 05, 2022 2:12 pm
Stinky wrote: Fri Aug 05, 2022 1:42 pm
webtrojan wrote: Fri Aug 05, 2022 1:35 pm Aspida MYGAs (rated A-) apparently are now available for Texas residents -- they just recently are listed on Blueprint website. They offer no withdrawal, interest only withdrawal, or 10% withdrawal options, with reduction in interest rates for the ability to withdraw. They seem to have the highest rates out there. However, their Death Benefit Provision is stated as:

Death Benefit Provisions:
Should you pass away before the end of your contract, the cash surrender value of the annuity, will be passed to your beneficiary without any charges or fees. A death benefit rider can be added at an additional cost to allow your beneficiary to receive the full account value, including interest.

With Gainbridge, Canvas, Brighthouse, and most of the others, the full account value including accumulated interest is passed to the beneficiary and not an additional charge.

Am I understanding this correctly? Wouldn't this be a major consideration to not considering Aspida? Any idea how much a rider would be to add this option?
Good to see that Aspida is now approved in Texas. I know that the company is licensed in 48 states (all but CT and NY), and I expect that they’ve filed their MYGA policy form in all licensed states. TX must have just approved the policy form.

I have already asked Blueprint about the rider charge to make the death benefit be the full accumulated value. The answer is a 0.10% reduction to the credited rate in all years. So the top rate, which is 4.80% for a seven year MYGA with no free withdrawals, would be 4.70% with the rider.

I’m definitely considering Aspida when I have a MYGA maturing in September.

Stinky - Thanks for your reply! You have been so very helpful in this thread. I would consider Aspida now with the rider. However, I would take the additional .10% reduction as well to be able to withdraw the interest in case I need to take some into income for a particular year. So that would make their 5 year MYGA approx. 4.45.% (4.35% if you chose the 10% withdrawal option rather than just the interest earned option). The 5 year Brighthouse is 4.3% with the death provision and 10% withdrawal ability, so I'm considering that one too. Aspida has only $2.3B vs Brighthouse $227B assets under management. I would think that a plus for "A" rated Brighthouse? I already have Gainbridge and Canvas annuities.

Thanks again for your contribution to this informative thread!
I agree that Brighthouse makes a lot of sense for you.

You’re getting a higher rating at A, and 0.05% difference in rates is essentially nothing.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by indexfundfan »

Stinky wrote: Fri Aug 05, 2022 1:42 pm Good to see that Aspida is now approved in Texas. I know that the company is licensed in 48 states (all but CT and NY), and I expect that they’ve filed their MYGA policy form in all licensed states. TX must have just approved the policy form.

I have already asked Blueprint about the rider charge to make the death benefit be the full accumulated value. The answer is a 0.10% reduction to the credited rate in all years. So the top rate, which is 4.80% for a seven year MYGA with no free withdrawals, would be 4.70% with the rider.

I’m definitely considering Aspida when I have a MYGA maturing in September.
It is also available for me now. Looking at the 7-yr jumbo (<$100k), the rates are

4.65% : no withdrawals
4.55% : withdrawals of earnings for that year, so 4.55% per year
4.45% : withdrawal 10% of prior year value

So to add the death benefit, the rates would be 4.55%, 4.45%, 4.35%?

Before Gainbridge lowered its rates, its 7-yr MYGA, which has 10% withdrawal and death benefit, was going at 4.55%.

PS. The rates for a >$100k investment are 15 basis points higher across the board.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by rich126 »

I've seen mention of deferring taxes if you roll over a matured MYGA. Is the deferral only if you roll it over within the same company? Or can you transfer it to another company if they are paying better rates w/o having to pay taxes on the gain?
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

rich126 wrote: Sat Aug 06, 2022 11:38 am I've seen mention of deferring taxes if you roll over a matured MYGA. Is the deferral only if you roll it over within the same company? Or can you transfer it to another company if they are paying better rates w/o having to pay taxes on the gain?
It is the latter.

You can do 1035 exchanges of taxable annuities either within or between insurers, and defer taxable income until the income is withdrawn.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by rich126 »

Stinky wrote: Sat Aug 06, 2022 11:40 am
rich126 wrote: Sat Aug 06, 2022 11:38 am I've seen mention of deferring taxes if you roll over a matured MYGA. Is the deferral only if you roll it over within the same company? Or can you transfer it to another company if they are paying better rates w/o having to pay taxes on the gain?
It is the latter.

You can do 1035 exchanges of taxable annuities either within or between insurers, and defer taxable income until the income is withdrawn.
Thanks. I got the same info from my CPA.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by discman017 »

Stinky wrote: Fri Aug 05, 2022 1:42 pm I have already asked Blueprint about the rider charge to make the death benefit be the full accumulated value. The answer is a 0.10% reduction to the credited rate in all years. So the top rate, which is 4.80% for a seven year MYGA with no free withdrawals, would be 4.70% with the rider.

I’m definitely considering Aspida when I have a MYGA maturing in September.
Thanks for this info. I didn't even consider the death benefit when I applied for the Aspida MYGA. I'm still in the free-look period, so I can still back out to get the death benefit.

I got the 4.6% rate on the seven-year contract, with 10% annual withdrawal allowance.

Looking at an actuarial table, it seems like the probability that I'll die in the next seven years is somewhere around 3%. (Never really looked at this stuff before. Kinda sobering.)

If I die, the death benefit pays out a higher value. Maybe 7% higher or so, depending on when I die. Does that seem about right as a rough estimate?

If so, the expected value of the death benefit is around 3% x 7% = 0.21%. And the cost is 0.1% every year, or a bit over 0.7% compounded. So it sounds like it's not worth it for me.

Just trying to do some rough calculations to see if I should back out and switch to the contract with the death benefit rider. I'm thinking not, but I'd appreciate any input. Thanks in advance!
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

discman017 wrote: Mon Aug 08, 2022 4:12 pm
Stinky wrote: Fri Aug 05, 2022 1:42 pm I have already asked Blueprint about the rider charge to make the death benefit be the full accumulated value. The answer is a 0.10% reduction to the credited rate in all years. So the top rate, which is 4.80% for a seven year MYGA with no free withdrawals, would be 4.70% with the rider.

I’m definitely considering Aspida when I have a MYGA maturing in September.
Thanks for this info. I didn't even consider the death benefit when I applied for the Aspida MYGA. I'm still in the free-look period, so I can still back out to get the death benefit.

I got the 4.6% rate on the seven-year contract, with 10% annual withdrawal allowance.

Looking at an actuarial table, it seems like the probability that I'll die in the next seven years is somewhere around 3%. (Never really looked at this stuff before. Kinda sobering.)

If I die, the death benefit pays out a higher value. Maybe 7% higher or so, depending on when I die. Does that seem about right as a rough estimate?

If so, the expected value of the death benefit is around 3% x 7% = 0.21%. And the cost is 0.1% every year, or a bit over 0.7% compounded. So it sounds like it's not worth it for me.

Just trying to do some rough calculations to see if I should back out and switch to the contract with the death benefit rider. I'm thinking not, but I'd appreciate any input. Thanks in advance!
You’re thinking the right way on the math. Yes, the insurance company expects to make money on the riders, and you’ve just demonstrated that.

An additional benefit on the Aspida contract that I’ve confirmed with the folks at Blueprint - if your beneficiary is your spouse, he/she can keep the contract to maturity and avoid surrender charges that way. They won’t get the money quickly after your death, but they will get full accumulated account value when the contract expires.

Two strikes against taking the rider, even at 0.10% per year. (Some companies charge 0.25% for that rider.)
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by discman017 »

Stinky wrote: Mon Aug 08, 2022 4:29 pm An additional benefit on the Aspida contract that I’ve confirmed with the folks at Blueprint - if your beneficiary is your spouse, he/she can keep the contract to maturity and avoid surrender charges that way. They won’t get the money quickly after your death, but they will get full accumulated account value when the contract expires.
Excellent. Yes, that's my situation. Spousal continuation makes the death benefit even less attractive. So I'll stick with what I have.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Wrench »

Stinky wrote: Sat Aug 06, 2022 11:40 am
rich126 wrote: Sat Aug 06, 2022 11:38 am I've seen mention of deferring taxes if you roll over a matured MYGA. Is the deferral only if you roll it over within the same company? Or can you transfer it to another company if they are paying better rates w/o having to pay taxes on the gain?
It is the latter.

You can do 1035 exchanges of taxable annuities either within or between insurers, and defer taxable income until the income is withdrawn.
Relative to 1035 exchanges, I will share my experience. I have two old whole life insurance policies. I no longer need life insurance (and probably never did need these policies, but that's another story). I did not want to cash them out because of tax consequences from the income. A 1035 exchange to a MYGA seemed like a perfect solution. Higher return, tax deferral, and the ability to withdraw a portion without penalty annually if I need it (I'm over 59.5). So ~3 months ago, I initiated a MYGA with Americo. To make a long story short, they botched the exchange. Neither life insurance company ever received the request, which I did not learn until ~3 weeks into it. Americo says they will not call the companies to follow up. I have to do that. By that point, rates had gone up anyway, so I just cancelled the deal. So it worked out in my favor, though I was annoyed at the time.
In the beginning of July, I initiated the process again with Gainbridge. This time, I was more proactive, and got specific details from both insurance companies about exactly what to do. I forwarded that to Gainbridge. 2 weeks went by. Nothing. Called the insurance companies. One had received the request, the other not. Back and forth with Gainbridge, and eventually, the other received the request. Four weeks after initiation, Gainbridge has both checks in hand, and has told me that the issue date on he MYGA will be the date they received the second check in late July. But, their web site says "Approved - awaiting funds" for my account. They don't seem to know why...
Bottom line for my experience - it was a PITA. But maybe I was just unlucky, or my experience was atypical.

Also, Gainbridge web site looks like it was created in 1999, and apparently it updates like it too. But I guess the good news is they have a web site since not all MYGA providers do. I will say that Gainbridge customer service has been very responsive, and easy to work with, so despite the web site, I would probably use them again if their rates remain competitive.

Wrench
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by discman017 »

Stinky wrote: Mon Aug 08, 2022 4:29 pmAn additional benefit on the Aspida contract that I’ve confirmed with the folks at Blueprint - if your beneficiary is your spouse, he/she can keep the contract to maturity and avoid surrender charges that way. They won’t get the money quickly after your death, but they will get full accumulated account value when the contract expires.
Just received my contract document and thought I'd share the relevant section regarding spousal continuation. This is definitely a nice feature:

Can a surviving spouse continue this Contract?
If the sole Beneficiary is the surviving spouse of the Owner, the surviving spouse may receive the Death Benefit under
one of the Annuitization Options described below, or may continue this Contract as the new Owner, subject to all its
terms and conditions. If the deceased person was an Annuitant and if the surviving spouse continues this Contract, the
surviving spouse will become the new Annuitant, replacing any other surviving Annuitant.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by aXlniM5gE9rBs »

discman017 wrote: Tue Aug 09, 2022 3:57 pm Just received my contract document and thought I'd share the relevant section regarding spousal continuation. This is definitely a nice feature:

Can a surviving spouse continue this Contract?
If the sole Beneficiary is the surviving spouse of the Owner, the surviving spouse may receive the Death Benefit under
one of the Annuitization Options described below, or may continue this Contract as the new Owner, subject to all its
terms and conditions. If the deceased person was an Annuitant and if the surviving spouse continues this Contract, the
surviving spouse will become the new Annuitant, replacing any other surviving Annuitant.
Most companies seem to allow spouse beneficiaries to assume the contract.

I recently canceled a contract with Aspida within the free-look period, because the beneficiary is non-spouse. In that case, the beneficiary is required to take the cash surrender value, that can be up to 10% less than the premium, the first year. It seemed silly to take such a risk. (The death benefit rider of 0.1% will allow the beneficiary to receive the accumulated value instead of the cash surrender value.)

These MYGAs are marketed as alternatives to bonds and CDs, but bonds and CDs don't require the beneficiary to terminate the bond or CD.

I asked Aspida and Blueprint several times to explain why non-spouse beneficiaries cannot simply continue the contract, and never got a specific answer. Is it because of a law? Or is it a company rule? If the company could continue the contract, I don't know why they would not simply let it continue.

Years ago we inherited an annuity from a parent, and were allowed to continue the contract until maturity. I don't know if the agent simply didn't inform the company, or if the company explicitly allowed it.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

aXlniM5gE9rBs wrote: Wed Aug 10, 2022 7:27 pm I asked Aspida and Blueprint several times to explain why non-spouse beneficiaries cannot simply continue the contract, and never got a specific answer. Is it because of a law? Or is it a company rule? If the company could continue the contract, I don't know why they would not simply let it continue.
It may be a law that the spouse is able to continue the contract after the annuitants death; I do not know that for sure.

A collected surrender charge is a revenue (and profit) item for the insurance company. As demonstrated upthread, the value of the surrender charge waiver if the beneficiary is not the spouse is very small - well less than the 0.10% cost for the rider to waive it.

That being said, Aspida is currently showing the highest credited rates on the Blueprint site. And a teensy, tiny part of that high credited rate is being supported by the non waiver of surrender charges at a non spouse death.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by aXlniM5gE9rBs »

Stinky wrote: Wed Aug 10, 2022 7:59 pm

That being said, Aspida is currently showing the highest credited rates on the Blueprint site. And a teensy, tiny part of that high credited rate is being supported by the non waiver of surrender charges at a non spouse death.
That's the obvious plan.

As Aspida has only been selling annuities for a few months, my guess is that is the motivation for the minorly higher rate.

The fact that neither Aspida or blueprint could articulate why non spouse beneficiaries cannot assume a contract, and insulted me for asking what seems a simple question, is the reason I canceled it. A possible 70 basis points over a cd is literally not worth it.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by 7eight9 »

Stinky wrote: Wed Aug 10, 2022 7:59 pm
aXlniM5gE9rBs wrote: Wed Aug 10, 2022 7:27 pm I asked Aspida and Blueprint several times to explain why non-spouse beneficiaries cannot simply continue the contract, and never got a specific answer. Is it because of a law? Or is it a company rule? If the company could continue the contract, I don't know why they would not simply let it continue.
It may be a law that the spouse is able to continue the contract after the annuitants death; I do not know that for sure.

A collected surrender charge is a revenue (and profit) item for the insurance company. As demonstrated upthread, the value of the surrender charge waiver if the beneficiary is not the spouse is very small - well less than the 0.10% cost for the rider to waive it.

That being said, Aspida is currently showing the highest credited rates on the Blueprint site. And a teensy, tiny part of that high credited rate is being supported by the non waiver of surrender charges at a non spouse death.
I.R.C. § 72(s)(3) Special Rule Where Surviving Spouse Beneficiary — If the designated beneficiary referred to in paragraph (2)(A) is the surviving spouse of the holder of the contract, paragraphs (1) and (2) shall be applied by treating such spouse as the holder of such contract.
https://irc.bloombergtax.com/public/usc ... section_72
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

7eight9 wrote: Wed Aug 10, 2022 9:21 pm
I.R.C. § 72(s)(3) Special Rule Where Surviving Spouse Beneficiary — If the designated beneficiary referred to in paragraph (2)(A) is the surviving spouse of the holder of the contract, paragraphs (1) and (2) shall be applied by treating such spouse as the holder of such contract.
https://irc.bloombergtax.com/public/usc ... section_72
So it IS the law that a spouse can continue an annuity contract.

Thank you for the link and reference.

I learn something new most every day on this Forum.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by discman017 »

aXlniM5gE9rBs wrote: Wed Aug 10, 2022 8:54 pmA possible 70 basis points over a cd is literally not worth it.
The Aspida MYGA pays 4.8%, or 4.6% with 10% annual withdrawal, or 4.5% with both the annual withdrawal and death benefit rider.

I just checked depositaccounts.com, and the best 7-year CD rate that I see is 3.35%.

So the premium is 115 bp, even if you get all the riders.

That's a difference of more than $8000 in final value on a $100,000 contract.

I got the 4.6% rate with 10% annual withdrawal but no death benefit rider. I'd say it's worth it, but of course it's your call.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by IowaFarmBoy »

I apologize if this has already been covered but I ran into something interesting recently. (I didn't take time to read all 17 pages of this thread.)

I purchased two MYGAs through Fidelity by doing a transfer from my traditional IRA about two years ago. They paid 1.3 and 2%. When rates increased this year, I requested a partial surrender of the amount that I could withdraw without penalty to be transferred back to my IRA at Fidelity so that I could invest it in Treasuries paying a higher rate. The Mass Mutual transfer went through but the Western & Southern transfer was refused because the apparently only allow a partial exchange if my account is currently in the one year renewal period. I couldn't find a definition for "one year renewal period" that was clearly spelled out online but I assume that means after maturity.

Not a huge deal, especially since this increase in rates is somewhat unusual but wanted to mention it as another piece of information about these products.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by BarbK »

Aspida products are now available in Florida.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by indexfundfan »

IowaFarmBoy wrote: Thu Aug 11, 2022 12:51 pm I apologize if this has already been covered but I ran into something interesting recently. (I didn't take time to read all 17 pages of this thread.)

I purchased two MYGAs through Fidelity by doing a transfer from my traditional IRA about two years ago. They paid 1.3 and 2%. When rates increased this year, I requested a partial surrender of the amount that I could withdraw without penalty to be transferred back to my IRA at Fidelity so that I could invest it in Treasuries paying a higher rate. The Mass Mutual transfer went through but the Western & Southern transfer was refused because the apparently only allow a partial exchange if my account is currently in the one year renewal period. I couldn't find a definition for "one year renewal period" that was clearly spelled out online but I assume that means after maturity.

Not a huge deal, especially since this increase in rates is somewhat unusual but wanted to mention it as another piece of information about these products.
I looked at the W&S MYGA on Blueprint. It should allow for 10% penalty-free withdrawal each policy year. Not sure why it was denied, unless the policy you bought was a different one.

And yes, according to the brochure below, the "one year renewal period" happens after the policy has reached maturity.

https://public-static-content.blueprint ... ochure.PDF
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by IowaFarmBoy »

indexfundfan wrote: Thu Aug 11, 2022 1:05 pm I looked at the W&S MYGA on Blueprint. It should allow for 10% penalty-free withdrawal each policy year. Not sure why it was denied, unless the policy you bought was a different one.

And yes, according to the brochure below, the "one year renewal period" happens after the policy has reached maturity.

https://public-static-content.blueprint ... ochure.PDF
I think the issue was that I wanted to transfer it back to my IRA. If I had just wanted a check, I think it would have gone through.

Their exact phrasing for the denial was " You may only make a Partial Exchange if your Account Value is currently in the One-Year Renewal Period."
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