Purchasing MYGAs (multi year guaranteed annuities) - mega thread

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

Post by gunny »

Stinky wrote: Sun Jan 26, 2025 1:29 pm That leaves you to rely on ratings. As I said upthread, most every life insurer has a rating from AM Best.
How much stock can one put in that? Sincere question as I've no idea. And is there any cutoff folks have, like anything less than an "A-" etc?

Thanks for the link!
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

gunny wrote: Sun Jan 26, 2025 5:45 pm
Stinky wrote: Sun Jan 26, 2025 1:29 pm That leaves you to rely on ratings. As I said upthread, most every life insurer has a rating from AM Best.
How much stock can one put in that? Sincere question as I've no idea. And is there any cutoff folks have, like anything less than an "A-" etc?

Thanks for the link!
Upthread, I had laid out some guidelines for myself. All based on AM Best ratings -

—- No purchases from companies rated B+ or lower
—- Maximum duration of 3 years for companies rated B++
—- Maximum duration of 5 years for companies rated A-

I would be more conservative if I lived in California, whose guaranty association covers just 80% of surrender value.

But I’m going to reassess going forward whether I want any exposure to companies rated B++, which was the rating of each of Colorado Bankers, Atlantic Coast, and Sentinel Security immediately before they encountered financial problems.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by gunny »

Thanks - can I ask how you came to those conclusions? I'm just totally unfamiliar with AM Best and trying to get a handle on this in terms of feeling comfortable with ratings, companies, etc (yes even though there are state backups...).
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

gunny wrote: Sun Jan 26, 2025 7:54 pm Thanks - can I ask how you came to those conclusions? I'm just totally unfamiliar with AM Best and trying to get a handle on this in terms of feeling comfortable with ratings, companies, etc (yes even though there are state backups...).
Look at this post, which includes an embedded table or historical AM Best default rates.

viewtopic.php?p=5435915#p5435915
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by SpaceCowboy »

bog007 wrote: Fri Jan 24, 2025 2:03 pm Rates went up at Canvas
3 Year Term6.00%
5 Year Term6.15%
7 Year Term6.20%
https://canvasannuity.com/product/future-fund
Thanks for this info. I bought a Canvas annuity recently and requested they amend the policy to the new higher interest rate of 6.15%, since it’s within the 30 day free look period. Appreciate the heads up!
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Help me understand this MYGA

Post by snic »

[merged into MYGA master thread - moderator prudent]

This is from the literature describing the Manhattan Life Preferred Choice 3 year annuity:
Interest - The interest rates quoted will be credited and compounded daily to arrive at an effective annual
yield.

After the Initial Guarantee Period the Guaranteed Minimum Interest rate will be 3%, or the 5-year Constant
Maturity Treasury (CMT) rate reduced by 125 basis points and rounded to the nearest five hundredths of
1%, whichever is less. We will re-determine the rate at each Contract Anniversary using the same
method. It will never be less than 1% per year.

The Initial Guaranteed Interest Rate is guaranteed for the Initial Guarantee Period.
At the beginning of each Contract Year thereafter, We will declare a new interest rate that will be
guaranteed for that Contract Year. This rate will never be less than the Guaranteed Minimum Interest Rate
in effect at the time.

The Guaranteed Minimum Interest Rate is an annual rate determined at the end of the month prior to
Your Contract Date. It is 3%, or the 5-year Constant Maturity Treasury (CMT) rate reduced by 125 basis
points and rounded to the nearest five hundredths of 1%, whichever is less. After the Initial Guarantee
Period, the rate will be re-determined annually on Your Contract Anniversary using the 5-year CMT rate as
of the Company’s last business day of the month prior to the Contract Anniversary Date. In no case will it
be less than 1% per year.
Currently the interest rate is 4.1%, and the CMT as of 12/31/24 was 4.38%. So the "Initial Guaranteed Interest Rate" seems to be the Guaranteed Minimum Interest rate (4.38 - 0.25 = 4.13, rounded down to nearest .05 is 4.1%) but without the 3% maximum.

But what about after the 3 years is up? As far as I can tell, if I leave the money in the MYGA for another year, the rate will be lowest of 3% or the CMT - 0.25, but not less than 1%. Currently, that value is 3%. So if interest rates remained identical for the next 3 years, I could expect the MYGA to earn 4.1% in the first 3 years and 3% in the last year. Am I missing anything?
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Re: Help me understand this MYGA

Post by Stinky »

snic wrote: Tue Jan 28, 2025 2:37 pm This is from the literature describing the Manhattan Life Preferred Choice 3 year annuity:
Interest - The interest rates quoted will be credited and compounded daily to arrive at an effective annual
yield.

After the Initial Guarantee Period the Guaranteed Minimum Interest rate will be 3%, or the 5-year Constant
Maturity Treasury (CMT) rate reduced by 125 basis points and rounded to the nearest five hundredths of
1%, whichever is less. We will re-determine the rate at each Contract Anniversary using the same
method. It will never be less than 1% per year.

The Initial Guaranteed Interest Rate is guaranteed for the Initial Guarantee Period.
At the beginning of each Contract Year thereafter, We will declare a new interest rate that will be
guaranteed for that Contract Year. This rate will never be less than the Guaranteed Minimum Interest Rate
in effect at the time.

The Guaranteed Minimum Interest Rate is an annual rate determined at the end of the month prior to
Your Contract Date. It is 3%, or the 5-year Constant Maturity Treasury (CMT) rate reduced by 125 basis
points and rounded to the nearest five hundredths of 1%, whichever is less. After the Initial Guarantee
Period, the rate will be re-determined annually on Your Contract Anniversary using the 5-year CMT rate as
of the Company’s last business day of the month prior to the Contract Anniversary Date. In no case will it
be less than 1% per year.
Currently the interest rate is 4.1%, and the CMT as of 12/31/24 was 4.38%. So the "Initial Guaranteed Interest Rate" seems to be the Guaranteed Minimum Interest rate (4.38 - 0.25 = 4.13, rounded down to nearest .05 is 4.1%) but without the 3% maximum.

But what about after the 3 years is up? As far as I can tell, if I leave the money in the MYGA for another year, the rate will be lowest of 3% or the CMT - 0.25, but not less than 1%. Currently, that value is 3%. So if interest rates remained identical forthe next 3 years, I could expect the MYGA to earn 4.1% in the first 3 years and 3% in the last year. Am I missing anything?
First, I think you’ve got a miscalculation. If the current CMT is 4.38, that rate minus 1.25% is 3.13%, not 4.13%.

That being said, I think you’ve interpreted it correctly. This MYGA would have a rate of 4.1% for the first three years, and 3% in the fourth year (unless CMT at that time is less than 4.25%).
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Re: Help me understand this MYGA

Post by snic »

Stinky wrote: Tue Jan 28, 2025 2:52 pm
snic wrote: Tue Jan 28, 2025 2:37 pm This is from the literature describing the Manhattan Life Preferred Choice 3 year annuity:



Currently the interest rate is 4.1%, and the CMT as of 12/31/24 was 4.38%. So the "Initial Guaranteed Interest Rate" seems to be the Guaranteed Minimum Interest rate (4.38 - 0.25 = 4.13, rounded down to nearest .05 is 4.1%) but without the 3% maximum.

But what about after the 3 years is up? As far as I can tell, if I leave the money in the MYGA for another year, the rate will be lowest of 3% or the CMT - 0.25, but not less than 1%. Currently, that value is 3%. So if interest rates remained identical forthe next 3 years, I could expect the MYGA to earn 4.1% in the first 3 years and 3% in the last year. Am I missing anything?
First, I think you’ve got a miscalculation. If the current CMT is 4.38, that rate minus 1.25% is 3.13%, not 4.13%.

That being said, I think you’ve interpreted it correctly. This MYGA would have a rate of 4.1% for the first three years, and 3% in the fourth year (unless CMT at that time is less than 4.25%).
Ah, thanks for catching my jumbled understanding of "basis point". (I never understood why the finance industry can't just use straight percent...)
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by SpaceCowboy »

Why would you buy a MYGA at a rate less than the current treasury rate? Just buy the 3 year treasury, no default risk and state tax free.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by snic »

SpaceCowboy wrote: Tue Jan 28, 2025 3:16 pm Why would you buy a MYGA at a rate less than the current treasury rate? Just buy the 3 year treasury, no default risk and state tax free.
Because that is all that is available for a 90+ year old in the state this person (my mother) lives in. It is arguable better to do a 1035 exchange into this MYGA than to leave it in a high-fee variable annuity.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

snic wrote: Tue Jan 28, 2025 4:00 pm
SpaceCowboy wrote: Tue Jan 28, 2025 3:16 pm Why would you buy a MYGA at a rate less than the current treasury rate? Just buy the 3 year treasury, no default risk and state tax free.
Because that is all that is available for a 90+ year old in the state this person (my mother) lives in. It is arguable better to do a 1035 exchange into this MYGA than to leave it in a high-fee variable annuity.
Yes, the choice of MYGA products is pretty limited for those over 90 years old.

I expect that the reason you’re considering an exchange from a high cost VA into a MYGA is to continue to defer taxable income - correct?

Finally - I expect that you know that annuities do not receive a step up at death. The only way that I know of to avoid taxes on the accumulated annuity gains is to designate a charity as beneficiary. You know that - right?
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by gunny »

SpaceCowboy wrote: Mon Jan 27, 2025 12:59 pm
bog007 wrote: Fri Jan 24, 2025 2:03 pm Rates went up at Canvas
3 Year Term6.00%
5 Year Term6.15%
7 Year Term6.20%
https://canvasannuity.com/product/future-fund
Thanks for this info. I bought a Canvas annuity recently and requested they amend the policy to the new higher interest rate of 6.15%, since it’s within the 30 day free look period. Appreciate the heads up!
That is impressive. But then I read stuff like this, which is why I'm still a little skittish about the whole thing: https://www.annuity.org/annuities/provi ... s-annuity/

Edit: but if they have the states backing them up, how much does this really matter?
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by tj »

gunny wrote: Tue Jan 28, 2025 7:55 pm
SpaceCowboy wrote: Mon Jan 27, 2025 12:59 pm

Thanks for this info. I bought a Canvas annuity recently and requested they amend the policy to the new higher interest rate of 6.15%, since it’s within the 30 day free look period. Appreciate the heads up!
That is impressive. But then I read stuff like this, which is why I'm still a little skittish about the whole thing: https://www.annuity.org/annuities/provi ... s-annuity/

Edit: but if they have the states backing them up, how much does this really matter?
They aren't backed by states.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by gunny »

Sorry, "non-profit insurance guaranty associations at the state level."

And my question stands....
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by snic »

Stinky wrote: Tue Jan 28, 2025 4:28 pm
snic wrote: Tue Jan 28, 2025 4:00 pm

Because that is all that is available for a 90+ year old in the state this person (my mother) lives in. It is arguable better to do a 1035 exchange into this MYGA than to leave it in a high-fee variable annuity.
Yes, the choice of MYGA products is pretty limited for those over 90 years old.

I expect that the reason you’re considering an exchange from a high cost VA into a MYGA is to continue to defer taxable income - correct?

Finally - I expect that you know that annuities do not receive a step up at death. The only way that I know of to avoid taxes on the accumulated annuity gains is to designate a charity as beneficiary. You know that - right?
There is one way to avoid taxes on annuity withdrawals: withdraw up to the amount of a large medical expense deduction. My mother has large, stable medical expenses (assisted living), so it's a reasonable situation for a MYGA. However, with a MYGA we do lose flexibility in that early withdrawals are penalized; her VA does not have that problem. But its fees are high (total of 1.4% M&E plus nearly 1% for fund fees). While 4.1% annual interest is not great, it's roughly what a 3-year bond would earn, and it's better than losing 2.4% per year to garbage fees.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

gunny wrote: Tue Jan 28, 2025 8:52 pm Sorry, "non-profit insurance guaranty associations at the state level."

And my question stands....
Yes, you’ll get your money from your local guaranty association if your annuity insurer goes into liquidation. But here are some qualifications to that statement -

—- Guaranty associations generally cover only the surrender value, not the full account value.

—- Guaranty association coverage is limited to a maximum amount. In many states it’s $250k, but check your state to be sure.

—- When life insurers run into financial problems, access to your money may be restricted beyond what the policy provides for. During the first stage of state control, called “receivership”, the regulator may restrict voluntary withdrawals from your policy, so you might not be able to fully surrender or even take a free partial withdrawal. Also during this time the interest rate credited to your policy may be reduced. “Receivership” will take months or years to resolve, with an extreme example being Colorado Bankers which was in receivership for over 5 years. “Liquidation” follows receivership, and that’s when policyholders are finally granted access to their money after waiting a few more months.

Thankfully, financial problems with annuity insurers have been rare in the last couple of decades. Even AIG didn’t enter receivership or liquidation during the 2008-9 crisis.

But there are several current examples of troubled writers of MYGAs. Colorado Bankers, which was run by a convicted felon who is alleged to have looted the company and is in process of liquidation. And Atlantic Coast/Sentinel Security, which are under regulatory “supervision” (but not yet “receivership”) because of bad investments.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by gunny »

Thanks! Wow that's a crock that you only get the surrender value; why should I be penalized for their incompetence?

Again I know this is all unlikely, but still good to know.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by jhblegend »

gunny wrote: Wed Jan 29, 2025 9:28 am Thanks! Wow that's a crock that you only get the surrender value; why should I be penalized for their incompetence?

Again I know this is all unlikely, but still good to know.
Agree. I wonder if Stinky has any insight to the funding of the state guaranty associations? My understanding is the states take a % of all premium issued in their state and throw it in the "rainy-day fund". I imagine if they guaranteed the AV instead of the SV, the withholding would increase from 0.4% to 0.5% of premium or something like that.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

jhblegend wrote: Thu Jan 30, 2025 8:22 am
gunny wrote: Wed Jan 29, 2025 9:28 am Thanks! Wow that's a crock that you only get the surrender value; why should I be penalized for their incompetence?

Again I know this is all unlikely, but still good to know.
Agree. I wonder if Stinky has any insight to the funding of the state guaranty associations? My understanding is the states take a % of all premium issued in their state and throw it in the "rainy-day fund". I imagine if they guaranteed the AV instead of the SV, the withholding would increase from 0.4% to 0.5% of premium or something like that.
You’re pretty close to correct.

State guaranty associations aren’t “pre funded”. Rather, they levy assessments against all companies licensed in their state. So, for example, if New York Life wrote 2% of the premium in Michigan, then the Michigan guaranty association would assess NYL with 2% of the cost for clearing a particular insurer liquidation. I believe that assessments are generally made when a particular insolvency is in hand.

The total guaranty association liability for a particular insolvency is the excess of the policyholder exposure over the assets of the insurer available to pay claims. So, to the extent that guaranty association coverage is limited (examples - $250k maximum per policyholder, surrender value instead of account value), then assessments against other insurers are reduced. This strikes a balance between equity to affected policyholders versus cost to solvent insurers.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by jhblegend »

Stinky wrote: Thu Jan 30, 2025 8:36 am
State guaranty associations aren’t “pre funded”. Rather, they levy assessments against all companies licensed in their state. So, for example, if New York Life wrote 2% of the premium in Michigan, then the Michigan guaranty association would assess NYL with 2% of the cost for clearing a particular insurer liquidation. I believe that assessments are generally made when a particular insolvency is in hand.
Ah, that is helpful. So it does differ from FDIC-style insurance where FDIC is "pre funded" and only hits the carrier's checkbooks when a claim occurs.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by jhblegend »

jhblegend wrote: Tue Jan 21, 2025 10:53 am
tj wrote: Fri Jan 17, 2025 8:18 pm It's cool that y'all bought a fastbreak. Is it working as intended? I guess the 1099s should be coming soon. Crazy to me that none of the insurers market a similar product.
Will keep you updated! And totally agree, the main reason I took advantage of it.
Received my 1099 on my FastBreak policy in the mail today. Oddly enough (and further blurring the lines between the two Clear Spring and Gainbridge), the Payer is Clear Spring Life and Annuity Company. $5,000 premium issued 4/30/2024 at 6.15%.

The amount is exactly what I would expect in box 1 - interest income. $5,000 * (1.0615)^(245/365)-$5,000 = $204.37
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Review on Canvas Annuity

Post by Cowboy2023 »

[Thread merged into here --admin LadyGeek]

Hi All,

Got lot of inputs from this forum, so want to help in anyway. I recently did a 7 year Future Fund annuity with Canvas. The process was very simple and the web-site was awesome. Very smooth process. Even Gainbridge web-site has quirks with multiple logins and all, but here it was smooth. Someone has done their homework. The policy was active the same day and the ACH fund were withdraw the same night. ACH happens through Plaid.

Definitely the way to go to Buy Annuities.

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

Post by LadyGeek »

I merged Cowboy2023's thread into the ongoing discussion.

(Thanks to the member who reported the post and provided a link to this thread.)
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Rajsx »

I see a 5% 3 yr MYGA at Fidelity by USAA Protected a AA+ rated company, as most of the MYGA companies through Fidelity are,

I will NOT NEED the money in my IRA for 3 yrs, and most CDs for 3 yrs are around 4.2% range -

I see a few more dollars going with this MYGA in our IRA, vs a CD

Any thoughts ??

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

Post by tj »

Rajsx wrote: Mon Feb 03, 2025 4:03 pm I see a 5% 3 yr MYGA at Fidelity by USAA Protected a AA+ rated company, as most of the MYGA companies through Fidelity are,

I will NOT NEED the money in my IRA for 3 yrs, and most CDs for 3 yrs are around 4.2% range -

I see a few more dollars going with this MYGA in our IRA, vs a CD

Any thoughts ??

Thanks
Not sure what thoughts you are looking for. Sounds like it makes sense for you.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

Rajsx wrote: Mon Feb 03, 2025 4:03 pm I see a 5% 3 yr MYGA at Fidelity by USAA Protected a AA+ rated company, as most of the MYGA companies through Fidelity are,

I will NOT NEED the money in my IRA for 3 yrs, and most CDs for 3 yrs are around 4.2% range -

I see a few more dollars going with this MYGA in our IRA, vs a CD

Any thoughts ??

Thanks
I think that’s a fine rate from a highly rated company.

As I look at Blueprint Income, I don’t see any 3 year rates from other A++ that high. You could go with A+ at 5.05%, or A- at 5.35%. But on $100k, a 0.35% difference over 3 years is just over $1,000.

If you want a great rate from a highly rated company, go for it.

If you’re
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Rajsx »

Stinky,

I see a 3 yr MYGA of Future Fund at Canvass with 6% with a B++ rated Puritan VS a 3 yr Jumbo Annuity at Fidelity with A++ USAA company.

How risky is a B++ rating 6 % VS a A++ 5% for 3 yrs for $100k ??

How easy & how much is the paperwork at Canvass ? How is their Customer Service ?

Can I add Canvass to my Fidelity Account to see all my investments in one place, so I or DW does not lose track of it ?

I am a newbie with MYGAs, I have one with Fidelity from Western Southern with whom I have 2 yrs left in a 3 yr annuity, I never had to call them & I did not take the possible 10% withdrawal as I did not have any unmet need.

I request your/Groups thoughts/opinions

I am sorry for many questions, as I have never dealth with Canvass

I have read here of just one company in Colorado going Bankrupt effecting people's money,

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

Post by Stinky »

Rajsx wrote: Mon Feb 03, 2025 9:24 pm Stinky,

I see a 3 yr MYGA of Future Fund at Canvass with 6% with a B++ rated Puritan VS a 3 yr Jumbo Annuity at Fidelity with A++ USAA company.

How risky is a B++ rating 6 % VS a A++ 5% for 3 yrs for $100k ??

How easy & how much is the paperwork at Canvass ? How is their Customer Service ?

Can I add Canvass to my Fidelity Account to see all my investments in one place, so I or DW does not lose track of it ?

I am a newbie with MYGAs, I have one with Fidelity from Western Southern with whom I have 2 yrs left in a 3 yr annuity, I never had to call them & I did not take the possible 10% withdrawal as I did not have any unmet need.

I request your/Groups thoughts/opinions

I am sorry for many questions, as I have never dealth with Canvass

I have read here of just one company in Colorado going Bankrupt effecting people's money,

Thanks
I'm a Canvas policyholder. (Note - Puritan Life is the life insurance company that actually issues the policies.) It's been a while since my policy was issued, but I don't recall the process being especially cumbersome compared to other MYGAs I own. And I've never taken a partial withdrawal from the policy, and haven't had any other recent customer service needs, so I have no comment on Puritan Life's comparison to others.

I've said upthread that I would currently personally consider going out as far as three years with a company rated B++ by AM Best. Others might not be as eager to purchase from a company rated B++.

It's good that purchasing a MYGA through Fidelity, as you did, allows you to view the MYGA "asset" as part of your portfolio. I expect that a MYGA purchased from Puritan Life (or any other company not on the Fidelity platform) will not show up in your Fidelity "portfolio view". Maybe there's a way to add it to you "portfolio view" manually - I'm not a Fidelity customer, so I don't know about that.

Yes, there is a company named Colorado Bankers that has been discussed on this thread. The company's owner is a convicted felon who is accused of looting the company. The unfortunate policyholders of that company have been in limbo since 2019, when the company was placed into regulatory receivership, and are just now in the process of being given access to their money as the state guaranty associations are moving in. Additionally, there are two other companies, Sentinel Security and Atlantic Coast, under common ownership, which are under some regulatory scrutiny because the regulators believe they have some bad assets. One of the companies is currently prohibited from issuing new policies.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Rajsx »

Thank you Stinky & everyone for your opinions/feedback,

After thinking about it, leaning towards USAA Policy at 5% for 3 yrs with Fidelity.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by tj »

You can add most accounts to fidelity full view. I don't know if canvas is one of the exceptions or not.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by indexfundfan »

Rajsx wrote: Tue Feb 04, 2025 8:23 am Thank you Stinky & everyone for your opinions/feedback,

After thinking about it, leaning towards USAA Policy at 5% for 3 yrs with Fidelity.
I did a full withdrawal from Canvas when it reached the end of its initial guaranteed period last year. They will only send withdrawals by check through the USPS (no electronic fund transfer). It took two weeks before I received the money.

I believe the three insurers that Stinky mentioned all were rated B++ when issues occurred. I no longer have any business with B++ rated insurers.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Rajsx »

Another A rated company with 5.2% rate I see for 3 yrs is from Oceanview Harborview MYGA 3 Annuity.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Rajsx »

I am asking the forum a speculative, futuristic question & trying to rationalize me buying a 5% 3 yr MYGA-

From the posts above we know I am moving towards buying $100k worth of a 5% 3 year MYGA from USAA

Today I sold more BND etf in our IRA & I am planning to make it $250k worth buy tomorrow at Fidelity, as the State Guarantee runs out beyong $250k

I am comparing the above 5% returns to the BND returns which for several years has been down, so much so it was down 13% in yr 2022.

So in my mind I am thinking for practical purposes for next 3 yrs BND total returns may not match 5% MYGA.

I know what I am getting with the MYGA, there are no coulda, wouda or possibly 100 other factors tied to the returns as with BND.

The answer I know nobody knows, but does my thinking make sense & on the right track ?

Our IRAs are all fixed income, if it is not MYGA or BND it is some other fixed income products, there are no equities in our IRAs, we are retired 68 & 63.

Your opinions please .........
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Wrench »

If it were me, i would stay below the state limit of the final value after the three year term. Otherwise, you stand to lose some interest if the company goes belly up. Or, you could take that risk since the company is highly rated and (very?) unlikely to have issues in the next three years. Just be aware that could happen.
I would agree with your decision to go with a lower interest rate and a higher rated company. I think people forget: for all fixed rate investments, higher returns means higher risk. Always. End of story. And the market tells us about how much extra risk - so for a fixed rate investment paying 6% versus one paying 5%, the market believes the risk is crudely 20% higher give or take (1.2*5 = 6). Of course, the absolute risk may be tiny so the 20% difference in risk could be next to nothing. So maybe (probably?) it is just fine, especially if it is over a short time frame. Stinky believes that so he is comfortable going with a B++ rated company for 3 years. Each individual investor has to figure that out for themselves. As Clint Eastwood in Dirty Harry said, "Do you feel lucky'"? :happy

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

Post by sycamore »

Rajsx wrote: Tue Feb 04, 2025 6:30 pm ...I know what I am getting with the MYGA, there are no coulda, wouda or possibly 100 other factors tied to the returns as with BND.

The answer I know nobody knows, but does my thinking make sense & on the right track ?

Our IRAs are all fixed income, if it is not MYGA or BND it is some other fixed income products, there are no equities in our IRAs, we are retired 68 & 63.

Your opinions please .........
One main question I'd ask is: will an MYGA help you achieve your goal?

I'm not sure what your goal is.

If it's simply to beat BND over the next 3 years, I think the MYGA will do pretty well.

However, if your goal is less about 3 years and more about providing income for the next couple of decades, an MYGA may not be the best choice.

Imagine when 3 years is up and interest rates have dropped a couple points. You'll need to invest your MYGA proceeds into something that has a lower yield than what you could've gotten now. And BND will have performed well in a declining rate environment -- its price will go up, making it more costly to buy back in.

That's just one scenario that could unfold. It focuses one kind of risk: picking a term for your fixed income gives you certainty for the term, but you lower yields may await you when the principal matures.

There are other risks with fixed income investing. Alas, there's no perfect investment that deals with them all well.

Perhaps you have a longer-term plan that you haven't presented here.
If so, make sure your MYGA choice fits in with that plan.

If you don't have a longer-term plan, now is a good time to come up with one.

P.S. If you'd rather not think about that, that's okay too :) Make a local optimization now and deal with the longer-term problem later.

(As to the lower or higher rated MYGA, I have no opinion.)
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

Rajsx wrote: Tue Feb 04, 2025 6:30 pm I am asking the forum a speculative, futuristic question & trying to rationalize me buying a 5% 3 yr MYGA-

From the posts above we know I am moving towards buying $100k worth of a 5% 3 year MYGA from USAA

Today I sold more BND etf in our IRA & I am planning to make it $250k worth buy tomorrow at Fidelity, as the State Guarantee runs out beyong $250k

I am comparing the above 5% returns to the BND returns which for several years has been down, so much so it was down 13% in yr 2022.

So in my mind I am thinking for practical purposes for next 3 yrs BND total returns may not match 5% MYGA.

I know what I am getting with the MYGA, there are no coulda, wouda or possibly 100 other factors tied to the returns as with BND.

The answer I know nobody knows, but does my thinking make sense & on the right track ?

Our IRAs are all fixed income, if it is not MYGA or BND it is some other fixed income products, there are no equities in our IRAs, we are retired 68 & 63.

Your opinions please .........
Your reasons for consider buying MYGAs are somewhat similar to mine.

A MYGA gives certainty of returns, with a certain date when the principal and interest will be fully available to the owner -

---- In your case, at the end of the initial guarantee period (three years for you), you'll be able to receive your full principal and interest, without market value adjustment or surrender charge. That sounds like it will be a comfort to you.

--- In my case, I've got almost all of my MYGAs in my IRA. I'm planning to make partial and full withdrawals from MYGAs to satisfy my RMDs starting in 2026 and going on for a number of years to come. The MYGAs give me high confidence that I'll have the cash available to make my RMDs, without needing to sell either equities or other assets, just from the cash I can raise from the MYGAs.

Maybe I would be just as well off with bond funds or other fixed income assets. But there's a sense of comfort from knowing that my RMDs can be fully satisfied with cash flows from MYGAs for many years to come, no matter what the stock market or bond market conditions are at the time.

I agree with Wrench that one should structure their MYGAs and other annuities to stay below state guaranty association limits at all times, even at the end date of the interest guarantee period. That probably calls for investing less than your state guaranty association limit, unless you plan to make significant partial withdrawals prior to the end of the interest guarantee period. For example, if your guaranty association limit is $250k, you might want to limit your purchases to $200k or $225k per company.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by 808 »

I did full surrenders of three non-qualified Puritan (Canvas) MYGAs in 2024. Each had a three-year guarantee period (all purchased in 2021 for $10,000 each). Two of the 1099-Rs show $10,000 in box 5. One shows $8489.80. No idea how they got that amount as this was not a 1035 exchange and the check I sent was for $10,000.

I called customer service today and they said they will pass my concern to the appropriate department and that department will respond directly either via email or the online portal. I hope they get this right and in a reasonable timeframe!

Anyone else receive an incorrect 1099-R from Puritan, get it resolved, and what was your experience?

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

Post by Rajsx »

Thank you so much for your insights ,

Good point, I will buy $225k worth,

Purpose of our IRAs is something I have yet to formulate,
it has been for Roth Conversions & more so in last 2 yrs with the (empty) threat of rising taxes.

Our AA is 80/20 no fixed income in Taxable or Roth, & no equities in IRAs,
Our living expenses at present are from dividends & cap gains from Taxable accounts, we gift our 2 children shares from taxable .
The % Tax Break up of our savings is 68 taxable/17 Roth /15 Tax deferred IRAs.
One goal of the IRAs could be for paying for Long Term in our old age as we do not have LT Ins., so we can get some medical expense deduction on our taxes.
Our IRAs have holdings of BND, CDs & now a MYGA
Plan calculations on paper have us leaving money behind to children & charities.
Hope our DIY haphazard way of winging things makes some sense.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

808 wrote: Tue Feb 04, 2025 8:20 pm I did full surrenders of three non-qualified Puritan (Canvas) MYGAs in 2024. Each had a three-year guarantee period (all purchased in 2021 for $10,000 each). Two of the 1099-Rs show $10,000 in box 5. One shows $8489.80. No idea how they got that amount as this was not a 1035 exchange and the check I sent was for $10,000.

I called customer service today and they said they will pass my concern to the appropriate department and that department will respond directly either via email or the online portal. I hope they get this right and in a reasonable timeframe!

Anyone else receive an incorrect 1099-R from Puritan, get it resolved, and what was your experience?

Thanks!
My 1099 experience this year was with Gainbridge, rather than Puritan.

I made two partial withdrawals from a taxable Gainbridge MYGA. But only the January withdrawal was reported on the 1099. The November withdrawal, which included significant tax withholding, was missing.

I called customer service today, waited on hold for about 45 minutes, then talked to a rep who had to put me on hold again while he talked to “accounting”. When he came back on the line, he said they would issue a new 1099 in a day or two, available through the portal rather than snail mail.
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808
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by 808 »

Stinky wrote: Tue Feb 04, 2025 8:40 pm
808 wrote: Tue Feb 04, 2025 8:20 pm I did full surrenders of three non-qualified Puritan (Canvas) MYGAs in 2024. Each had a three-year guarantee period (all purchased in 2021 for $10,000 each). Two of the 1099-Rs show $10,000 in box 5. One shows $8489.80. No idea how they got that amount as this was not a 1035 exchange and the check I sent was for $10,000.

I called customer service today and they said they will pass my concern to the appropriate department and that department will respond directly either via email or the online portal. I hope they get this right and in a reasonable timeframe!

Anyone else receive an incorrect 1099-R from Puritan, get it resolved, and what was your experience?

Thanks!
My 1099 experience this year was with Gainbridge, rather than Puritan.

I made two partial withdrawals from a taxable Gainbridge MYGA. But only the January withdrawal was reported on the 1099. The November withdrawal, which included significant tax withholding, was missing.

I called customer service today, waited on hold for about 45 minutes, then talked to a rep who had to put me on hold again while he talked to “accounting”. When he came back on the line, he said they would issue a new 1099 in a day or two, available through the portal rather than snail mail.
+1 for Gainbridge. At least their reps are able to talk to the appropriate department. Apparently, with Puritan, the reps have to pass the info on rather than call in real time.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by HueyLD »

808 wrote: Tue Feb 04, 2025 8:20 pm I did full surrenders of three non-qualified Puritan (Canvas) MYGAs in 2024. Each had a three-year guarantee period (all purchased in 2021 for $10,000 each). Two of the 1099-Rs show $10,000 in box 5. One shows $8489.80. No idea how they got that amount as this was not a 1035 exchange and the check I sent was for $10,000.

I called customer service today and they said they will pass my concern to the appropriate department and that department will respond directly either via email or the online portal. I hope they get this right and in a reasonable timeframe!

Anyone else receive an incorrect 1099-R from Puritan, get it resolved, and what was your experience?
The more important data is:

Does Box 2 show the correct income? Is the amount in Box 2 = 1510.20?
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by RockinL »

Just retired in Nov and have been doing quite a bit of research on MYGAs. Im pretty sure I've settled on a $225k, 3 year MYGA (to just test the waters), which I can peel the interest off of. I'm looking at Blueprint Income and Aspida as they have the best % rate as of now, 5.15%. To be honest I'm a little nervous because I'm new to this. I've watch several videos from Stan the Annuity Man to just about everyone else, and I'm still just a bit skeptical, although I know my principal will be backed by the state up to $225k.

Has anyone here done business with Aspida?
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Rajsx »

I signed up for a 3 yr MYGA today with USAA at 5% at Fidelity, thanks to this thread/forum I had all my questions/apprehensions answered.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

RockinL wrote: Wed Feb 05, 2025 1:55 pm Just retired in Nov and have been doing quite a bit of research on MYGAs. Im pretty sure I've settled on a $225k, 3 year MYGA (to just test the waters), which I can peel the interest off of. I'm looking at Blueprint Income and Aspida as they have the best % rate as of now, 5.15%. To be honest I'm a little nervous because I'm new to this. I've watch several videos from Stan the Annuity Man to just about everyone else, and I'm still just a bit skeptical, although I know my principal will be backed by the state up to $225k.

Has anyone here done business with Aspida?
I have done business with Aspida. No problems.

Just be aware that Aspida’s best rates are for MYGAs that have NO free partial withdrawals. They pay lower rates for “interest” withdrawals, and still lower rates for 10% withdrawals. (At least, that’s what I see when I look at Aspida rates).

Also, I’m not familiar with a state guaranty fund limit of “$225k of principal”. Many states have guarantees of “$250k of surrender value”. I don’t know of any state that guarantees that you’ll get your full premium back.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by RockinL »

Stinky wrote: Wed Feb 05, 2025 4:12 pm
RockinL wrote: Wed Feb 05, 2025 1:55 pm Just retired in Nov and have been doing quite a bit of research on MYGAs. Im pretty sure I've settled on a $225k, 3 year MYGA (to just test the waters), which I can peel the interest off of. I'm looking at Blueprint Income and Aspida as they have the best % rate as of now, 5.15%. To be honest I'm a little nervous because I'm new to this. I've watch several videos from Stan the Annuity Man to just about everyone else, and I'm still just a bit skeptical, although I know my principal will be backed by the state up to $225k.

Has anyone here done business with Aspida?
I have done business with Aspida. No problems.

Just be aware that Aspida’s best rates are for MYGAs that have NO free partial withdrawals. They pay lower rates for “interest” withdrawals, and still lower rates for 10% withdrawals. (At least, that’s what I see when I look at Aspida rates).

Also, I’m not familiar with a state guaranty fund limit of “$225k of principal”. Many states have guarantees of “$250k of surrender value”. I don’t know of any state that guarantees that you’ll get your full premium back.
You are correct. that should have been $250k of surrender value. Thanks
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by 808 »

HueyLD wrote: Wed Feb 05, 2025 4:48 am
808 wrote: Tue Feb 04, 2025 8:20 pm I did full surrenders of three non-qualified Puritan (Canvas) MYGAs in 2024. Each had a three-year guarantee period (all purchased in 2021 for $10,000 each). Two of the 1099-Rs show $10,000 in box 5. One shows $8489.80. No idea how they got that amount as this was not a 1035 exchange and the check I sent was for $10,000.

I called customer service today and they said they will pass my concern to the appropriate department and that department will respond directly either via email or the online portal. I hope they get this right and in a reasonable timeframe!

Anyone else receive an incorrect 1099-R from Puritan, get it resolved, and what was your experience?
The more important data is:

Does Box 2 show the correct income? Is the amount in Box 2 = 1510.20?
Box 2 does not show the correct income. Box 2 shows Box 1 - Box 5.

Since Box 5 is incorrect, even though Box 1 is correct, Box 2 is also incorrect.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by jhblegend »

Received an email from Gainbridge today that the payer on my 1099 was misnamed. "This is an administrative error and should not affect your tax filing or obligations."

While it's nice they let me know (and nice it really has no impact.) It makes me a bit nervous the amount of 1099 errors that may occur. Especially it's not like 12/31 surprises anyone, it comes at the same, every year.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by gunny »

I'm curious if Stinky or anyone has information on the state guaranty associations...like how are they backed up? Have they ever been unable to cover an insurance company's annuities?
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by DustyDebris »

A snag in my plan.
My plan was to attempt to live off of my retirement income plus 3 MYGA's, and with Canvas it went great, no phone calls required, quick service.
On to Gainbridge, as has been observed upthread the on hold times are brutal. Using the 'request a return call' feature took 1.5 hrs.

The bad news, they do not have any way to regularly send withdrawals and each one requires a phone call to be sent a one-time electronic form. I was not planning on having to call once a month for 7 years, but there it is. Maybe I'll do it quarterly instead of monthly. Clearly I should have done a little more research.

Update, the form cannot be filled out completely because the spouse signature is required but no active text box is located in the section; no way to sign. It's a DocuSign form so filling it out, wet signing, scan and email isn't an option.

One of the contact options is chat, but the Gianbridge site does not have a chat option. It all feels understaffed and unprofessional. I sent an email and we will see what's next.
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Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Post by Stinky »

gunny wrote: Thu Feb 06, 2025 3:50 pm I'm curious if Stinky or anyone has information on the state guaranty associations...like how are they backed up? Have they ever been unable to cover an insurance company's annuities?
State guaranty associations are funded through assessments against all insurance companies licensed in that particular state. For example, let’s say that a particular insolvency costs the Texas guaranty association $10 million, in support of Texas policyholders of the failed insurer. If (for example) New York Life has a 2% share of the Texas market, then NYL would be assessed $200,000 by the Texas guaranty association. That process would be repeated for all states. Those “assessments” against insurance companies carry the force of law.

There have been relatively few life insurance company insolvencies in the 21st century, and I don’t know of a situation where the guaranty associations didn’t fully perform as expected.
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