Disclaimer: Interest rates change often. This article will be updated on a quarterly basis, but rates may change between those updates. At any time, you can review current annuity rates here, and you can download our 5-Year Annuity Tip Sheet, which is updated regularly, here.
Things have been very steady since the last update, but the main changes are going to be from Equitable. For starters, they did lower their 5-year MYGA 10bps to 3.9%. Secondly, they released a new Fixed Index Annuity line called Teton.
Equitable's 5-Year MYGA Rate Decrease
Equitable did decrease their MYGA from 4.0% to 3.90% as of July 1, 2019. I'd like to look at the positive side of this though, because this is still a very competitive product, and I don't anticipate it losing any traction.
Even though it's a slightly lower interest rate, you have to remember that this product has tons of built-in features that other MYGAs charge for via rider deductions. With Equitable, you get:
- 5% free withdrawal after Year 1
- Free accumulated interest withdrawal after 30 days
- Full account value at death
Plus, it's RMD friendly.
With Sentinel and ACL, they are at 4.0%, but you have rider deductions for those features. So really, when you look at it that way, Equitable still shines.
Equitable's New Teton FIA Products
We do plan on doing a more detailed article on the Teton series, but I'd like to cover the main highlights of this new product here.
The product is tied to the S&P 500, which is basically 500 companies that share common stock together.
Over the last 30 years, the S&P have averaged double-digit gains. Depending on what you read, the gains have been anywhere from 10-12%. It’s very attractive when you’re looking at a product tied to that S&P. A lot of other FIAs out there are tied to other indices - this is unique in that way. It’s a positive for sure.
The more I look at it, the more I realize how simple it is, especially for a Fixed Index Annuity. It offers some attractive features for a person that wants potential to have bigger gains.
It’s nice that they offer a 7, 10, and 14-year. That commitment corresponds with the rates you get. The longer you go, the more chance for bigger gains you have.
Plus, I do want to remind you that FIAs are a little more than double the commission of a MYGA. When looking at the 14-year, it’s really almost 4 times the commission of a MYGA.
They're seriously worth looking at! Get in touch with me if you want to learn more but aren't comfortable taking that step just yet.
Our "Big Three" 5-Year MYGAs
Pretty much all year, our top 3 MYGAs have been Equitable, Sentinel, and ACL. We went over Equitable's already, but here's a quick refresher on Sentinel and ACL.
Sentinel is at 4%, but they have some rider deductions. It's basically a la carte. If you want a 10% free withdrawal, you take off .08%.
With Sentinel, you don't have to do the suitability, which saves the agent a lot of time and headache. Sentinel also has the e-app, which is another plus.
Atlantic Coast Life has that same rate. Even though they pay 4.8% in Year 1, they pay 3.8% in Years 2-5. So that averages out to 4% as well.
They also have the same rider deductions as an a la carte option.
Sentinel and ACL's rates are hanging right in there. They’ve stayed at this 4% for a long, long time. Equitable’s was nearly a year, so that’s all positive.
So those are the big 3 right now – Equitable, Sentinel, and Atlantic Coast Life.
When we talk about MYGAs that are less than 5 years, there are two that immediately come to mind as being very popular and competitive.
The first is from Liberty Bankers Life with the Banker's Elite 3, which is now at a 2.95% interest rate. There are no withdrawal features with this one, so you have to keep your money in there for the 3 years.
That’s better than pretty much any bank out there. The positives of MYGAs are your money grows tax-deferred, whereas your gains in a CD are taxable.
It's a pretty high comp, too – the comp is comparable to a 5-year MYGA even though it's a 3-year.
Secondly, Equitable has a 2-year plan at 2.85%. Sometimes, people don't want to get too far down the road, you know? This is a great option for them.
KSKJ's Rocket Annuity
KSKJ’s Rocket Annuity is also something to take a look at. If it’s a deposit of $100k or more, it’s 3.45%.
It has a lot of features including:
- Access to the money if you go to a nursing home
- Full account value at death
- 13% free withdrawal after Year 1
When I'm asked about the future of annuity rates, it’s just so unpredictable. Due to the bond market, it’s hard for these carriers to make money, but the rates have been steady and very competitive.
Just as a little reminder, make sure you're asking those additional questions. It all goes back to the CNA.
If they have money in the turbulent market and want to steady the ship, that's a MYGA sale. In the bank accumulating no interest? Let's explore.
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