What is the main difference between a FIA and a MYGA?

A MYGA pays a fixed, guaranteed interest rate for a set term. A FIA offers the potential for higher gains by linking interest to a market index, while still protecting your principal from losses. MYGAs offer certainty; FIAs offer growth potential with a floor.

Which annuity is better for someone close to retirement?

There is no universal answer. If your priority is predictability and you want to know exactly what rate you will earn, a MYGA fits that goal. If you want some growth potential and are comfortable with variable credits year to year, a FIA may be a better fit. Both protect principal, which makes either reasonable close to retirement.

Do both protect my principal from market losses?

Yes. Both FIAs and MYGAs guarantee your principal cannot decrease due to market performance. FIAs use a floor (typically zero percent) on index-linked credits. MYGAs guarantee a minimum fixed rate. Neither type exposes your account value to direct stock market loss.

Can I move money between a FIA and a MYGA?

You can do a 1035 exchange to move money from one annuity to another without triggering an immediate tax event. Moving funds within the surrender period of your current contract may still trigger surrender charges. A licensed advisor can help you evaluate whether an exchange makes sense given your current contract terms.

Which type earns more interest?

It depends on the market and the contract. In a strong market year, a FIA with a high cap or participation rate can significantly outperform a MYGA. In a flat or down year, the MYGA wins because you earn your guaranteed rate while the FIA credits zero. Over a long period, FIAs have historically credited more than MYGAs in most environments, but this is not guaranteed.

Are surrender periods the same for FIAs and MYGAs?

Not necessarily. MYGA surrender periods typically align with the guarantee term (for example, a 5-year MYGA has a 5-year surrender period). FIA surrender periods are often longer, ranging from 7 to 12 years, though free withdrawal provisions apply to both. Always confirm the surrender schedule before purchasing.

What is the main difference between a FIA and a MYGA?

A MYGA pays a fixed, guaranteed interest rate for a set term. A FIA offers the potential for higher gains by linking interest to a market index, while still protecting your principal from losses. MYGAs offer certainty; FIAs offer growth potential with a floor.

Which annuity is better for someone close to retirement?

There is no universal answer. If your priority is predictability and you want to know exactly what rate you will earn, a MYGA fits that goal. If you want some growth potential and are comfortable with variable credits year to year, a FIA may be a better fit. Both protect principal, which makes either reasonable close to retirement.

Do both protect my principal from market losses?

Yes. Both FIAs and MYGAs guarantee your principal cannot decrease due to market performance. FIAs use a floor (typically zero percent) on index-linked credits. MYGAs guarantee a minimum fixed rate. Neither type exposes your account value to direct stock market loss.

Can I move money between a FIA and a MYGA?

You can do a 1035 exchange to move money from one annuity to another without triggering an immediate tax event. Moving funds within the surrender period of your current contract may still trigger surrender charges. A licensed advisor can help you evaluate whether an exchange makes sense given your current contract terms.

Which type earns more interest?

It depends on the market and the contract. In a strong market year, a FIA with a high cap or participation rate can significantly outperform a MYGA. In a flat or down year, the MYGA wins because you earn your guaranteed rate while the FIA credits zero. Over a long period, FIAs have historically credited more than MYGAs in most environments, but this is not guaranteed.

Are surrender periods the same for FIAs and MYGAs?

Not necessarily. MYGA surrender periods typically align with the guarantee term (for example, a 5-year MYGA has a 5-year surrender period). FIA surrender periods are often longer, ranging from 7 to 12 years, though free withdrawal provisions apply to both. Always confirm the surrender schedule before purchasing.

Side-by-Side Comparison

FIA vs MYGA: Which Is Right for You

Both products protect your principal and grow tax-deferred, but they serve different goals. This comparison will help you identify which one fits your situation.

Feature	Fixed Indexed Annuity (FIA)	MYGA
Growth type	Index-linked (with cap or spread)	Fixed interest rate
Principal protection	Yes, floor at 0%	Yes, fully protected
Rate type	Variable (tied to index performance)	Fixed for full term
Best for	Growth potential + downside protection	Predictable, CD-like returns
Typical term	5-10 years	2-10 years
Liquidity	Surrender charges during term	Surrender charges during term

Growth type

FIA

Index-linked (with cap or spread)

MYGA

Fixed interest rate

Principal protection

FIA

Yes, floor at 0%

MYGA

Yes, fully protected

Rate type

FIA

Variable (tied to index performance)

MYGA

Fixed for full term

Best for

FIA

Growth potential + downside protection

MYGA

Predictable, CD-like returns

Typical term

FIA

5-10 years

MYGA

2-10 years

Liquidity

FIA

Surrender charges during term

MYGA

Surrender charges during term

When a FIA Fits

You want growth potential with principal protection
You have a longer time horizon (10 or more years)
You are comfortable with variable annual credits
You want optional lifetime income riders
You want to participate in market upside without direct exposure

When a MYGA Fits

You want a guaranteed rate with no surprises
You are replacing a maturing CD or bond
You have a medium-term horizon (2 to 7 years)
You want tax-deferred accumulation without market risk
You are building a predictable income foundation

Common Questions

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