“Annuity” is a family name, not one product. The three fixed annuities most people consider do very different jobs. Here’s how they compare.
| SPIA | MYGA | FIA | |
|---|---|---|---|
| Main job | Income for life, starting now | A fixed interest rate for a set term | Interest credits linked to a market index, with contract protection from negative index performance |
| Key thing to know | You give up access to the lump sum | Not a bank CD and not FDIC insured; surrender charges if you leave early | Caps and participation rates limit credits; surrender charges; optional riders charge fees |
| Income starts | Within 12 months | Usually later, if ever | Later, often through an optional income rider |
| Access to money | Generally none after purchase | Limited; surrender charges during the term | Limited; surrender charges, often 5–10 years |
| Index losses credited to you? | Not applicable | Not applicable | No — a down index year typically credits 0%, but surrender charges and rider fees can still reduce your value |
| Ongoing account fee? | Usually none stated; costs are built into the payout rate | Usually none stated; costs are built into the credited rate | Base contract usually none; optional riders often charge a yearly fee |
| Complexity | Very simple | Simple | More complex — caps, participation rates, riders |
| Often chosen by | Retirees covering monthly bills | Savers wanting a set rate for 3–10 years | People seeking index-linked interest with protection from negative index credits |
SPIA — single premium immediate annuity
You trade a lump sum for a guaranteed monthly check, for life. It’s the most straightforward way to turn savings into income. More on SPIAs.
MYGA — multi-year guaranteed annuity
A MYGA pays a fixed interest rate for a set number of years, often 3 to 10. Interest is tax-deferred until you withdraw. It is an insurance contract, not a bank CD: it isn’t FDIC insured, and the guarantee depends on the insurer’s claims-paying ability. Most allow small penalty-free withdrawals each year; taking more during the term triggers a surrender charge, and some add a market value adjustment. At the end of the term you can renew, move the money, or turn it into income.
Estimate your growth: see what a deposit could grow to over 3, 4 or 5 years at today’s guaranteed MYGA rates. Open the Growth Calculator →
FIA — fixed indexed annuity
An FIA credits interest using a formula linked to a market index such as the S&P 500. Under the contract, negative index performance isn’t credited to you — in a down year the credit is typically zero. In exchange, caps, participation rates, or spreads limit how much of the index’s gain you receive. Surrender charges commonly last 5–10 years, and optional income riders usually charge a yearly fee that is deducted from the contract value even in years with no credit. FIAs have the most moving parts of the three, so they deserve the most careful reading.
