MYGA Rates in Tennessee: What to Know Before You Commit

What Are MYGA Rates and Why Do They Matter?

A Multi-Year Guaranteed Annuity — commonly called a MYGA — is a type of fixed annuity issued by an insurance company. You deposit a lump sum, and the carrier credits a declared interest rate for a set number of years. At the end of that term, you decide what to do next.

MYGA rates matter because they determine how much your money grows during the contract period. Unlike a variable or indexed annuity, the credited rate on a MYGA is spelled out in the contract itself. That makes comparison shopping straightforward — but only if you know what else to look at beyond the headline number.

How a 10-Year MYGA Works

Ten-year MYGAs are among the most popular terms on the market right now, partly because longer commitments have recently come with more competitive rates. Here is the basic structure:

You deposit a single premium. Most carriers require a minimum — often $10,000 to $250,000 depending on the product.
Interest compounds tax-deferred. You do not owe income tax on the growth until you take a withdrawal. For money held outside a pre-tax account like an IRA, this is a meaningful difference from a bank CD, where interest is taxable each year whether you withdraw it or not.
A surrender charge schedule applies. If you need to access more than the penalty-free amount before the term ends, the carrier deducts a surrender charge. On a 10-year contract, that schedule might start at 9% in year one and step down to zero by the end of the term.
A market value adjustment (MVA) may also apply. Some contracts include an MVA clause, which can increase or decrease the amount you receive on early surrender depending on interest rate movements since you purchased the contract. Always ask whether an MVA applies before you sign.
At maturity, you have options. Most carriers give you a window — often 30 days — to withdraw the full value, roll it into a new contract, or explore other choices. If you do nothing, the contract typically renews at whatever rate the carrier declares at that time.

What Drives MYGA Rates Right Now?

MYGA rates are not set arbitrarily. Insurance carriers invest your premium primarily in bonds and other fixed-income instruments. When prevailing interest rates rise, carriers can offer higher credited rates. When rates fall, new contracts tend to offer less.

That is why the rate environment of the past few years has made MYGAs more attractive to many savers than they were a decade ago. Rates that once seemed out of reach for a fixed annuity have become more common. Even so, rates vary meaningfully from one carrier to the next, which is why shopping across multiple companies — rather than accepting the first quote you see — is worth the effort.

Factors Beyond the Rate

A higher MYGA rate does not automatically mean a better contract. Before committing, consider the following:

Carrier Financial Strength

Unlike bank deposits, annuities are not covered by FDIC insurance. They are backed by the financial strength of the issuing insurance company. Independent rating agencies like A.M. Best assign letter grades to carriers based on their ability to meet obligations. Ratings range from A++ (Superior) down through B++ (Good) and below. A higher rate from a lower-rated carrier may or may not be worth the trade-off — that is a conversation worth having with a licensed agent.

Surrender Charge Schedule

Two contracts can both advertise a 10-year term but have very different surrender charge schedules. One might start at 9% and decline gradually; another might start lower. If there is any chance you will need liquidity before the term ends, the shape of that schedule matters.

Penalty-Free Withdrawal Provisions

Many MYGAs allow you to withdraw a portion of your account — often the interest earned, or a percentage of the account value — each year without triggering a surrender charge. Some carriers include this automatically; others offer it as an optional rider that slightly reduces your credited rate. Understand exactly what is available before you purchase.

Optional Riders

Some carriers offer add-on riders for things like an enhanced death benefit. These typically come at a cost — usually a small reduction in your credited rate. Whether a rider makes sense depends on your individual situation, not on a general rule.

State Availability and Age Limits

Not every MYGA is available in every state. Tennessee residents should confirm that any product they are considering is approved for sale here. Carriers also set maximum issue ages — commonly 85 or 90 — which can vary by whether the funds are qualified (IRA, 401k) or non-qualified.

Minimum Premium Requirements

Minimum deposits vary widely. Some products start at $10,000; others require $100,000 or more. Make sure the product you are comparing is actually accessible given your available funds.

MYGA vs. CD: A Straightforward Comparison

Tennessee savers often ask how a MYGA compares to a bank certificate of deposit. Both offer a fixed rate for a set term. The key differences:

Tax treatment: CD interest is taxable each year. MYGA interest is tax-deferred until withdrawal.
FDIC coverage: CDs at FDIC-member banks are insured up to $250,000. MYGAs are not FDIC-insured; they are backed by the issuing carrier and, in Tennessee, by the state guaranty association up to applicable limits.
Early access: Both have penalties for early withdrawal, though the mechanics differ. CDs typically charge a set number of months of interest; MYGAs use a percentage-based surrender charge schedule and may include an MVA.
Rates: MYGA rates have often been competitive with or above CD rates for comparable terms, though this varies by market conditions and should be verified with current quotes.

Neither product is right for everyone. The better choice depends on your tax situation, liquidity needs, and time horizon.

How Tennessee’s Tax Treatment Affects Your MYGA

Tennessee does not have a state income tax on wages or salaries, and the Hall Income Tax — which previously applied to interest and dividends — was fully repealed as of January 1, 2021. That means Tennessee residents generally owe no state income tax on MYGA withdrawals, though federal income tax still applies to the growth portion of any distribution. If your MYGA is held inside a traditional IRA or other pre-tax account, the entire withdrawal is typically subject to federal income tax. A tax professional can help you understand how this applies to your specific situation.

How to Compare MYGA Rates in Tennessee

When you are ready to compare options, here is a practical approach:

Gather quotes from multiple carriers. Rates change frequently — sometimes weekly. A snapshot from one source may not reflect the full market.
Look at the full contract, not just the rate. Surrender schedules, MVA provisions, and penalty-free withdrawal rules all affect the real value of the contract.
Check the carrier’s financial strength rating. A.M. Best ratings are publicly available and give you a starting point for evaluating carrier stability.
Confirm state availability. Not every product is approved in Tennessee.
Talk to a licensed annuity agent. Product suitability depends on your age, income needs, tax situation, and overall financial picture. A licensed professional can help you sort through the options without pressure.

Ready to Explore MYGA Rates for Tennessee Residents?

MYGA rates shift with the broader interest rate environment, so the best time to get a current picture is now. A licensed agent can pull live quotes from multiple carriers, walk you through the contract details, and help you decide whether a MYGA fits your plan — or whether a different approach makes more sense.

This article is for educational purposes only and does not constitute personalized financial or tax advice. Annuities are insurance contracts, not investments. Please consult a licensed insurance professional and a qualified tax advisor before making any purchase decision.