Fixed Annuity Rates in 2026: What to Expect and How to Compare

Fixed annuity rates are at their highest level in nearly two decades. After the Federal Reserve's prolonged tightening cycle pushed Treasury yields above 5%, insurance companies followed, and multi-year guaranteed annuities (MYGAs) are now competing aggressively with bonds and CDs.

This guide explains where rates stand in 2026, how insurers actually set them, and what to look for when shopping.

Current Fixed Annuity Rate Environment (Q2 2026)

Below are representative fixed annuity rates from highly-rated insurers (A.M. Best A or better) as of April 2026. Rates change daily — verify with the insurer or your broker before purchasing.

| Term | Average Rate | Top Quartile Rate | Notable Insurers | |---|---|---|---| | 3 years | 4.85% | 5.30% | Athene, Mass Mutual, F&G | | 5 years | 5.45% | 5.95% | Athene, Nassau Re, North American | | 7 years | 5.75% | 6.25% | F&G, Sentinel Security, Athene | | 10 years | 5.85% | 6.40% | Sentinel Security, Athene, Nassau |

These are MYGA rates — the simplest fixed annuity product. The rate is locked for the entire term. You take a lump sum out at the end, renew, or annuitize.

For an immediate income annuity (where the insurer converts your lump sum into a monthly payment), the implicit rate is typically 0.5–1.5 points lower than MYGA rates because the insurer is also providing longevity insurance.

Calculate your payout at any rate →

How Insurers Actually Set Rates

Annuity rates aren't pulled out of thin air. They're driven by a few measurable inputs:

1. The 10-Year Treasury Yield

When the U.S. 10-Year Treasury yields 4.5%, insurers can buy government bonds at that rate with no credit risk. Anything they pay you above that is essentially their margin minus the value of the longevity guarantee they're providing.

Rule of thumb: Top-quartile MYGA rates run roughly 0.75–1.25 percentage points above the 10-Year Treasury.

2. Corporate Bond Spreads

Insurers don't only buy Treasuries. Most insurer general accounts hold a heavy mix of investment-grade corporate bonds (BBB and above), which yield more than Treasuries. When corporate spreads widen, insurers can pay more on annuities.

3. The Insurer's Own Credit Rating

Lower-rated insurers (B+ or below) sometimes offer higher MYGA rates to attract capital. This is risky. The state guaranty association will only cover $250,000–$500,000 per insurer if it fails. If you're putting more than that into a single contract, stick with A-rated or higher carriers.

4. Surrender Charge Length

Longer surrender periods mean the insurer can lock up your money longer. A 10-year MYGA typically pays 0.30–0.50 percentage points more than a 5-year MYGA from the same insurer.

How to Shop Effectively

The fixed annuity market is fragmented. Rates vary by 1–1.5 percentage points across insurers for the same term. On a $250,000 deposit over 7 years, that's $26,000+ in extra interest. Shop carefully.

1. Use a Multi-Carrier Broker

Independent brokers can quote rates from 30+ insurers. Captive agents (those who only work with one company) can only show you their employer's products, which are often uncompetitive.

2. Compare Annuity Yield to Treasury Yield

If a 5-year MYGA pays 5.50% and the 5-year Treasury yields 4.30%, you're getting 120 bps of premium for taking on insurer credit risk and giving up liquidity. That's a fair deal. If the spread is under 50 bps, the bond is the better choice.

3. Check the Insurer's A.M. Best Rating

Free at www.ambest.com. Stick to "A-" or better. Avoid "B" and lower for amounts over $100,000.

4. Read the Surrender Schedule

Most MYGAs allow 10% free annual withdrawal without penalty. Beyond that, surrender charges in years 1–7 typically follow a declining scale: 9% / 8% / 7% / 6% / 5% / 4% / 3%, then 0%.

If a contract has a surrender period longer than 10 years, walk away.

5. Look for Market Value Adjustment (MVA)

Many MYGAs include an MVA clause that adjusts your surrender value up or down based on prevailing interest rates. This protects the insurer if rates spike. It works against you if you need to surrender early in a high-rate environment.

Red Flags

Watch for these in any annuity sales presentation:

• Bonus rates that disappear. "We'll give you a 7% first-year bonus!" Usually paired with much lower rates in years 2–10. Check the lifetime average.
• Vague language about liquidity. Always read the surrender schedule yourself.
• Pressure to sign during the meeting. A quality fixed annuity will still be available next week. Pressure tactics signal commission-driven sales.
• Index annuities marketed as "fixed." Indexed annuities have caps, participation rates, and crediting methods that significantly affect realized returns. They are a different product class.
• Insurers rated B+ or lower offering top-of-market rates. Higher rate often comes with higher default risk.

A Worked Example

George, 62, has $300,000 in a CD ladder paying 4.2%. His CD is maturing. He's considering moving the money into a 7-year MYGA paying 5.85%.

CD reinvestment:

• $300,000 × 4.2% = $12,600/year interest
• After 7 years: ~$397,000 (compounded)

MYGA at 5.85%:

• $300,000 × 5.85% = $17,550/year interest (compounded inside contract)
• After 7 years: ~$447,000

Difference: $50,000 over 7 years.

The MYGA wins on yield. The trade-offs: less liquidity (only 10%/year free withdrawal) and insurer credit risk (vs. FDIC). For someone with adequate liquidity elsewhere, this is often a worthwhile swap.

Run your own scenario in the calculator → and read our guide on whether annuities are worth it for more decision context.

Where Rates Are Headed

As of Q2 2026, the consensus among economists is that the Federal Reserve will hold or modestly cut rates over the next 12 months. Implications for annuity buyers:

• If you believe rates will fall: Lock in longer-term MYGAs (7–10 years) now to capture today's higher rates.
• If you believe rates will stay flat: A 5-year MYGA gives flexibility to renegotiate in a few years.
• If you believe rates will rise: Stay short or consider laddering.

The simplest hedge is annuity laddering: split your principal across 3–5 different MYGAs with staggered maturities (e.g., 3-year, 5-year, 7-year, 10-year). This way, you always have one contract maturing and can capture rate movements without committing everything to a single term.

Frequently Asked Questions

What's the best fixed annuity rate available right now? Top-quartile MYGAs in Q2 2026 are paying 5.95–6.40% for 5–10 year terms from A-rated insurers. Rates change weekly.

Are fixed annuities better than CDs? For tax-deferred growth and rates above 1% premium over CDs of similar term, yes. CDs are FDIC-insured; annuities have insurer credit risk and surrender penalties.

Can I cash out a fixed annuity early? Yes, but you'll pay a surrender charge (typically 7–10% in year one, declining). You'll also pay ordinary income tax on earnings and a 10% IRS penalty if under 59½.

What happens at the end of the MYGA term? You can: (1) take a lump sum, (2) renew at the new prevailing rate, (3) annuitize into income payments, or (4) do a 1035 exchange to another carrier.

Should I buy a 10-year MYGA or build a CD ladder? The MYGA usually wins on yield. The CD ladder wins on flexibility. If you don't need access for a decade, the MYGA's tax-deferral and higher rate compound powerfully.

This article is for educational purposes only and does not constitute financial advice. Consult a licensed financial advisor before making any retirement planning decisions.