- MYGA is a single-premium deferred annuity that can be issued up to age 85, with as little as $10,000 in premium. As mentioned in its brochure, you can withdraw 10% of the accumulation value per contract year with no surrender charge.
- The initial fixed interest rate is determined by the guarantee period (5, 7, or 10 years). You get to choose how long you want that interest rate to last. If you don't need your extra cash for ten years, for example, you can lock in that interest rate for all 10 years. But if you want to start the payout phase earlier, you can choose a shorter 5-year term and score a slightly higher interest rate.
- There's a free look period of about 20 days (varies by state). Cancel within this period and get your money back, no questions asked.
- Change your mind after the guarantee period? Your minimum cash surrender value is 90% of the premium, accumulated at 1-3% minus any related taxes or fees for early withdrawals.
- If you die before the payout phase, Lincoln Financial pays your beneficiary the accumulation value of your annuity. Keep in mind this amount is subject to tax.
- You can start taking payments after the fifth contract year. If you wait until the annuity matures, your payouts will start either on the 10th anniversary of your contract, or the contract anniversary immediately after your 95th birthday (90 in New York).
- Surrender charges are based on the guarantee period and max out at seven years, while your interest rate can be guaranteed for up to 10 years. That’s huge! That means you can go over the 10% withdrawal rate with no Market Value Adjustment (MVA) as long as that surrender charge period is over (5 years for a 5-year guaranteed period, 7 years for all other periods).
- After the guarantee period, your contract renews at a new interest rate each year. Subsequent rates will never be lower than the Guaranteed Minimum Interest Rate (GMIR) stated in the contract.
In our last blogpost, we introduced the concept of Fixed Annuity, now we will specifically discuss the Lincoln MYGA -
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