Renewal Rate Integrity: Grading Carriers on the Bait-and-Switch
Written & reviewed by Hans Goldstein, EA, Independent Licensed Insurance Producer · CA license 4273294 · NPN 20602398Admitted to practice before the IRS
Independently reviewed & last updated 2026-06-09
Quick take: When your MYGA's initial guarantee period ends, the carrier offers a "renewal rate." That rate is almost always LOWER than the new-money rate they're offering to fresh buyers. Some carriers are transparent and renew close to market; others slash renewals expecting you won't shop. Below: my A-to-F Renewal Integrity grades for every carrier I review + how to defeat the bait-and-switch with §1035 exchanges.
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CD vs MYGA, after tax
What $100,000 earns in 5 years: CD vs MYGA, after tax
Rates used: CD 5.00%, the top nationally available 5-year CD (Bankrate, October 14, 2026); change it to the rate you are offered. MYGA 5.95%, the best A-rated rate we track as of October 13, 2026: Delaware Life Pinnacle Plus 5-year (AM Best A-, negative outlook, 7/31/2026), $100,000 and up, effective October 6, 2026 (Delaware Life rate sheet).
| CD, interest taxed every year | $121,081 |
|---|---|
| MYGA, tax-deferred, before tax | $133,507 |
| MYGA after paying tax on all the interest at withdrawal | $126,136 |
| Tax deferral alone adds about | $674 |
| MYGA ahead of the CD, after tax | $5,055 |
Assumes 22% federal and 0% state income tax, no withdrawals, rates held for the whole term. MYGA interest is taxed as ordinary income when you withdraw it, not as capital gains. Gains taken before age 59 1/2 can owe a 10% IRS penalty, and cashing out early can cost a surrender charge. In an IRA both grow tax-deferred, so the edge there is the rate alone. Bank and credit union deposits are FDIC or NCUA insured up to the limits; a MYGA is backed by the issuing insurer's claims-paying ability and your state's guaranty association up to its limits, not the FDIC. General education, not tax, legal or financial advice.
How the carrier bait-and-switch works
Most carriers segment buyers into TWO POOLS at renewal:
New money pool (you get this when you first buy)
- Headline rate: designed to attract you
- 5.85% on a 5-year MYGA, for example
Renewal pool (after initial guarantee ends)
- Lower rate: they assume you won't shop around at maturity
- Typically 50-150 bps below new-money
- So your 5.85% MYGA renews at 4.85% even though new buyers get 5.85%
The spread is the carrier's profit. They keep your money at the LOWER rate while attracting new buyers at the HIGHER rate.
How to defeat the bait-and-switch
At maturity, you have a 30-day window (typically) to decide. Three good options:
- §1035 exchange to a different carrier's NEW MYGA at current new-money rate: TAX-FREE
- Surrender within the 30-day window for cash + reinvest where rates are best
- Negotiate with the existing carrier. Some will match the new-money rate if you call and threaten to leave
All three put you back in the "new money pool," at the existing carrier or a new one.
Renewal Integrity grades: my A-to-F system
Tier S (best): Transparent, predictable renewals close to new-money
Wichita National Security: A+
• Publishes renewal rates publicly on their website
• Historical pattern: renewals within 50 bps of new-money
• B+ rating but excellent renewal behavior
Tier A: Mostly transparent, renewals reasonable
Aspida WealthLock: A
• Apollo-backed, fairly competitive renewals
• Generally within 75 bps of new-money
• A- carrier rating
Penn Mutual: A
• A+ mutual carrier
• Conservative but consistent renewal behavior
MassMutual Stable Voyage: A
• A+ mutual structure
• Renewals near new-money historically
Oxford Multi-Select: A
• A AM Best rating
• Strong renewal track record
Tier B: Variable history, sometimes drops 100+ bps
Delaware Life Pinnacle: B
• Group 1001 parent (private credit heavy)
• Renewals can drop 100-150 bps from new-money
• Worth shopping aggressively at maturity
Athene MaxRate: B
• A+ Apollo-backed
• Renewal behavior varies; recent years have been competitive
• Worth verifying at maturity
North American Liberty: B+
• A+ Sammons mutual
• Generally reasonable but cohort-dependent
Tier C: Renewals often drop sharply
EquiTrust SPIA/MYGA: C
• B++ AM Best
• Renewal rates historically drop 150+ bps from new-money
• Strongly recommend §1035 exchange at maturity
Sentinel Personal Choice: C
• AM Best C+ (Marginal), cut from B on 9/22/2026, under review (AM Best press release, 9/22/2026)
• Renewals can be punitive; NAIC complaint index elevated
• §1035 exchange essentially mandatory
Tier D: Avoid the renewal entirely
Old captive-distributed carriers (Bankers Life legacy contracts, etc.)
· Some legacy contracts renew at 1-2% on 5%+ initial guarantees
· The age of the contract matters: older = worse renewal
· Always §1035 exchange out
Why some carriers maintain integrity
Carriers in Tier S/A typically share these traits:
- Mutual ownership: no shareholder pressure to maximize spread
- Limited distribution channels: fewer competing for the new-money pool
- Track record concerns: they want repeat business + word-of-mouth
- Conservative balance sheet: they don't NEED the spread
Carriers in Tier C/D typically:
- Aggressive growth + private equity ownership: pressure to maximize spread
- Volume distribution: assume churn at renewal
- Newer brands: building book before reputation
How to research renewal history
Direct from carrier
Some carriers publish renewal rate cohorts publicly (Wichita, MassMutual, Penn Mutual). Look at their websites.
From your agent
Ask your agent: "What's the renewal history for this carrier's 5-year MYGAs from 2018-2020?" Honest agents have this data.
From NAIC
NAIC consumer database tracks complaint volume. Higher complaints often correlate with worse renewal practices.
From state insurance department
Some state insurance departments publish carrier rate filings publicly. Read the renewal rate sections.
The 5-year ladder strategy
The right way to handle renewal risk: build maturity dates into your strategy from Day 1.
Buy 5-year MYGAs at staggered intervals so something matures every 1-2 years. At each maturity:
• Survey current market rates
• If renewal beats new-money offers: stay (rare)
• If new-money beats renewal: §1035 to a different carrier OR surrender + redeploy
This is built-in flexibility against the bait-and-switch.
Hans's renewal recommendations
If your current MYGA matures in:
0-12 months:
• Get current new-money rate quotes from 3-4 carriers
• Calculate the §1035 exchange break-even (surrender charges + new lockup)
• Decide: stay, exchange, or surrender + redeploy
12-36 months:
• Note your maturity date
• Monitor your carrier's renewal rate transparency
• Build a maturity calendar across all your MYGAs
3+ years:
• Build awareness now, defer action
• Use the time to research carrier renewal histories
What to do
Don't let your MYGA quietly renew at a bait-and-switched rate. At every maturity, demand new-money pricing or move on.
213-414-2808 for a §1035 exchange analysis at your MYGA maturity. Hans pulls 3-4 carrier quotes + analyzes whether the exchange beats staying. No charge.
Related reading
- Why 5-Year MYGAs Win: laddering strategy
- 1035 Exchange Step-by-Step: tax-free transfer mechanics
- Top MYGA Rates June 2026: current market
- Annuity Quote Comparison Checklist: apples-to-apples shopping
Goldstein Complexity Index
Every annuity I review gets a complexity score from 0 to 100. Higher means harder to understand. Complexity is where buyers get hurt: riders they didn't know they were paying for, surrender charges that surprise them, and income "benefit bases" they took for cash. SPIAs and MYGAs score low. Products that stack a bonus, an income rider, an MVA and several crediting options score high.
This product's score: 8/100, Grade A+ (Transparent)
Easy to understand. Few moving parts. The buyer can fully explain the product to a friend after one read of the contract.
Score breakdown
| Dimension | Score (1-10) | What this measures |
|---|---|---|
| Riders | 1/10 | How many riders, optional or built in (income, death benefit, LTC). Each one adds cost and one more thing to understand. |
| Crediting strategies | 1/10 | How many index options (cap, spread, participation rate, step rate, volatility-controlled indices). More choices are harder to follow. |
| Surrender complexity | 1/10 | Length of the surrender period, plus any MVA and bonus recapture. The longer and more layered it is, the harder it is to know what leaving early costs. |
| Benefit-base separation | 1/10 | Whether there is a separate income base ("PIV") that is not cash but looks like it. This causes more buyer confusion than anything else. |
| Bonus structure | 1/10 | A premium bonus with a recapture schedule. The bonus is real, but you can lose part of it if you leave early. |
How to read this
- A+/A (0-40): Easy to understand. A pure accumulation FIA, a MYGA or a SPIA. Little room for mis-selling.
- B (41-60): Read the contract carefully and get a second opinion before signing. Income riders cause most of the confusion.
- C (61-80): Many owners don't fully understand what they bought. Common mis-sells: a bonus presented as cash, a benefit base presented as account value, surrender charges glossed over.
- D (81-100): Get an independent second opinion before signing. The product may still fit you, but the odds you later say "I didn't know it worked that way" are high.
Why it matters: nobody gets sued for selling a complicated product, but buyers regret them all the time. An annuity that wins your money in year one and confuses you for the next 14 is worse than a simpler one you understood from the start. Simple products are easier to check.
Renewal rate risk: FIA caps can change after year one
The cap you are quoted on a fixed indexed annuity is not locked like a mortgage rate. It covers the first crediting period, usually one year. At each contract anniversary the carrier can reset it anywhere above the contract minimum.
It works much like a high-yield savings rate: the bank can lower that next month, and the carrier can lower your cap next year. The reason is how caps are funded. The carrier puts most of your premium in bonds and uses part of the yield to buy index options. When bond yields fall, that option budget shrinks and caps get cut. Caps were cut across the industry in the 2010-2021 low-rate years and came back after 2022.
The minimum cap is the only guarantee
Every FIA states a minimum guaranteed cap in the contract. Of the 99 FIAs we found that publish one, 86 let the insurer cut the cap to 1% or less, and some go as low as 0.25%. A few set 2% to 3%, and several insurers publish no number at all (FIA minimum cap data, checked October 4, 2026). Read that number before you sign.
Questions to ask before you buy
- "What is the minimum guaranteed cap in this contract?"
- "Can you show me this product's in-force renewal-rate history for the last 5 years?"
- "What cap are contracts sold in 2020, 2018 and 2015 getting today?"
- "If the cap drops to the minimum, what would I realistically earn each year?"
If the agent can't answer questions 2 and 3 with documents, you don't have enough information to buy yet.
Annuities in plain terms
An annuity is an insurance contract. You pay a premium, in one lump sum or over time, and get one of three things back:
- Lifetime income (SPIA: pay once, get a check every month for life)
- Tax-deferred growth with downside protection (FIA: index-linked interest with a cap and a 0% floor)
- A fixed rate for a set term (MYGA: works like a CD, with the tax deferred)
The carrier pays for these out of its bond portfolio and, for FIAs, an option budget that buys the index-linked credit.
Every annuity trades liquidity and growth for certainty. A SPIA gives the most certainty (income for life), but you give up access to the principal. An FIA protects the downside but caps the growth. A MYGA locks the rate but ties up the money for the term.
Quick FAQ
Q: Are annuities ever "good investments"?
A: Yes, when used for what they do well: income certainty, downside protection or a locked rate. They go wrong when sold for something else, like a SPIA pitched for "growth."
Q: What's the difference between immediate and deferred annuities?
A: An immediate annuity (SPIA) starts paying within 12 months of purchase. A deferred annuity grows for years before payments begin.
Q: Who regulates annuities?
A: State insurance commissioners. (RILAs are also FINRA-regulated as securities.)
Q: What's the state guaranty fund limit?
A: Usually $250,000 to $300,000 per owner per carrier, depending on the state. Splitting a large purchase across carriers keeps each piece inside the limit.
Q: How do I compare annuities side-by-side?
A: Compare the carrier's ratings (AM Best, S&P, Moody's, Fitch, Weiss, KBRA composite), the Goldstein Complexity Index, the carrier's renewal-rate record, its service, and how the structure fits what you need the money to do.
Q: When should I get a second opinion?
A: Before you sign any annuity over $50,000. An independent review costs nothing and can save you thousands.
Get a second opinion before you sign
Talk to Hans Goldstein, a licensed independent insurance producer.
A fixed indexed annuity ties up your money for 7 to 15 years. Cap rates renew annually and can drop. Income riders have separate benefit bases that aren't cash. Get an independent review before you commit your retirement savings to a multi-year contract.
Send your details. Within one business day you get a written review of your quote, a side-by-side with two alternatives, and a free 15-minute call if you want one.
Rather talk it through? Or book 15 minutes on Hans’s calendar, or call 213-414-2808.
Hans Goldstein · 213-414-2808 · NPN 20602398, independent licensed insurance producer appointed with multiple A-rated carriers
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Disclosure
This review is based on the carrier's public product materials and rates as of the date shown above. Annuity rates, caps, participation rates, payout factors, crediting methods, and long-term care benefit structures change often, sometimes monthly. Confirm current figures in the latest carrier disclosure and the contract before you buy. This is general education, not a personal recommendation or an offer of any product. Hans Goldstein is an independent licensed insurance producer (CA license 4273294, NPN 20602398) appointed with several A-rated carriers. His appointment with the carrier reviewed here may vary, and this review is not an endorsement. No carrier paid for this review. Always read the actual contract and consult a licensed advisor before purchasing any annuity or long-term care insurance product. Past index performance does not predict future credited interest. Annuities and hybrid life+LTC policies are long-term contracts with surrender charges; they are not suitable for funds you may need before the end of the surrender period. AM Best ratings and tax treatment are subject to change. Tax discussion of IRC §7702B, §1035, and the Pension Protection Act of 2006 reflects law as of 2026 and is subject to change.