Short answer
A fixed annuity earns a set interest rate for a chosen term, with principal protected.
The NAIC says a fixed deferred annuity earns interest at a rate the insurer sets, with a guaranteed minimum rate written into the contract that cannot drop while you own it. A multi-year guaranteed annuity, or MYGA, locks that rate for a set number of years. Because the rate is fixed and the principal is protected, people often compare it to a bank CD. It tends to suit someone who wants a dependable, protected return for a set period.
Start here
What you actually came to find out
Plain answers first. Sources stay below for checking details.
What does it earn?
A set interest rate the insurer fixes for the term.
Is principal protected?
Yes, with a guaranteed minimum rate in the contract.
How is it like a CD?
Set rate, set term, protected principal.
Who does it suit?
Someone wanting a dependable, protected return.
Rate
Fixed for term
The NAIC says a fixed annuity earns at a rate the insurer sets.
Source trail: NAIC
Floor
Guaranteed minimum
The NAIC says the contract has a guaranteed minimum rate that cannot drop.
Source trail: NAIC
CD comparison
Similar shape
A set rate and term make a MYGA comparable to a bank CD.
Source trail: NAIC
Taxes
Tax-deferred
The SEC says a deferred annuity grows tax-deferred before withdrawal.
Source trail: SEC
The plain answer is that a MYGA is the annuity world’s version of a CD: a set rate, a set term, and principal you do not put at market risk.
Neutral landscape
The shape of the question
The NAIC is the main source because it defines the fixed annuity and its guaranteed minimum rate.
Source trail: NAIC
The multi-year guarantee is the MYGA feature, locking the rate for a set term.
Source trail: NAIC
The CD comparison helps, since the set rate and term give it a familiar shape.
Source trail: NAIC
The tax angle is deferral, which the SEC notes for deferred annuities.
Source trail: SEC
Curator core
What the authorities say
These sources are here for the reader who wants to check the work. The plain-English answer stays above them.
Source 01
NAIC
Buyer’s Guide to Fixed Deferred Annuities
The NAIC consumer Buyer’s Guide explains fixed deferred and fixed indexed annuities, guaranteed minimum interest rates, and the questions to ask.
Source framing
The NAIC says a fixed deferred annuity earns interest at a rate the insurer sets with a guaranteed minimum, and a fixed indexed annuity earns interest based on changes in an index.
Strongest for: how fixed and fixed indexed annuities work and what to ask
Read at NAICSource 02
SEC
Annuities (Investor.gov)
The SEC investor education site explains the basic kinds of annuities, including immediate and deferred annuities and annuitization.
Source framing
The SEC says an immediate annuity starts income within about a year of a single payment, while a deferred annuity lets money grow before income begins.
Strongest for: neutral definitions of immediate, deferred, and annuitized annuities
Read at SECPlain-English forks
The forks people face
Most retirement questions hide a few smaller decisions. These are the practical pieces that change the plan.
Do you want a protected, set return?
Why it matters: A fixed annuity fixes the rate with a guaranteed minimum.
In real life: This fork fits a safety goal.
What to look at: What to look at: the fixed annuity terms.
What term fits you?
Why it matters: A MYGA locks the rate for a set number of years.
In real life: This fork sets how long the rate holds.
What to look at: What to look at: the guarantee period.
CD or MYGA?
Why it matters: Both offer a set rate and term; taxes and access differ.
In real life: This fork weighs the alternatives.
What to look at: What to look at: the comparison of the two.
Common questions
Quick answers
Short, plain answers for the questions people usually have next. The source trail stays available below.
What is a fixed annuity?+
The NAIC says a fixed deferred annuity earns interest at a rate the insurer sets, with a guaranteed minimum rate in the contract that cannot drop while you own it.
What is a MYGA?+
A multi-year guaranteed annuity is a fixed annuity that locks the interest rate for a set number of years.
How is a MYGA like a CD?+
Both offer a set rate for a set term with protected principal. The main differences are tax treatment and access rules.
Is my principal protected?+
Yes. The NAIC says the contract has a guaranteed minimum rate, so the principal is not exposed to market losses.
Who does a fixed annuity suit?+
It tends to suit someone who wants a dependable, protected return for a set period without market risk.
How this page is curated
This page uses the NAIC consumer Buyer’s Guide and the SEC investor education site. MYGA is a common-usage label for a multi-year fixed annuity. It is neutral education, not a recommendation to buy any product.
Read the planner methodologyTrust anchor
Sources used on this page
Every source named above is listed here in one place.
NAIC. Buyer’s Guide to Fixed Deferred Annuities
https://content.naic.org/sites/default/files/publication-anb-lp-consumer-annuities-fixed.pdfSEC. Annuities (Investor.gov)
https://www.investor.gov/introduction-investing/investing-basics/investment-products/annuities
Before you act on this
This plan is educational. It is not personalized financial, tax, or insurance advice. Projections illustrate the math, they do not predict the future. Talk to your own licensed financial professional before acting on any of it.