What is a multi-year interest rate guarantee annuity?
One of the most popular types of fixed deferred annuities today offers a current competitive guaranteed interest rate for multiple years, usually three or five years. The insurance company declares a guaranteed interest rate at the time the contract is issued for the specific term of the guarantee period. This allows you to ‘lock-in’ an interest rate for a specified period of time and be assured that the interest rate will not be reduced in future years. Usually, the guaranteed period coincides with the length of the surrender or withdrawal charges. The advantage of the multi-year rate guarantee annuity is that you know exactly what interest rate you will receive for the specified term, and there is no opportunity for the insurance company, at its discretion, to reduce the interest rate. Obviously, this takes the ‘trust me’ factor out of the equation, as you are guaranteed a particular rate of interest for the term you select. The disadvantage of a multi-year interest rate, of course,
