The MYGA That Pays 6.30% Guaranteed for 5 Years and Beats Every Bank CD on the Market in 2026

Most retirees with cash sitting in a money market account or rolling short-term CDs are accepting a yield penalty they do not have to accept. The best 5-year CDs available in 2026 are paying around 4.0%, which is competitive by historical standards but meaningfully below what a Multi-Year Guaranteed Annuity from a credible insurer can deliver on the same capital for the same term. 

For a 64-year-old with $200,000 in cash equivalents earning roughly 4.2% in a brokerage money market account, one specific Multi-Year Guaranteed Annuity (MYGA) product changes the five-year income math significantly: the Knighthead Life 5-year MYGA, rated A- by AM Best, which is currently paying 6.30% guaranteed for the full term. 

What the Numbers Actually Produce

Consider this: with 6.30% compounded annually over five years, $200,000 grows to approximately $271,700, representing roughly $71,700 in guaranteed growth. Alternatively, a 5-year CD at 4.0% on the same principal compounds to approximately $243,300, producing about $43,200 in growth. The MYGA delivers roughly $28,400 more over the same five-year window without taking on additional market risk, credit risk beyond the insurer’s rating, or any equity exposure. 

The tax treatment amplifies the advantage further as MYGA growth accumulates tax-deferred, meaning the $71,700 in earnings is not reportable as income until withdrawal. A CD’s interest is taxable annually as ordinary income, which, for an investor in the 22% federal bracket, reduces the effective annual yield on the CD each year the interest accrues. 

The MYGA’s deferral allows the full 6.30% to compound without annual tax drag, with the entire gain taxed as ordinary income only at the point of withdrawal. 

What A-Rated Means in Practice

Knighthead Life’s A- rating from AM Best places it in the “Excellent” category, indicating strong financial strength and a credible ability to meet ongoing policyholder obligations. For a MYGA, which is a contractual obligation of the issuing insurer rather than a government-backed instrument, the carrier rating is the primary credit quality indicator. 

Unlike bank CDs, MYGAs are not covered by FDIC insurance as most states operate guaranty associations that provide coverage for annuity contracts up to statutory limits, typically $250,000 per insurer per policyholder, though limits vary by state and should be verified before purchase. 

For a $200,000 MYGA with a single A-rated insurer, most buyers fall within standard guaranty association coverage in their state, but confirming the applicable limit is a reasonable step before committing. 

The Liquitity Terms Worth Understanding

It is worth knowing that MYGAs are not liquid in the way that a market account is. Surrender charges apply during a contract term if more than the penalty-free withdrawal amount is taken out early. This said, most MYGA contracts, including 5-year terms, allow penalty-free withdrawals of up 10 % of the account value annually, providing some access to capital without triggering charges. Amounts above the free withdrawal threshold are subject to declining surrender penalties that typically reduce to zero at or near the end of the contract term. 

For a 64-year-old who does not need this $200,000 for living expenses during the five-year window, the surrender charge structure is largely a theoretical constraint. For someone who might need access to the full principal before maturity, a shorter MYGA term or a laddered approach across multiple maturities would be worth considering. 

What Happens at Maturity

When the five-year term ends, the insurer typically offers a window to renew, withdraw, or exchange the contract without penalty. A 1035 exchange into another MYGA at that point allows the full accumulated value, now approximately $271,700, to roll into a new guaranteed contract without triggering a taxable event at the time of transfer. 

If rates are favorable at maturity, the exchange locks in a new guaranteed rate on the larger compounded balance. If the investor prefers income at that point, the accumulated value can be annuitized or withdrawn on a schedule that spreads the tax liability across multiple years. 

Retirees who want the simplicity of a guaranteed rate, the predictability of a known five-year outcome, and a yield meaningfully above what the CD market currently offers, the Knighthead Life 5-year MYGA makes a straightforward case worth taking seriously.