By Marc Gilman
(800) 927-9326 |
The Federal Reserve has already cut interest rates several times since its 2023 peak — yet annuity rates haven’t followed it down. That gap between what the Fed is doing and what annuities are actually paying is the real story of the 2026 annuity market, and it’s worth understanding before deciding whether now is the right time to buy.
Key Takeaways:
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The Fed funds rate has fallen substantially from its 2023 peak — currently in the 3.50% to 3.75% range as of 2026, down from a peak of 5.25% to 5.50%, after several rate cuts through 2024 and 2025.
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MYGA rates haven’t fallen proportionally, and that’s not a coincidence. Annuity rates track longer-term Treasury yields more closely than the Fed funds rate itself, and long-term yields haven’t dropped as much as short-term rates have.
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Top 5-year MYGA rates today are running roughly 6.0% to 6.3% from A-rated carriers — comparable to, and on some terms above, the peak rates seen in late 2023.
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2025 was a record year for annuity sales overall — $464.1 billion, the fourth consecutive annual record. That momentum has continued into 2026: Q2 2026 hit its own all-time quarterly record of $123.9 billion, though the mix has shifted — RILAs and variable annuities are driving growth while MYGA and FIA sales have softened slightly year-over-year.
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SPIA sales just hit a quarterly record, reversing the softer income-annuity sales seen through most of 2025 — a reminder that “waiting for a better rate” is a moving target, not a fixed strategy.
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LTC riders aren’t really a MYGA feature. They live almost exclusively on fixed indexed annuities, not simple fixed-rate MYGAs — so “buy a MYGA and optionally add LTC protection” isn’t quite how the market actually works.
Why Are Annuity Rates Still High If the Fed Has Been Cutting?
This is the part of the current environment most worth understanding, because it isn’t intuitive. The Fed’s rate hikes from 2022 through 2023 were dramatic and fast — the fastest pace since the 1980s — pushing the federal funds rate to a peak of 5.25% to 5.50%. Since then, the Fed has cut rates several times, and as of early 2026 the target range sits at 3.50% to 3.75%, a meaningful reduction from the peak.
Annuity rates haven’t followed that decline the same way, and the reason is mechanical. MYGA and fixed annuity rates are priced primarily off longer-term Treasury yields and investment-grade corporate bond yields — the 5-year and 10-year range in particular — not the short-term federal funds rate the Fed directly controls. Those longer-term yields respond to a broader set of factors: inflation expectations, long-term growth forecasts, and fiscal outlook. They can hold steady, or even rise, while the Fed is cutting short-term rates, which is close to what’s happened through 2025 and into 2026. The practical result: even with meaningful Fed cuts already behind us, insurance carriers are still able to offer some of the most competitive guaranteed rates in over a decade.
What Do Current Rates Actually Look Like?
Top 5-year MYGA rates from A-rated carriers are commonly running in the 6.0% to 6.3% range as of mid-2026, with some 7-year and 10-year terms running slightly higher still. That’s a genuinely strong environment — for comparison, a 5-year MYGA in 2021 was paying somewhere around 2.1% to 2.25%, so today’s rates represent an increase of roughly 350 to 400 basis points from that low point. Fixed indexed annuities are also benefiting from the same underlying environment, with cap rates on major index strategies commonly running 8% to 12% and full principal protection built in.
None of this means rates are guaranteed to stay at this level. Most economists expect the Fed to hold rates relatively steady through the rest of 2026, with perhaps one or two additional modest cuts if inflation continues to moderate — and if long-term Treasury yields eventually follow the Fed down more than they have so far, new MYGA rates would likely follow with them.
Not Every Annuity Type Is Trending the Same Way
The record sales figures mask a real, evolving split in what’s actually growing and what isn’t — and the picture has continued shifting into 2026. Total sales hit another all-time quarterly record of $123.9 billion in the second quarter of 2026, up 4% from a year earlier and the eleventh consecutive quarter above $100 billion, according to LIMRA. But underneath that headline, the guaranteed-rate products that drove the last few years of growth actually lost some ground: MYGA sales fell 2% year-over-year to $44.7 billion, and fixed indexed annuities fell 7% to $30.7 billion — both still the largest categories, but softer than a year earlier. Registered index-linked annuities (RILAs) set their own record at $23.3 billion, up 22%, and traditional variable annuities grew even faster in percentage terms, up 25% to $17.9 billion. LIMRA’s own explanation is straightforward: equity markets hitting new highs made market-participation products look more attractive next to a flat guaranteed rate, not that guaranteed products suddenly became less useful.
RILAs and FIAs are easy to confuse but structured differently, which matters if you’re comparing them. A RILA sits between an FIA and a variable annuity — more index upside in exchange for taking on a defined slice of downside risk, usually through a buffer that absorbs the first 10% or 20% of a loss. Because of that risk-sharing, RILAs are registered securities, regulated accordingly; FIAs are insurance products and are not.
Income-focused products tell the most encouraging story, and a more current one than the “buyers are waiting” narrative suggested earlier in 2026. Single premium immediate annuities hit their own quarterly record in the second quarter — $4.0 billion, up 12% year-over-year — and deferred income annuity sales grew as well. That’s a meaningful shift from the softer SPIA and DIA sales seen through most of 2025, when buyers appeared to be holding off in hopes rates would move higher before locking in lifetime income. Whatever hesitation existed seems to have eased by mid-2026, which is a useful reminder that “wait for a better rate” is a moving target, not a fixed strategy — the buyers who waited through 2025 gave up months of income while rates for income products didn’t necessarily move in their favor.
Is Now Actually a Good Time to Buy?
The honest answer is that it depends on what you’re comparing against, not just whether today’s headline rate looks attractive in isolation. A MYGA rate you lock in today is genuinely locked for the full term — if rates fall over the next few years, you keep the rate you started with. That’s a real advantage of buying now rather than waiting, if the rest of your financial picture supports a multi-year commitment. But trying to perfectly time the purchase around a specific Fed meeting or rate announcement is generally not a productive exercise — by the time a rate change is public, pricing has often already moved, and the more consequential decision is usually whether a multi-year, principal-protected, tax-deferred product fits your goals at all, not whether you can shave a few extra basis points off the entry rate.
The one thing worth planning for regardless of when you buy: every MYGA has a maturity date, and a decision about what happens next — renew, exchange, or withdraw — needs to be made before that date arrives, not after.
Should You Add an LTC Rider While Rates Are High?
This part of the question deserves a direct clarification: LTC riders aren’t really a feature you add onto a MYGA. Multi-year guaranteed annuities are built to do one thing — lock in a fixed rate for a set term — and LTC or ADL-enhanced riders are almost never available on that specific product type. Where LTC-related riders actually show up is on fixed indexed annuities, where an income rider can sometimes include an ADL-triggered enhancement, or on genuinely 7702B-qualified annuity-based hybrid products built specifically around LTC protection, like the annuity-chassis products discussed elsewhere in this content.
That distinction matters for how to think about the current rate environment’s effect on LTC planning. A high-rate environment does make FIA-based products generally more attractive, since higher yields support better cap rates and participation rates on the index-linked side. But whether a specific LTC-related rider on an FIA is worth adding depends on the same questions that apply regardless of the interest rate environment: whether it’s a genuine 7702B-qualified benefit or just an enhanced withdrawal feature, what it actually costs, and whether you’d use it. A strong rate environment is a reasonable time to take a fresh look at annuity options generally, including FIA-based products that could carry LTC protection — but it’s not, by itself, a reason to add a rider you wouldn’t otherwise need.
Where Does Insurance Planning Fit In?
Whether today’s rate environment makes sense for you depends on your time horizon, what the money is earmarked for, and whether a multi-year lock-in fits your broader plan — not just whether the headline rate looks good compared to a bank CD. And if long-term care protection is part of what you’re trying to solve for, that’s worth evaluating as its own decision, on its own merits, rather than as an afterthought bundled onto a rate-driven purchase.
What To Do Next
If you’re trying to figure out whether today’s annuity rates make sense for your situation — or whether an FIA-based product with genuine LTC protection fits better than a simple MYGA — we’re glad to walk through the actual numbers with you. Call us at (800) 927-9326 or email — no pressure, just straight answers.
By Marc Gilman, Gilman Agency
This information is general in nature and not intended as tax or legal advice. Interest rates, cap rates, and product availability change frequently and vary by carrier, state, and premium amount. Consult your tax advisor regarding your specific situation.
Sources: Federal Reserve, January 2026 FOMC statement; Annuity.org, “Annuity Sales Surge for the Fourth Straight Year” and current fixed annuity rate reporting (August 2026); LIMRA U.S. Individual Annuity Sales Survey, Q2 2026 results (released July 28, 2026); AnnuityJournal.org, “Annuity Sales Hit Record $123.9 Billion in Q2 2026 as RILAs Surge”; SafeMoney.com, “MYGA Rates 2026”; Annuity.com, current MYGA rate reporting (August 2026); Trading Economics, U.S. Fed Funds Interest Rate historical data; Bob Carlson, “What You Should Know As Annuity Sales Soar,” Forbes (June 2026).
