Looking for the best 1-year annuity rate? You’re not alone. Short-term fixed annuities, often called MYGAs (Multi-Year Guaranteed Annuities), have become a favorite among savers who want safety, predictability, and guaranteed growth without locking up their money long term. At Diversified Insurance Brokers, we help clients compare annuity products from over 75 top-rated carriers to find the most competitive options — and we do it without any sales pressure or hidden fees.

A 1-year annuity offers an ideal blend of flexibility and security, especially for retirees or conservative investors who want to earn a guaranteed interest rate but maintain short-term access to funds. Whether you’re transitioning from a CD, holding cash between market cycles, or testing the waters before a longer-term annuity commitment, a 1-year MYGA can be a smart move.

What Is a 1-Year Fixed Annuity?

A 1-year fixed annuity is a contract with an insurance company that guarantees a specific interest rate for one year. At the end of the term, you can either renew, roll into another annuity, or withdraw your funds — all while your principal remains fully protected. It functions similarly to a certificate of deposit (CD) but with one key advantage: tax-deferred growth. That means your interest compounds without being taxed each year, allowing your savings to grow more efficiently over time.

Who Should Consider a 1-Year Annuity?

This short-term strategy appeals to individuals who value liquidity and flexibility but don’t want to sacrifice yield. You may want to consider a 1-year MYGA if you are:

  
• Rolling over funds from a CD or money market account and want higher yields.
  
• Waiting for interest rates to change before committing to a longer annuity term.
  
• Building a laddered annuity strategy — owning multiple MYGAs with staggered terms.
  
• Preserving cash you may need for near-term expenses or upcoming retirement income needs.
  
• Seeking principal protection during volatile market periods.

Unlike bank CDs, 1-year annuities are issued by insurance companies and offer guaranteed principal protection through state-backed reserves and carrier financial strength. For additional protection, our fiduciary team only recommends carriers rated “A-” or higher by independent agencies such as AM Best.

Benefits of a 1-Year MYGA

The appeal of a 1-year annuity lies in its simplicity and guaranteed return. Key benefits include:

  
• Guaranteed Growth: Your interest rate is locked in for 12 months — no market risk, no surprises.
  
• Tax-Deferred Earnings: Unlike bank CDs, you won’t pay taxes on growth until you withdraw funds.
  
• Penalty-Free Withdrawals: Many contracts allow up to 10% access to your funds each year without penalties.
  
• Renewal Flexibility: At maturity, you can renew at the new rate, roll into a longer-term annuity, or take a full withdrawal.
  
• Short-Term Safety: Ideal for those concerned about interest rate movement or market volatility.

Why Rates Change So Often

Fixed annuity rates fluctuate based on bond yields, market conditions, and carrier portfolio management. The best 1-year annuity rate today may be different tomorrow — that’s why working with a broker who constantly monitors the market is crucial. At Diversified Insurance Brokers, we maintain direct relationships with more than 75 carriers, giving us access to their most recent rate updates before many competitors.

Even small differences in rate — for example, 0.25% — can make a meaningful impact on your returns when compounded over time. That’s why we always compare the top options for you before recommending a product.

How to Compare 1-Year Annuity Options

When evaluating short-term fixed annuities, consider these key features beyond the base rate:

  
• Financial Strength of the Carrier: Look for insurers rated A- or higher by AM Best.
  
• Renewal Options: Some contracts automatically renew; others allow free withdrawals at maturity.
  
• Liquidity Provisions: Verify if you can access up to 10% annually without surrender penalties.
  
• Minimum Deposit Requirements: Usually $10,000–$25,000, but varies by carrier.
  
• Market Value Adjustments (MVA): Understand how an MVA could impact withdrawals before maturity. Learn more in our Market Value Adjustment Explained guide.

Using a 1-Year Annuity in a Ladder Strategy

One of the smartest ways to use a short-term annuity is through laddering — buying multiple MYGAs with different term lengths. This strategy allows you to reinvest annually into higher-yielding contracts while keeping part of your funds liquid each year. Laddering provides both stability and flexibility, especially in uncertain rate environments.

Comparing a 1-Year MYGA to CDs and Money Markets

Both CDs and annuities offer guaranteed interest, but the differences are critical:

  
• Tax Deferral: CD interest is taxed annually, while annuity interest compounds tax-deferred.
  
• Higher Potential Yield: Insurers can often offer higher fixed rates than banks due to different investment models.
  
• Principal Protection: Annuities are backed by carrier guarantees and state guaranty associations.
  
• Flexible Payout Options: You can renew, withdraw, or roll into an income-producing annuity.

Many clients use 1-year MYGAs as a bridge between CDs and longer-term annuities — particularly when they plan to roll funds into a 3- or 5-year contract after the first term. For retirees seeking future income, rolling a short-term annuity into a fixed indexed annuity with a lifetime income rider can lock in guaranteed income later.

Next Step: Compare Current Fixed Annuity Rates

To see the most up-to-date offers and carrier options, visit our Fixed Annuity Rate Page. Rates change frequently, and the best opportunities often go to those who act promptly.

Related Topics to Explore

  
• Best Short-Term MYGA Annuities
  
• Tax-Deferred Annuity Strategies
  
• Annuity Surrender Charges Explained
  
• Guaranteed Lifetime Withdrawal Benefits Explained
  
• Annuity Rollover Options for Teachers