Declared Rate
A declared rate is the interest rate set by the carrier for a specified period on a fixed annuity. On a MYGA, the declared rate is fixed for the entire guarantee period (typically 2-10 years). On a traditional fixed annuity, the declared rate is set annually and may be adjusted at the carrier's discretion within the contractual rate-renewal range. The minimum guaranteed interest rate (MGIR) — typically 1% to 3% — is the contractual floor below which the declared rate cannot drop, regardless of market conditions or carrier discretion.
A traditional fixed annuity is issued with a 5.50% declared rate for year one and a 2.0% minimum guaranteed interest rate. In year two, market rates have declined. The carrier declares 4.25% for year two. In year three, rates decline further; the carrier declares 3.50%. In year four, rates collapse; the carrier could declare 2.50%, 2.10%, or any rate down to but not below 2.0%. The consumer's actual return depends on the carrier's rate-renewal decisions, which are constrained by the MGIR floor and the carrier's competitive positioning.
Why it matters
On a traditional fixed annuity, the year-one declared rate is often a "teaser" — set high to attract premium and reset lower in subsequent years. The MGIR is the contractual protection against extreme rate cuts. On a MYGA, the declared rate IS the locked rate for the term, eliminating renewal risk during the guarantee period.
How to evaluate
On a traditional fixed annuity, compare the declared rate AND the MGIR. A 5.50% teaser with a 1.0% MGIR is materially worse than a 5.00% rate with a 3.0% MGIR. On a MYGA, the declared rate is the headline number — but verify the rate is locked for the full term, not just for year one.
In the contract
Look for "current declared interest rate," "minimum guaranteed interest rate," "renewal rate," and "rate-renewal period."
Related terms
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