A new money rate is the pricing a carrier is quoting right now to people opening a brand new annuity contract, shaped by today's market rather than what an existing contract might renew at.
New money rate vs. renewal rate
The rate quoted to someone opening a brand new contract today, the new money rate, is almost never the same figure a carrier offers an existing customer at renewal. When your MYGA reaches its maturity date, the carrier proposes a renewal rate for leaving your money right where it is, and that renewal rate typically sits below what the same company is advertising to attract fresh deposits. Carriers compete hard for new money because that is where growth comes from, so those rates get sharpened. Renewal rates face far less competitive pressure, since inertia alone keeps a lot of contract holders from ever comparing offers, and the carrier knows it.
That gap is the main reason so many annuity owners choose a 1035 exchange at maturity instead of simply staying put. Moving the balance to a new contract, whether with the same carrier or a different one, lets you capture the current new money rate rather than settling for whatever renewal number shows up in the mail. A renewal rate is not necessarily a poor rate on its own, and switching carriers can start a fresh surrender period, so weigh the rate gap against how many more years you would be locking the money away. Still, checking new money rates elsewhere before your renewal window closes costs nothing and often pays for itself many times over.
The simplest way to run that comparison is to request current quotes from two or three carriers as soon as your maturity notice arrives, rather than waiting until the renewal deadline is almost on top of you. A few points of difference on a large deposit adds up over a multi-year term, and a licensed strategist can price several carriers side by side so you are comparing real numbers instead of guessing whether the renewal offer in your mailbox is competitive.
Frequently asked questions
What is a new money rate?
It is the rate an insurance company is quoting right now to someone opening a brand new contract, shaped by current market conditions and that carrier's pricing strategy at the moment.
What separates a new money rate from a renewal rate offer?
A renewal offer, given when your existing contract matures, is typically lower than what that same carrier is quoting fresh buyers, since new deposits face far more competitive pricing pressure.
Why do owners move their money at maturity instead of renewing?
Renewal offers face less competition than new business, so shifting the balance into a new contract, often through a 1035 exchange, usually recaptures the sharper new money pricing.
Written and reviewed by
James Forren Warren
Licensed Retirement Income Strategist · License #20551202
James Forren Warren is a licensed Retirement Income Strategist with Tax Free Wealth Plan. For the past five years he has helped individuals and families turn their savings into retirement income they can count on. He writes and reviews the annuity research on this site and keeps it plain: what a product does, what it costs you, and who it actually fits.
Educational only, not investment, tax or legal advice. Tax Free Wealth Plan LLC is a licensed insurance agency, not a registered investment adviser or broker-dealer. Annuities are not bank deposits, are not FDIC insured and are not guaranteed by any government agency. Guarantees are backed solely by the claims-paying ability of the issuing insurance company. Features, rates and availability vary by state and change over time; the contract and disclosure documents govern.