Tennessee Annuity Rates: Current Fixed Annuity Yields for 2026

Tennessee Annuity Rates: Current Fixed Annuity Yields for 2026

Compare current Tennessee annuity rates across 2- to 10-year terms. See today's MYGA yields from rated carriers and learn what to ask a licensed agent.

Full written article: Tennessee Annuity Rates: Current Fixed Annuity Yields for 2026

Tennessee Annuity Rates

Transcript

SPEAKER_01 0:03

Welcome to the Tennessee Annuity Show. I'm Jessica.

SPEAKER_00 0:06

And I'm Caleb. We break down complex annuity products in plain English, fixed annuities, indexed annuities, income annuities, all of it.

SPEAKER_01 0:13

We cover the products, the fine print, and the questions you should ask before you sign anything.

SPEAKER_00 0:18

Quick note before we start. This show is for general information only and is not financial, tax, or legal advice. Annuity guarantees depend on the issuing insurance company's ability to pay claims. Talk with a licensed professional before making decisions about your retirement income.

SPEAKER_01 0:33

All right, let's get into today's episode. So uh I had a conversation with my aunt last month. She's 68, lives outside of Knoxville, just finished rolling over a chunk of her old 401k, and um she called me and said, Jessica, I keep seeing these uh annuity rate numbers online, and I have no idea if they're real or if they're just bait. And honestly, I didn't have a great answer for her.

SPEAKER_00 1:01

That's such a common place to land because the rates are real. They're actual contractual rates from actual carriers. But there's a lot of context that doesn't come with the number when you first see it.

SPEAKER_01 1:11

Right. Like she was looking at a five-year product showing 6.25%, and she's thinking, is this too good to be true? What's the catch?

SPEAKER_00 1:20

So the first thing I'd tell her, and this is important, is that we're specifically talking about multi-year guaranteed annuities. My guess. Uh that's the technical name for what most people call a fixed annuity. And the rate you see is the declared rate for the full term of that contract. Not a teaser, not a first-year bonus that drops off, the full term.

SPEAKER_01 1:40

Okay, so if it says five years at six something percent, that's what you're getting for five years.

SPEAKER_00 1:45

For that specific product from that specific carrier, yes. But here's the nuance it's not indefinitely. Once the term ends, you have options. Renew, withdraw, roll into a new contract. The rate doesn't just keep going automatically.

SPEAKER_01 2:02

That's actually something my aunt didn't realize. She thought once you locked in, you were locked in forever.

SPEAKER_00 2:08

A lot of people think that. It's more like a term similar to how a mortgage rate is fixed for a period, then you revisit. The annuity contract has a defined window.

SPEAKER_01 2:16

Okay, so let's actually get into the numbers because I think people listening right now are curious what's actually out there? What does the landscape look like for Tennessee residents right now?

SPEAKER_00 2:27

So, as of early July 2026, the rates are genuinely competitive across the board. On the shorter end, two-year terms, you're looking at roughly 4.95 to 5.25%, depending on the carrier. Three-year products are running from about 5.65 up to six percent at the top of the list.

SPEAKER_01 2:47

Wait, six percent on a three-year? That's higher than I would have expected for something that's short.

SPEAKER_00 2:52

Yeah. Five-year products are where you see some of the highest numbers, up to six point two five percent. And then interestingly, the ten-year products are also coming in around six percent for some carriers, which is notable.

SPEAKER_01 3:08

Interesting that the ten year isn't dramatically higher than the five year. I would have assumed locking up money longer means you get paid more for it.

SPEAKER_00 3:16

Usually that's the intuition. And sometimes it holds. But the yield curve, the relationship between short-term and long-term rates, has been pretty flat lately. So carriers aren't always offering a huge premium for longer commitments. Sometimes the sweet spot is actually in the middle.

SPEAKER_01 3:33

Huh. So chasing the longest term isn't automatically the move.

SPEAKER_00 3:37

Not at all. And that brings up something I think is really underappreciated the AM best ratings attached to each of these products.

SPEAKER_01 3:44

Right, because when I look at that rate table, the highest rates aren't always from the carriers with the highest ratings.

SPEAKER_00 3:50

Exactly. You've got some products at the top of the rate list carrying a B minus rating, and then you've got A-rated carriers offering rates that are maybe a quarter to half a percent lower. And that trade-off is real.

SPEAKER_01 4:01

So what does a B minus actually mean versus an A, like in plain terms?

SPEAKER_00 4:05

And best is essentially rating the insurer's financial strength, their ability to pay claims and meet obligations. An A rating means the carrier is in strong financial shape. A B minus is still a passing grade, so to speak, but it signals more uncertainty about the insurer's long-term stability.

SPEAKER_01 4:20

So you might get a higher rate, but you're taking on a little more counterparty risk.

SPEAKER_00 4:25

That's the trade-off. And I want to be careful here. A B minus carrier isn't automatically a bad choice, and an A carrier isn't automatically the right one for everyone. But it's a factor you should be weighing alongside the rate, not ignoring.

SPEAKER_01 4:37

And Tennessee does have some protection in place for residents, right? Like if a carrier runs into trouble.

SPEAKER_00 4:44

Yes. The Tennessee Life and Health Insurance Guarantee Association provides a backstop up to certain limits if an insurer becomes insolvent. It's not unlimited coverage, and it's not the same as FDIC insurance, but it's meaningful protection. Your agent can walk you through the specific limits.

SPEAKER_01 5:00

Which brings up the CD comparison, because I know that's the first thing a lot of people do. They go to their bank, they see what the CD is paying, and then they look at annuity rates.

SPEAKER_00 5:11

And it's a fair comparison to start with, but the products are pretty different once you get into the details.

SPEAKER_01 5:16

Walk me through the main differences because I think people assume they're basically the same thing.

SPEAKER_00 5:20

The biggest one for a lot of people is tax treatment. With a bank CD, the interest you earn is taxable every year. You get a $1099 at the end of the year, you pay tax on it, even if you didn't touch the money. With a myga, the growth is tax deferred. You don't owe anything on it until you actually withdraw.

SPEAKER_01 5:35

So if you're in a high tax bracket and you're just letting money grow, that deferral is actually worth something.

SPEAKER_00 5:42

It can be significant over a multi-year term. Think of it like the difference between a plant growing in full sun uh versus one that keeps getting trimmed back every year. The tax-deferred account just has more to compound on.

SPEAKER_01 5:55

I like that. Uh okay, what about the FDIC piece? Because I know that's a big comfort for a lot of people. That little sticker on the bank door.

SPEAKER_00 6:04

Right. And that's a legitimate difference. CDs are FDIC insured up to $250,000. Uh annuities are not FDIC products, they're insurance contracts, are regulated by the State Insurance Department, not the FDIC. The Guarantee Association is the backstop, uh, but it's a different mechanism.

SPEAKER_01 6:24

Aaron Powell And annuities have surrender charges, which CDs technically don't, or at least CDs have early withdrawal penalties, but they work differently.

SPEAKER_00 6:34

Yeah, this is where people sometimes get surprised. MyGas typically have a surrender charge period. If you pull out more than the free withdrawal amount before the term ends, you pay a penalty. Most contracts do allow some free withdrawals each year, often around 10% of the account value, but beyond that, you're in surrender charge territory.

SPEAKER_01 6:52

And that free withdrawal provision varies by carrier?

SPEAKER_00 6:55

It does. Some are more generous than others. Which is why, and I keep coming back to this, you really need to read the actual contract terms, not just the rate.

SPEAKER_01 7:07

This is actually what I wish I had told my aunt. She was so fixated on the rate number.

SPEAKER_00 7:12

It's natural. The rate is the thing that gets advertised, but the surrender schedule, the free withdrawal provision, the renewal terms, those are what determine whether the product actually works for your life.

SPEAKER_01 7:23

Let's talk about who this actually makes sense for, because I don't want people to hear 6% and just assume it's right for them.

SPEAKER_00 7:31

Yeah, good call. The profile that tends to benefit most is someone approaching or already in retirement who wants a predictable declared rate on a portion of their savings. Not all of it necessarily, just a portion they don't need immediate access to.

SPEAKER_01 7:46

And the keyword there is portion, right? Like this isn't a put everything in one place strategy.

SPEAKER_00 7:51

For most people, no. You'd want liquidity elsewhere. But for money that you genuinely don't need for five or seven years, maybe it's a rollover from a retirement account. Maybe it's savings you've already earmarked. A media can be a sensible place to park it.

SPEAKER_01 8:05

What about someone who's already maxed out their IRA and their 401k? Does the tax deferral still matter?

SPEAKER_00 8:11

That's actually one of the more compelling use cases. If you've hit the contribution limits on your tax-advantaged accounts and you have additional savings you want to grow without paying tax on the growth each year, a non-qualified annuity, funded with after tax dollars, gives you that deferral outside of the retirement account structure.

SPEAKER_01 8:29

Okay, and then there's the income piece. Like people who are worried about outliving their money.

SPEAKER_00 8:35

That's a different product, actually. Aspia, a single premium immediate annuity. That's where you hand over a lump sum and the carrier starts sending you income payments, often for life. That's a separate conversation from my gas, but it's worth knowing it exists if longevity is the concern.

SPEAKER_01 8:54

Right, because I think people sometimes conflate all annuities into one thing.

SPEAKER_00 8:58

They really do. Annuity is a broad category. A myga is a fixed accumulation product. Uh, SPIA is an income product. Um, there are also indexed annuities, variable annuities, they all work very differently. Today, we're really focused on the fixed NYG side.

SPEAKER_01 9:16

Let's talk Tennessee specific for a minute, because there's actually something pretty notable about this state when it comes to taxes.

SPEAKER_00 9:23

Yeah, Tennessee is genuinely unusual here. There's no state income tax on wages or salaries. Most people know that. But what's less known is that the hall income tax, which used to tax investment income like dividends and interest, was fully repealed as of January 1st, 2021.

SPEAKER_01 9:38

So when you eventually take money out of an annuity in Tennessee, you're not paying state tax on it.

SPEAKER_00 9:44

Generally, no. Not at the state level. Federal tax still applies to the growth portion. And if the annuity was funded with pre-tax dollars, like a rollover from a traditional IRA, the full withdrawal is typically taxable at the federal level.

SPEAKER_01 9:58

So the tax picture in Tennessee is actually pretty favorable compared to a lot of other states.

SPEAKER_00 10:03

It is. That doesn't mean you skip talking to a tax professional because everyone's situation is different and federal taxes are still very much in play. But the state tax piece is one less thing to worry about for Tennessee residents.

SPEAKER_01 10:15

Okay, I want to hit on something that I think trips people up in the actual buying process. The rate you see today, um, is that the rate you're going to get in your contract?

SPEAKER_00 10:25

Not necessarily, and this is a really important point. The rate gets locked in when your application is approved and the contract is issued, not when you first see the quote. And there can be a gap of days or even weeks between when you apply and when the contract is actually issued.

SPEAKER_01 10:41

And rates can change in that window.

SPEAKER_00 10:44

They can. Carriers adjust MIGAR rates based on the interest rate environment and their own business decisions, sometimes weekly, sometimes more frequently. So if you see a rate today, that looks great. The right move is to get the application in and ask your agent specifically how that carrier handles rate changes during the application period.

SPEAKER_01 11:02

Some carriers lock the rate at application, some at issuance.

SPEAKER_00 11:06

Exactly. It varies by carrier. Some will honor the rate you applied at, some will give you the rate at issuance, and some have a better of policy. Your agent should know the specific carrier's policy.

SPEAKER_01 11:16

That's the kind of thing that would have never occurred to me to ask.

SPEAKER_00 11:19

Most people don't ask it until it affects them, and then they're frustrated. So ask up front.

SPEAKER_01 11:25

Let me throw a scenario at you because I think it helps to make this concrete. Picture a couple, both 65. They've got $100,000 they want to deploy. Maybe it's a rollover, maybe it's savings. They're in Nashville. How do they even start thinking about which term makes sense?

SPEAKER_00 11:43

So the first question is really about uh when they need the money. If they have a pension or social security covering their basic expenses, and this hundred thousand is genuinely discretionary for the next five to seven years, they have more flexibility to go longer and and potentially capture a higher rate.

SPEAKER_01 11:57

But if they're counting on some of that money in three years for, I don't know, a healthcare expense or helping a kid with a down payment.

SPEAKER_00 12:06

Then locking into a seven-year product at six percent is not the right answer, even if the rate looks great. Because if you need to get out early, you're paying surrender charges, and suddenly that attractive rate doesn't look so attractive anymore.

SPEAKER_01 12:18

So the rate is almost the last thing you should be looking at, not the first.

SPEAKER_00 12:22

I'd say it's one of several things you should be looking at simultaneously. Timeline, carrier rating, surrender schedule, free withdrawal provisions, and then rate. If you just optimize for rate, you can end up in a product that doesn't fit your actual life.

SPEAKER_01 12:36

I feel like that's the thing the internet makes harder, not easier, because you see a big number and it's very easy to anchor on it.

SPEAKER_00 12:43

Completely. And rate tables are useful. They tell you what's possible, they help you go into a conversation with a licensed agent already knowing the landscape, but they can't tell you which product fits your situation. That requires an actual conversation.

SPEAKER_01 12:58

What about minimums? Because I know some people listening might have say $20,000 or $30,000, not a hundred thousand. Are my gas even accessible at that level?

SPEAKER_00 13:08

Yeah, many are. A lot of myga products have minimums in the $5,000 to $25,000 range. Some carriers set higher thresholds, maybe $50,000 or more for their top-tier products. But there are options at lower premium amounts. Your agent can help you identify what's available at your specific number.

SPEAKER_01 13:26

And the rates at lower minimums. Are they comparable?

SPEAKER_00 13:30

Sometimes. Some carriers though offer the same rate regardless of premium size. Others have tiered rates where larger premiums get slightly better rates. Um it's product specific.

SPEAKER_01 13:39

Okay, I want to circle back to something you said earlier about the rate table being a snapshot, because I think people need to really internalize that. These numbers are from a specific date. Um, they're not permanent.

SPEAKER_00 13:53

Right. And I can't stress this enough. Mega rates move. The rate environment we're in right now has been favorable, but that can shift. If you see a rate today that meets your needs, waiting six months to see if something better comes along is a real gamble. It might go up, it might go down.

SPEAKER_01 14:11

Which is a little ironic because the whole appeal of a fixed annuity is that once you're in, your rate is set. The uncertainty is in the shopping phase, not the holding phase.

SPEAKER_00 14:21

That's actually a really clean way to put it. The product eliminates rate uncertainty going forward, but you still have to make a decision in an uncertain present.

SPEAKER_01 14:29

Okay, one more thing I want to touch on, uh, and this is something I think gets glossed over. The fact that annuities are insurance contracts, not bank products. Does that distinction actually matter in practice?

SPEAKER_00 14:42

It matters in a few ways. It affects how they're regulated. Insurance is state regulated, so the Tennessee Department of Commerce and Insurance is the relevant oversight body, not a federal banking regulator. It affects how they're protected if a carrier fails, as we talked about with the guarantee association. And it affects how they fit into a broader financial plan. You know, they're not interchangeable with a savings account or a brokerage account.

SPEAKER_01 15:08

And I think it also matters for how you shop for them. You need a licensed insurance agent, not just anyone who sells financial products.

SPEAKER_00 15:16

Correct. In Tennessee, the person selling you an annuity needs to be licensed to sell insurance in the state. And honestly, a good agent is worth a lot here. They know which products are approved for sale in Tennessee. They know the carrier nuances, they can help you compare apples to apples across the rate table.

SPEAKER_01 15:34

I think the framing I'd give someone like my aunt is use the rate table to get educated, not to make a decision. Go into that agent conversation knowing what 6% on a five-year means, knowing what AM best ratings are, knowing the questions to ask about surrender schedules. But let the agent help you figure out which specific product actually fits.

SPEAKER_00 15:59

That's exactly it. The worst outcome is someone who sees a number, calls a carrier directly without understanding the contract, and ends up locked into something that doesn't match their timeline or their liquidity needs. The best outcome is someone who comes in informed, asks the right questions, and ends up in a contract they actually understand.

SPEAKER_01 16:18

And that's true whether you're in Nashville, Knoxville, Memphis, you're wherever in Tennessee you are.

SPEAKER_00 16:24

The products are generally available statewide, though you do want to confirm that any specific product is approved for sale in Tennessee. Not every carrier offers every product in every state. Your agent will know which ones are available to you.

SPEAKER_01 16:36

One thing I didn't ask, and I'm realizing I should have, is there a scenario where a fixed annuity is clearly the wrong tool? Like, when should someone walk away from this conversation?

SPEAKER_00 16:47

If you need the money in less than two years, a my gay is probably not the right fit. The surrender charges alone would eat into whatever rate advantage you'd get. If you're very young and have decades of runway, you might be better served by other vehicles. And if you're in a very low tax bracket already, the tax deferral benefit is less compelling.

SPEAKER_01 17:06

So it's not a universal answer, it's a tool that fits specific situations.

SPEAKER_00 17:12

Every financial product is a tool. A hammer is great for nails. Um if you need a screwdriver, a hammer is just going to make a mess. A myga is excellent for what it does. Locking in a declared rate, uh growing tax deferred for a defined period. If that matches your situation, great. If it doesn't, there are other tools.

SPEAKER_01 17:31

It's I appreciate that you didn't just say annuities are great for everyone. Because I've heard that pitch before and it always makes me suspicious.

SPEAKER_00 17:40

Yeah. Anytime someone tells you a financial product is right for everyone, that's your cue to slow down. The right answer always starts with your situation, your timeline, your tax picture, your liquidity needs, your comfort with the carrier. Then you find the product that fits.

SPEAKER_01 17:56

And for Tennessee residents specifically, the tax picture is actually pretty clean. No state income tax on withdrawals, the hall tax is gone. So at least that's one less variable to untangle.

SPEAKER_00 18:09

It really is. Federal taxes are still the main consideration. And if you're doing a rollover from a pre-tax account, you'll want a tax professional in the conversation. But the state level piece in Tennessee is genuinely simpler than in a lot of other states.

SPEAKER_01 18:23

Alright, so if someone's listening to this and they're ready to take a next step, what does that actually look like?

SPEAKER_00 18:31

Talk to a licensed Tennessee insurance agent, not a general financial advisor who dabbles in annuities. Someone who actually knows these products, knows the carriers approved in Tennessee, and can walk you through the contract details. Come with your questions. Know your timeline. Know roughly how much you're working with, and don't let the headline rate be the only thing driving the conversation.

SPEAKER_01 18:50

And if the agent can't explain the surrender schedule clearly, or can't tell you how the carrier handles your rate changes during the application window.

SPEAKER_00 19:00

Find a different agent. A good agent should be able to answer those questions without hesitation. That's not a gotcha. That's just basic product knowledge.

SPEAKER_01 19:07

I love that. That's actually the most useful thing I've heard today. Use those questions as a filter for whether you've got the right person in front of you.

SPEAKER_00 19:16

Exactly. The agent who can't explain the contract clearly probably doesn't understand it well enough to be selling it to you.

SPEAKER_01 19:25

That's it for today's Tennessee Annuity Show.

SPEAKER_00 19:28

If you have questions about your specific situation, talk to a licensed advisor.

SPEAKER_01 19:31

Visit Tennessee AnnuityRates.com for show notes or to get matched to an advisor.

SPEAKER_00 19:36

We'll see you next time.