Like the others, I suspect there are fees or other barriers that make the proposed annuity not "like" a CD.
I suppose it's possible that the odd advantage in short term interest is offered as a loss leader - they're assuming a high enough % of participants retain the annuity that they will make their profit. In any case, it's not like a CD, because in a CD, the interest during the stated medium term period (in this case 3 years) is the reward; in an annuity, usually the expectation is to hold the annuity for many years, then in old age receive a stream of fixed payments. I'm assuming the salesperson is stating there's an early redemption option of some sort at the 3 year mark with a nominal interest rate attached, but that's not the point of the instrument, not the expected use case (regardless of what the salesperson says).
@foghorn, I am struck that CDs and annuities are part of the "cash" bucket. Cash should mean money you can access quickly. Is the annuity money locked up for 3 years? Does the CD have substantial penalties for early withdrawal? If so, then in my view, at best these instruments are more similar to bonds, not cash. Can't you get close to 1.65% with a bond fund, but also have easier lower-cost withdrawal abilities?
VBILX is paying 1.27% at the moment, for example.
Another option, at least for small amounts, is i-bonds (Series I Treasury Bonds). They're paying 1.68% right now, can be cheaply redeemed after one year, and carry federal guarantee of 100% inflation protection for 30 years. I doubt that either the annuity or the CD is as good as that! Though you can only buy $10,000 per year.
https://www.treasurydirect.gov/indiv/products/prod_ibonds_glance.htmDepending on your energy and level of organizational detail, you could use some the CD/annuity cash to harvest bank bonuses. Those can be equivalent to much higher interest rates for periods between 3 months and 3 years. There's a thread somewhere about that.