What will we be going over in this annuity review?
In this review of the Forethought ForeIncome ll 7-Year Fixed Indexed Annuity, we will be discussing the following information:
- Type of annuity
- How the annuity works
- Pros and cons
- Where this annuity may or may not fit in a financial plan
Annuities can be complex. That’s where having an Annuity Investigator who loves math comes in.
We make the complex, simple.
The consideration of an annuity – or any financial product – that can offer you security, along with an ongoing income stream in the future, is a big decision. But, if you have been reading up on the Forethought ForeIncome 7-Year fixed indexed annuity, it could fit into your overall financial plans, as it can provide you with principal protection and certain other guarantees.
However, before you dive in and purchase this or any other annuity, it can be helpful if you know all of the facts, especially those that pertain to how the product works, and how it may (or may not) actually help you to attain your future financial goals.
Over the past decade or so, given the large number of Baby Boomers who are retiring or approaching that time in their lives, annuities have become extremely popular. One reason for this is the guaranteed income stream that they can provide.
In addition, because fixed indexed annuities can provide you with the opportunity for growth AND principal protection in any type of market environment, many investors and retirees are flocking to them – especially after the damage that was done from the 2008 recession, and more recently, the COVID-19 outbreak (and corresponding stock market correction).
Because of annuities’ appeal, there are more financial advisors that are offering these vehicles to their clients. But this is not necessarily a good thing – primarily because even if an advisor is vying to do the right thing for his or her clients, they may not always be providing the “whole picture.”
In addition, due in large part to the popularity of annuities, the array of annuity offerings that are now available has grown substantially in order to help investors to essentially “customize” them to fit their particular needs. This, however, has made many annuity products extremely complex – even for well-educated consumers (as well as for many advisors).
With that in mind, it is always a good idea to truly understand what it is that you are purchasing – especially because an annuity could comprise a significant portion of your retirement savings. And, once you get into an annuity, it can be very difficult to get out, given the potential fees and penalties that are usually involved.
Annuity and Retirement Income Planning Information that You Can Trust
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Annuities are a unique type of insurance product in that they are the only financial vehicle that can make the promise of providing you with a lasting, lifetime income stream. Unfortunately, though, some advisors – albeit unintentionally – will tend to make them sound better than they actually are.
One reason for this is because, in order to obtain the nice benefits, there are oftentimes also some tradeoffs that you need to make. So, the reality is that you really do need to know just exactly what you might have to give up in order to get the guarantees and other benefits an annuity can provide.
Many annuity sales reps, and even many of the annuity websites that you’ll see online, will make some pretty bold claims about the performance of the annuities that they offer, such as:
- 7 to 8% return
- Low fees
- Guaranteed income for life
- No market risk
The goal of the annuity and other product reviews that you’ll find here on AnnuityGator.com is to provide you with information on the features and benefits inside the annuity, and to help you better understand what the benefits could mean to you and your financial situation – both now and in the future.
So, if you’re ready to get started, let’s dive in!
The Forethought ForeIncome ll 7-Year Fixed Indexed Annuity at a Glance
|Product Name||ForeIncome ll 7-Year FIA|
|Issuer||Forethought Life Insurance Company / Global Atlantic|
|Type of Product||Fixed Indexed Annuity (FIA)|
|A.M. Best Rating||A|
|Phone Number||(855) 244-4440|
Opening Thoughts on the Forethought ForeIncome ll 7-Year FIA Annuity
Forethought Life Insurance Company entered into the life insurance business in 1985. So, while its 35+ year history still makes it a relative newbie in the industry, the company has quickly become a top seller of fixed and fixed indexed annuities.
The company actually started out focusing on pre-need funeral expense insurance plans. However, over time, Forethought has added a list of related products like annuities – and, several years ago when Forethought added annuity capabilities from The Hartford, it increased its position with regard to annuities.
Today, Forethought Life Insurance Company is a part of the Global Atlantic Financial Group -a privately held company with over 1,500 shareholders. Considered strong and stable financially, Global Atlantic has received high marks from the insurer rating agencies, including a(n):
- A (Excellent) from A.M. Best
- A (Strong) from Fitch
- A- (Strong) from Standard & Poor’s
- A3 (Stable) from Moody’s Investor Services
Largely due to the ups and downs of the stock market over the past decade or so, the demand for fixed indexed annuities has increased significantly, as they can help with increasing your return, while at the same time keeping principal safe from volatility.
However, the growth potential for these types of annuities can often be inflated – leading to future disappointment of the annuity purchaser. Not that most financial advisors are trying to do wrong by their clients, but many may focus on the plusses, without also adding in the factors that should be considered regarding these complex financial vehicles.
Before we get into the gritty details, here are some necessary legal disclosures…
This is an independent annuity product review. It is not a recommendation to purchase or to sell an annuity. Forethought Life Insurance Company has not endorsed this review in any way, nor do we receive any type of compensation for providing this review. This annuity review is meant solely to be an independent review at the request of our readers so that they may see our perspective when breaking down the positives and the negatives of this particular annuity. Prior to committing to the purchase of any type of insurance and/or investment vehicle, it is critical that you do your own due diligence, and that you also talk with a properly licensed professional if you have any questions that relate to your specific situation. All of the names, materials, and marks that have been used in compiling this annuity review are the property of their respective owners.
For additional information on how to compare fixed annuities so that you can decide which may be the best one for you, click here in order to obtain our free annuity report.
How Forethought Life Insurance Company Describes the ForeIncome ll 7-Year Annuity
The ForeIncome ll 7-Year annuity is described as a fixed indexed annuity that “goes beyond the traditional crediting and protection benefits of a basic FIA.”
For example, this annuity provides two ways to help grow your lifetime income – including a way to continue growing income while you are in retirement. The annuity can also offer you a dependable source of retirement income that will last as long as you need it to.
In the case of the ForeIncome annuity, the Guaranteed Income Builder Benefit option allows the product’s withdrawal base to grow by a guaranteed “roll up” – which is also referred to as a deferral bonus – each year before you start to receive income from the annuity. And, this annual growth will continue for as long as you wait to receive income.
In addition, with the Income Multiplier Benefit option, the growth of the annuity’s withdrawal base is linked to the interest that is credited to the contract value either via a fixed or index-based crediting strategy.
So, before you take income from the ForeIncome 7 annuity, your withdrawal base can receive two times the amount of interest credits that your contract value may earn. Then, once you begin your income, the withdrawal base will receive one times the amount of interest credits your contract value earns during a bonus period.
As a side note, the ForeIncome 7-Year FIA annuity offers several different interest crediting options to help with increasing your contract value. Plus, as with other types of annuities, the growth that takes place inside of the account can increase on a tax-deferred basis. This means that there is no tax due on the growth until the time of withdrawal.
Regardless of the interest crediting strategy that you choose, though, you cannot lose money due to poor market performance. So, even if the stock market corrects like it did during the 2008 recession, as well as during the 2020 Coronavirus pandemic, your principal in this annuity will remain safe.
For more details on the ForeIncome 7 fixed indexed annuity, you can check out the product guide HERE.
How Financial Advisors May “Pitch” the ForeIncome ll 7-Year FIA from Forethought
The ForeIncome 7 Year fixed indexed annuity offered by Forethought Insurance Company offers the features of a traditional fixed indexed annuity, including the opportunity for growth, as well as safety of principal. It can also provide you with an income stream for a set number of years, or even for the remainder of your lifetime.
If you have been approached by a financial advisor who is offering you this particular annuity, it may be that he or she focused on certain features that it offers – such as the opportunity for higher growth than a fixed annuity (and other fixed financial investments such as bonds and CDs), as well as the annuity’s ability to offer you a guaranteed lifetime income stream regardless of how long you may need it.
With that in mind, most educated consumers are likely aware that insurance and financial companies will typically show their product offerings in the brightest light so that they appear to be more enticing. For instance, if you are hoping for high growth plus safety of principal, then you may well think that this is the perfect option for you.
But it is essential to note that, if you are being offered this – or any – annuity by a commissioned financial advisor, then it is likely that they are going to explain the product to you while highlighting all of its positive features.
When you take a closer look at the product’s material, though, you will be able to delve a bit deeper into some of the other items that should be considered prior to moving forward with the annuity purchase.
For instance, it is easy to be confused regarding the contract value and the withdrawal base – because these are not one in the same. In fact, the withdrawal base cannot be accessed at all and is oftentimes considered to be a “phantom” figure, as it is really just a number that is used for calculating the amount of your income payment – but not a “pool” of dollars like the contract value. In other words, you can’t just call up the insurance company and have them send you a check in the amount of the withdrawal base…because it doesn’t exist!
On top of that, the guaranteed income rider should not be considered a “free lunch” – because it isn’t. In this case, there is an annual charge of 1.05% of the withdrawal base at the beginning of each contract year. This, in turn, could actually end up lowering your overall return.
For more details on the ForeIncome annuity from Forethought Insurance Company, you can check out the product guide HERE.
Fees Associated with the Forethought ForeIncome 7 Year Fixed Indexed Annuity
On top of understanding how your funds may perform in an annuity, it is also pertinent that you know about any of the fees that you may encounter as a result of owning one. While most any financial product will incur some fees, fixed indexed annuities are known for being complex products – and at times, the amount and the duration of their fees may be well hidden within the fine print.
Just some of these fees could include an up-front sales commission for the advisor who sold you the annuity. These products will also typically include a surrender, or withdrawal charge, which is deducted from funds that you access during the annuity’s surrender period.
Surrender charges typically start out fairly high – in the neighborhood of 8% or more – and then gradually grade downward until the surrender charge time period has elapsed. So, it is really important that you only use funds for this (or any) annuity that you do not anticipate needed for quite some time.
On top of all that, if you make a withdrawal from this (or most any) annuity before you have turned age 59 ½, the IRS can also incur an additional 10% “early withdrawal” penalty to the dollars that you access.
The Annuity Gator’s End Take on the Forethought ForeIncome ll 7-Year Fixed Indexed Annuity
Where it works best:
This particular annuity will typically work the best if you are looking for:
- The opportunity for additional index-linked growth
- Safety of principal in years when the underlying index performs negatively
- Guaranteed lifetime income
Where it works worst:
The Forethought ForeIncome ll 7-Year Fixed Indexed Annuity may now, however, be a good fit for you if you:
- Want access to most or all of your money during the surrender charge period (as well as if you are under the age of 59 ½)
- Do not intend to use the lifetime income feature
In order to really know how to best compare the annuity options that could be right for you, click here so that you are able to download our free annuity report.
There is certainly a wide array of factors that should be considered when you are trying to determine which annuity (if any) may be best for you. With all annuities, for instance, the money that you deposit should be considered as a long-term endeavor. Therefore, you should feel comfortable in knowing how the annuity may or may not get you closer to your retirement goals.
With regard to the Forethought ForeIncome 7-year annuity option, there are definitely some very nice features, such as principal protection and a lifetime income stream. However, this particular annuity may also fall somewhat short – and quite honestly, there could be some better alternatives that are available to you.
If you still have any questions or concerns regarding this or any annuity, or even if you just happen to need additional assistance with reviewing annuity features and benefits, feel free to reach out to us via our secure contact form.
Have Any Additional Questions on the Forethought ForeIncome ll 7-Year Annuity?
We understand that this Forethought ForeIncome annuity review may have been a bit long. However, we would much prefer to provide you with more information than not enough. So, if you found this annuity review to be beneficial, please feel free to pass it on and share it with others.
Also, we know just how quickly things can change in the financial world. This includes information on annuities that maybe changes. So, in light of this, if you did notice that there was any missing and/or outdated information in this review, please let us know and we will be happy to make the needed updates.
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P.S. If you would like to read more of our Forethought Life reviews here are some links to check out:
- Independent Review of Forethought SecureFore 5 Fixed Annuity (MYGA).
- Independent Review of Forethought Life ForeCare Fixed Annuity.
- Independent Review of the Forethought ForeIncome 7-Year Annuity.
- Independent Review of the Forethought ForeAccumulation 6-Year Indexed Annuity.
- Independent Review of the Forethought SecureFore 3 Fixed Annuity (MYGA).
- Independent Review of the Forethought ForeIncome 9-Year Indexed Annuity (March 2020 Update).
- Independent Review of the Forethought Choice Income Annuity.