What will we cover in this annuity review?In this review, we will cover the following features of the Great American AssuranceSelect 3 Plus Fixed Indexed Annuity:
- Type of product
- Current rates
- Realistic long-term return expectations
- How the annuity is used best
- How the annuity is more poorly used
Annuities can be complex. That’s where having an Annuity Investigator who loves math comes in. We make the complex, simple.
If you have been considering the idea of purchasing an annuity because you are seeking additional tax-deferred growth, protection of principal (in any market environment), and a lifetime income stream, then the Great American AssuranceSelect 3 Plus fixed indexed annuity could be a good option for you. However, things are not always what they seem – and this is particularly the case when it comes to financial and insurance products. So, prior to diving in and making a long-term commitment sight unseen, it is recommended that you get a good understanding of how this annuity works, and how it may – or may not – work out for your particular financial objectives. Throughout the past ten years or so, fixed indexed annuities, or FIA annuities, have become quite a bit more popular for those who are planning for their future retirement income. One reason for this is because an annuity can offer you a guaranteed stream of income for life, regardless of how long you may need it. However, with the good also comes the bad – or at least certain tradeoffs that you might need to make in order to get that guarantee. For instance, during their growth phase, a fixed annuity will provide you with safety of your principal. But the returns that are generated on fixed annuities are usually pretty low – and are oftentimes in line with the returns that are generated on CDs, money markets, and other “safe” alternatives. For this reason – even though you are not actually “losing” money – you are losing out on future purchasing power, as fixed annuity returns won’t usually even keep up with inflation. So, here again, there is no loss on paper per se, but trying to pay your future living expenses can become more and more difficult as prices go up. As an alternative, you could consider going with a variable annuity. With these financial vehicles, you have the opportunity to get higher returns, based on the performance of the underlying investments. This would be great if the market always went up….but we all know too well that it doesn’t. So, with a variable annuity, you run the risk of losing principal. And that really isn’t very appealing if you’re trying to keep your hard-earned money safe as you approach retirement. Enter the fixed indexed annuity! With a fixed indexed annuity like the Great American AssuranceSelect 3 Plus, you have the opportunity to earn a higher return than a regular fixed annuity because your return is based on the performance of an underlying market index, such as the S&P 500. So, if the index performs well, you’ll be credited with a positive return. If, however, the underlying index performs poorly during a given year, your annuity won’t lose value, but rather will be credited with a 0% return. This ability to earn, but not lose, has made fixed indexed annuities a popular choice among pre-retirees. But, just like anything else that may sound too good to be true, you need to find out the whole story before you dive in. That’s where the Annuity Gator can help.
Annuity and Retirement Income Planning Information You Can TrustIf you have never been to our website before, please allow us to officially welcome you here to Annuity Gator. Who exactly are we? At Annuity Gator, we are a team of experienced financial and annuity professionals who focus on providing in-depth, and unbiased, annuity reviews on the Internet. We have been at this for quite a while now – far longer than our competitors have – even though there are now a number of “copycat” websites that are popping up. If you’ve spent any amount of time online looking for annuity information, you may have come across some highly conflicting details about these financial tools. That really isn’t all that surprising, though, as there are many varied opinions about these types of products. There are also a fair number of annuity-related websites that will try to lure you in for the purpose of giving them your contact information. They’ll oftentimes do so by stating some pretty bold claims, like:
- Lowest fees
- High income
- Top-rated annuity carriers
- Income stream for life
Great American AssuranceSelect 3 Plus Fixed Indexed Annuity at a Glance
|AssuranceSelect 3 Plus
|Great American Life
|Type of Product
|Fixed Indexed Annuity
|A.M. Best Rating
Opening Thoughts on the Great American AssuranceSelect 3 AnnuityGreat American Life traces its roots all the way back to the year 1872. The company has a key focus on annuities, and it offers a wide array of products that can help grow funds and generate income when it is needed. Today, Great American Life Insurance Company is a member of Great American Insurance Group and a subsidiary of American Financial Group, Inc. The company has earned high ratings from the insurer rating agencies, including an A (Excellent) from A.M. Best for more than forty consecutive years. It is also rated an A+ by Standard & Poor’s. In less than a decade, Great American Life’s annuity premiums have tripled – from $1.4 billion in 2009, to more than $4 billion in 2017. This shows the tremendous growth that annuities – in particular, fixed indexed annuities – have experienced, due in large part to the volatile and unpredictable market. To check out some of the recent Great American Life customer reviews, go HERE. A fixed indexed annuity is oftentimes touted as the “best of all worlds,” because they allow their owners a way to secure a positive return in good times and to hang on to their principal value during market downturns. But it is essential to know all of the in-depth details about a fixed indexed annuity you are considering before you move ahead with depositing a large chunk of your money into one – as it can be difficult, and costly, for you to get out if you later realize that it really isn’t the best option for you.
Before we get into the gritty details, here are some legal disclosures we need to provide…This is an independent product review, not a recommendation to buy or sell an annuity. Great American Life has not endorsed this review in any way, nor do we receive any type of compensation for providing this review. This review is meant to be an independent review at the request of readers so that they may see our perspective when breaking down the positives and negatives of this particular annuity. Prior to purchasing any type of investment or insurance product, it is important that you do your own due diligence and that you consult a properly licensed professional if you should have any specific questions that relate to your individual circumstances. All names, marks, and materials that were used for this review are the property of their respective owners. For more details on how you can compare annuities so that you can determine which one may be right for you, click here to instantly download our free annuity report.
How Great American Describes the AssuranceSelect 3 Plus AnnuityGreat American Life describes the AssuranceSelect 3 Plus annuity as a fixed indexed annuity that offers growth opportunity, protection from loss, and guaranteed retirement income. Like other annuities, the funds that are inside of this annuity are allowed to grow on a tax-deferred basis. This means that there is no tax due on the gain until the time of withdrawal. In addition, regardless of market conditions, you won’t lose money that you have contributed to this annuity. This can ease the concern about losing your life savings at a time you need it the most. There are actually several different ways in which the return on this annuity can be determined. For instance, there is a “declared rate strategy” that allows you to grow your money at a fixed interest rate. (This rate is set at the beginning of each one-year term). There are also indexed strategies that offer you the opportunity to earn interest that is based, in part, on market performance – yet without the risk of loss. Here, the interest is credited on the last day of each one-year term – and it is guaranteed to never be less than 0%. When you’re ready to turn the money you’ve accumulated into an ongoing retirement income stream, you are able to select from a variety of different payout alternatives – including an income stream that will last for the remainder of your life, no matter how long that may be. One of the differentiating factors about the AssuranceSelect 3 Plus annuity is that, should your circumstances change, you can access your money penalty-free after just three years. There are also some other features of note on this annuity, such as a death benefit that is paid to your named beneficiary(ies) if you should pass away unexpectedly. There is also an extended care waiver rider, and a terminal illness waiver rider. With the extended care waiver rider, after the first contract year, if you are confined to a nursing home or a long-term care facility for at least 90 consecutive days, you have the option to withdraw up to 100% of the account value without incurring an early withdrawal charge. With the terminal illness waiver rider, after the first contract year, if you are diagnosed by a physician as having a terminal illness, you have the option to withdraw up to 100% of the account value without incurring an early withdrawal charge. (In this case, a terminal illness is defined as having a prognosis of survival of 12 months or less in most cases). For more in-depth information, you can read the AssuranceSelect 3 Plus consumer brochure HERE.
How an Insurance or Financial Advisor Might “Pitch” this AnnuityGiven that people are living so much longer today than ever before, having enough income in retirement has become a top concern for many retirees. With that in mind, the guaranteed income concept of the AssuranceSelect 3 Plus annuity is most likely where an insurance or financial advisor would focus on when presenting this product to clients or prospects. An additional aspect is the beneficiary protection that is provided by the death benefit. Here, in the event that the annuitant passes away before receiving all of the contract value back, a named beneficiary can receive the funds, without them having to pass through probate. But even with all of these awesome features, you really need to be careful, as there are some “tradeoffs” you may need to make with this product. For instance, even though you have the ability to obtain a positive return based on the performance of an underlying index (or indexes), the upward potential is capped. In other words, this annuity uses an annual index rate cap, which is another way of saying that there is a maximum amount of return you can earn each year – even if the underlying index(s) have a stellar performance. In this case, if the cap on earnings is 4%, and the underlying index return 6%, you will only receive 4% for that time period. In addition, excess withdrawals will void any income credits, and can even reduce the income base.
Are there Any Fees on the AssuranceSelect 3 Plus Annuity from Great American Life?As with most other annuities, there may be some fees that you need to look out for with the AssuranceSelect 3 Plus Annuity. For instance, while you can withdraw funds penalty-free after the first three years of purchasing this annuity, if you do need to access more than 10% of the contract value before the third full year, you can incur a surrender charge. These charges start at 9% in Year 1, and then they grade down to 8% in Year 2, and 7% in Year 3. In Year 4, there are no more withdrawal charges. In addition, if you make a withdrawal before you turn age 59 1/2, you could also be hit with an additional 10% “early withdrawal” charge from the IRS.
The Annuity Gator’s End Take on the Great American AssuranceSelect 3 Plus AnnuityWhere it works best: Although this fixed indexed annuity offers many nice benefits, it will typically work the best for those who are seeking the following attributes:
- Safety of principal
- The opportunity for additional, index-linked growth, which can provide a higher return than a regular fixed annuity
- Guaranteed income for life
- Will need access to more than 10% of the contract’s value within the 3-year surrender period
- Do not intend to use the lifetime income feature
In SummaryThere is a long list of factors that need to be considered when you are planning for your future retirement income. And, when it comes to using annuities for either your primary income stream or even for filling in any retirement income “gaps,” it is essential that you know just exactly what you can anticipate. That’s because a different amount of income than you were planning on can make a big difference in your retirement lifestyle and on your life! In terms of the AssuranceSelect 3 Plus annuity from Great American, you can be assured that you will have an income for life. But at the same time, depending on your other goals and needs, this product may still fall a bit short – and there quite frankly may be something else out there that is a better fit for you. If you do have any questions on this or other income related products, we are here to help. So please feel free to contact us directly via our secure online contact form here.
Do You Have Any Additional Questions About this Annuity? Did You Happen to Notice Any Mistakes on this Annuity Review?We realize that this annuity review may have run a bit long. But quite frankly, we would much rather that you have “too much” information on this product than to not have enough. So, if you found this annuity review to be beneficial, please feel free to pass it on and to share it with other people who could also find value in it. (And, if you found it to be confusing, please also let us know that, too.) In addition, we are aware that information regarding annuities can, and often does, change. So, if you happened to notice anything in this review that should be updated or revised, let us know and we will be happy to make the necessary edits. Any other annuities that you would like to learn more about? If so, just give us a shout and let us know, and our team will get to working on them right away. Best, The Annuity Gator P.S. If you would like to read more of our Great American annuity reviews here are some links to check out:
- Independent Review of the Great American – American Legend III Fixed Indexed Annuity
- Independent Review of the Annuity Investors Life Great Flex 6 Fixed Annuity
- Independent Review of the Great American American Freedom Stars and Stripes 5 (MYGA) Annuity
- Independent Review of Great American American Freedom Aspire 7 Annuity
- Independent Review of the Great American Assurance Select 7 Fixed Indexed Annuity
- Independent Review of Great American Life AssurancePlus 7 Fixed Annuity