What’s Covered In This ReviewWhat is covered in this review of the Premium Bonus fixed indexed annuity:
- Product Type
- Current Rates
- Realistic long-term return expectations
- How it is used
- How it is most 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’ve been seriously thinking about purchasing an annuity because you want to assure yourself of long-lasting retirement income in the future, and you also want the opportunity to earn a higher rate of return than what is available on fixed, or “safe”, financial products, then the Bankers Life and Casualty Premium Bonus IA fixed indexed annuity could be right for you. But, prior to running out and signing on the dotted line to purchase this annuity, it is a good idea to ensure that you know just exactly how this annuity works, and how it could (or may not) work for you, given your specific financial goals. Throughout the past several years, annuities have become quite popular – primarily the fixed index version of these products – as a way for investors to obtain guaranteed income in retirement and also to obtain a higher return than those of regular fixed annuities. But as awesome as this may sound, these products are often times mis-sold by insurance and financial advisors. In most cases, this is completely unintentional, as financial and insurance sales people will typically work to do what is right for their clients. But, because fixed index annuities tend to have more “bells and whistles” than regular fixed annuities, advisors will often time tend to only highlight the key advantages, while not really going into depth about some of the potential drawbacks. Unfortunately, because these “hybrid” annuities have so many moving parts, they can be somewhat confusing to understand – even for well-educated consumers and financial professionals. As a result, it is important that you know just exactly what it is that you are considering because locking yourself into one of these products – and then later trying to get out – could prove to be expensive due to surrender charges.
Annuity and Retirement Income Planning Information You Can TrustIf you have never been to our AnnuityGator.com website before, allow us to personally welcome you here. We make up a team of financial pros who are focused on providing the most comprehensive – and at the same time, unbiased – annuity reviews on the Internet. We have been doing this for quite a while now, much longer than our competitors have, and because of that, we are considered a highly trusted source of annuity information. Given that, if you have been looking for more details on fixed indexed annuities and how they work, you may have already noticed that there is a great deal of conflicting information online about these particular products. This, however, is not at all a surprise, as there is also a lot of confusion about how they work. It may be that you have recently attended a seminar about annuities where the presenter offered you a free meal in return for allowing him or her to talk about the Bankers Life & Casualty Premium Bonus IA annuity (or some other similar product). It may even have been your attendance at this event that has ultimately led you here to our site in search of additional details. The good news is that you are in the right place. Before you landed here, though, you may have noticed that some of the annuity marketing websites will truly to “lure” you in by offering some fairly bold claims about the product they sell. These may include some or all of the following:
- High-income payments
- Lowest annuity fees
- Guaranteed lifetime income
- 7 – 8% Rate of Return
Bankers Life & Casualty Premium Bonus IA at a Glance
|Product||Premium Bonus IA|
|Issuer||Bankers Life & Casualty|
|Type of Product||Fixed Indexed Annuity|
|A.M. Best Rating S&P Rating||A- / BBB+|
|Phone Number||(800) 787-1431|
Opening Thoughts on the Bankers Life & Casualty Premium Bonus IA AnnuityAlthough Bankers Life & Casualty is not considered to be one of the largest insurers in the market place, this company has a good reputation, and it offers a nice product variety, especially for those who are preparing for retirement. The company is a wholly-owned subsidiary of CNO Financial – which has a history that dates all the way back to 1879. Bankers Life has more than 300 offices across the U.S., and roughly 5,000 insurance agents who market the company’s products – so it could be that you’ve been approached by a sales rep who has offered you the Premium Bonus IA annuity. Due in large part to the ongoing ups and downs of the stock market, fixed index annuities have become much more popular over the past decade or so. One reason for this is because these types of annuities can seemingly offer a “best of all worlds” scenario, including the safety of principal, the opportunity for index-linked growth, and a guaranteed stream of income in retirement. Yet, while this may at first glance seem like an ideal way to go with your savings, if something sounds too good to be true, it typically is! Therefore, it is essential that you review the “fine print” before you move forward with the purchase.
Before we get into the gritty details, here are some legal disclosures…This is an independent product review, not a recommendation to buy or sell an annuity. Bankers Life & Casualty 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 information on how to compare annuities in order to determine which one may be right for you, click here to obtain our free annuity report.
How Bankers Life & Casualty Describes the Premium Bonus IA Fixed Indexed AnnuityBankers Life & Casualty describes the Premium Bonus IA as an indexed product that offers “the simplicity of a fixed annuity combined with the opportunity to earn returns linked to the S&P 500 Index – all while protecting the annuity’s principal and growth against downside market risks.” This annuity offers an up-front premium bonus, in which a certain percentage of the net single premium amount is credited to the index value when the annuity is initially issued. This can help with earning money in the annuity right from the beginning. The annuity also offers a few more “bells and whistles”, such as a terminal illness rider and a convalescent care rider, at no additional charge. With these riders, annuity holders can access funds penalty-free if they are needed for qualified expenses that are related to a nursing home stay and/or the diagnosis of certain health conditions.
How Financial and Insurance Advisors May “Pitch” This AnnuityGiven the flexibility of fixed index annuities, it is likely that an insurance or financial advisor would pitch the key benefits such as the opportunity to earn a higher rate of return than a regular fixed annuity, as well as the safety of principal – regardless of what occurs in the underlying index being tracked (or even in the market overall). Plus, because outliving retirement income is quickly becoming the number one fear in the minds of retirees today, financial and insurance reps are big on touting the guaranteed lifetime income feature that can come with having an annuity. But, even though this can sound like it meets all of your retirement planning needs, you first need to take a closer look at the fine print. This is because insurance and financial agents will typically paint a nice rosy picture of the annuity they are presenting you with. This is especially true if he or she will be getting a commission for selling you the annuity. In the case of the Premium Bonus IA from Bankers Life & Casualty, the positive return that you receive can be “capped.” This means that the amount of upward movement that your annuity can take part in may or may not fully experience all of the underlying index’s gains. As an example, if your annuity’s return is capped at 4%, but the underlying index that it is tracking goes up 10%, you would only be credited with the 4%. This is something that financial advisors will typically not discuss in great detail when showing this annuity to clients.
They also offer a monthly average strategy with participation rate tied to the S&P 500.
We have not big fans of monthly average strategies. In our opinion, they, for the most part, underperform other strategies.
What About Any Fees on the Premium Bonus IA from Bankers Life & Casualty?You would be hard-pressed to find any financial or insurance product that does not charge you at least some amount of fee for the privilege of participating in it. The Premium Bonus IA annuity is not different. In this case, while there is no fee charged to the annuity’s account value for the lifetime income withdrawal benefit – meaning that you won’t experience a loss to your principal from either fees or market conditions, there are other charges to look out for. As an example, if you want or need to access more than 10% of your annuity’s account value during the first several years, you could be hit with a surrender penalty. In addition, if you make any withdrawals prior to turning age 59 1/2, you could also incur an additional 10% penalty from the IRS for the “early withdrawal.” So here again, when purchasing an annuity, it is imperative that you consider it a long term proposition. Otherwise, it could be a very costly one.
The Annuity Gator’s End Take on the Bankers Life & Casualty Premium Bonus IA AnnuityWhere it works the best: This annuity could be a good option for you if you are:
- Looking for a set amount of guaranteed income in retirement
- Seeking protection of premium against losses due to market downturns and fluctuations
- Wanting to ensure the financial legacy you leave to loved ones
- If you access to most or all of your money within the first several years
- If you are not planning to use the guaranteed lifetime income feature
Just an FYI, I am a series 7 FA and as far as I know the Bankers annuities do not have a cap on this product, rather they have a participation rate which can make a pretty significant difference in a good year market wise.
Great article otherwise.
Thanks for pointing that out. We have made the necessary changes.
The Annuity Gator