What We Will Cover in this Annuity ReviewIn this annuity review, we will be going over the details regarding the Horace Mann Destination 6- year fixed indexed annuity, such as:
- 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 tossing around 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 Horace Mann Destination 6-Year Fixed Indexed Annuity could be a viable option for you. However, before you dive in head first and make a long-term financial commitment to this product, there are some things you need to know, which could impact whether or not this – or any – annuity is right for you. Over the past several years, fixed indexed annuities have become quite popular – particularly with those who are seeking higher returns than what a regular fixed annuity can give, yet also want the principal protection of their hard-earned savings. Fixed indexed annuities can provide all of this – as well as a lifetime income in retirement. But, because these products have gotten so in-demand, many insurance companies have started to expand their products lines and added all sorts of “bells and whistles” to them. While this can be beneficial, it can also make an already confusing product even more so – and, many of these product add-ons will cost you an additional amount of premium, in turn, negatively impacting the ultimate benefit that you end up with. Although this may not necessarily be bad in all cases, it is important that you at least know how the product works and what it will cost – and then determine whether or not you want to move forward with it.
Annuity and Retirement Income Planning Information You Can TrustIf you have never visited our website before, please allow us to officially welcome you here to AnnuityGator.com. We are a team of annuity experts who have a primary focus on providing highly comprehensive, and unbiased, annuity reviews online. We have been doing this for quite a long time now – far longer than our competitors have – and because of that, we have come to be known as a highly trusted source of annuity information. We’ve also had some “copycats” try to duplicate our offerings. The way we see this, though, is that imitation is surely the highest form of flattery. If you’ve been in the market for an annuity, then it is likely that during your research, you have come across some conflicting details about them. This really is not all that surprising, though, as there are a lot of annuities available in the market today, and there are many opinions, both positive and negative, about them. You may also have attended an annuity seminar or workshop where the presenter offered you a free dinner or lunch, as well as information regarding the Horace Mann Destination 6-Year Fixed Indexed Annuity, or some other similar product. Your attendance at that seminar may even have been the ultimate catalyst that brought you here to our site in search of additional annuity information. While there are many other good websites out there online that are focused on annuities, you may have found in your quest for information that some of these websites will try luring you in by making some fairly bold claims, like having the lowest fees and offering the highest annuity income payouts. Sound familiar? Yet, even though these claims may sound just great, prior to making a long-term commitment on an annuity, it is important for you to find out whether or not these claims are really true, just as you would do prior to purchasing any other high-dollar item. This is where the Annuity Gator comes in! If you want to know more about the Horace Mann Destination 6-Year Fixed Indexed Annuity, you are definitely in the right spot. In fact, we dare say that this website is the only place online where you can find all of the in-depth details about this annuity – which includes the good, and the bad. That’s because we feel that knowing the whole story about an annuity is the only way for consumers to make a truly well-informed decision about whether or not it is the right product for them. Oftentimes, when a financial or insurance advisor is presenting a fixed indexed annuity to his or her clients, they will provide a nice rosy picture of how the annuity can offer the best of all world, meaning that the product has the ability to offer a nice return, along with safety of principal – as well as income for life. But in doing so, the advisor may neglect to provide details about areas that could be considered drawbacks. With that in mind, if you are seriously thinking about purchasing the Destination 6-Year Fixed Indexed Annuity from Horace Mann, you will need to know exactly what it is that you are getting into. This is because getting out of an annuity can be difficult, as well as costly due to the surrender charges. In order to be completely clear here, we do want to state that we feel annuities can be a good financial vehicle for many investors – as long as it fits in well with both their short- and long-term financial goals. So, if you’re ready to begin this review, let’s go ahead and dive in!
Horace Mann Destination Fixed Indexed Annuity 6-Year at a Glance
|Type of Product
|Fixed Indexed Annuity
|A.M. Best Rating
Opening Thoughts on the Horace Mann Destination Fixed Indexed Annuity (6-Year)Horace Mann has been in the business of offering insurance and investment products since 1945. The company has a primary focus on providing affordable financial and protection products to educators. In addition to just insurance and wealth building vehicles, the company provides free workshops on financial literacy and other topics of importance to educators – including student loan relief. The company is considered to be strong and stable from a financial standpoint, which is reflected in its ratings. It has been provided with an A from A.M. Best, and an A from Standard & Poor’s. It also has an A3 from Moody’s and an A from Fitch. This is a positive, as an annuity is really only as strong as the claims-paying ability of the underlying insurance carrier that offers it. Throughout the past decade or so, the volatility in the market has made investors think twice about putting their hard earned savings into an area that could wipe away years of planning within a very short time if experiencing a correction. Yet at the same time, historically low-interest rates have not provided investors anywhere near the returns they need in order to beat – or even meet – future inflation. This is where the fixed indexed annuity can come in. These financial vehicles allow you the opportunity to attain index-linked returns as well as the safety of principal, regardless of what occurs in the market. Just like other types of annuities, these products also offer tax-deferred earnings within the account – and, there is the option to receive lifetime income in retirement, regardless of how long you may need it. However, even though this “best of all worlds” scenario initially seems very appealing, these benefits can also come at a cost. So, before you move forward with the purchase of the Destination fixed indexed annuity (or for that matter, any annuity), you need to be sure that you check out all of the details as, once you have purchased an annuity, it could be quite an ordeal to get yourself out of it.
Before getting into the nitty-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. Horace Mann 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 Horace Mann Describes the Destination 6-Year Fixed Indexed Annuity ProductHorace Mann describes the Destination Fixed Indexed Annuity as a product that offers three different account options. These include:
- General Fixed Account
- S&P 500 Index
- Down Jones Industrial Average (DJIA) Index
How a Financial Advisor Might “Pitch” this AnnuityFixed indexed annuities can offer some very nice advantages – starting with the fact that they allow the opportunity to get a higher return than a regular fixed annuity, and still protect your principal in any type of market environment. These products also allow you to get income for life, so you can alleviate the worry about running out of income in retirement. With that in mind, a financial advisor is likely to focus on this “best of all worlds” scenario when presenting this product to you. However, because there are so many moving parts on fixed indexed annuities, you really need to take a deeper look into how the components of these annuities work because typically, they aren’t always a walk in the park when it comes to generating the returns you are anticipating. For example, many fixed indexed annuities – including this one – come with a cap and/or participation rate. And these can skew the return-related figures just a bit. With a cap rate, the return that is attained on the annuity’s account value can be impacted (mainly negatively) when the return on the underlying index is up – and particularly when the index’s return is way up. That is because the annuity’s return will be “capped” at the cap rate set by the insurance company. For example, with a floor rate of 0%, if the underlying index loses 15% in a given year, the principal will still be protected, and the account is simply credited with a 0%. (Basically no gain, but also no loss). However, with a cap rate of 2.5%, if the underlying index has a positive return of 15% in a given year, then the return that is credited to the annuity is only going to be 2.5%. (Likewise, if the return on the underlying index is only 2%, then the annuity would be credited with just the 2%. The return will also be affected by the participation rate with this annuity. A participation rate is basically the amount of return that the annuity contract will be allowed to “participate” in. So, for instance, if the participation rate is 100%, then – going back to the 2% index return – the annuity would get 100% of the index’s 2% return (and if the return on the index was higher, the annuity would participate in 100% of the index’s return – up to the stated cap rate). Therefore, if the annuity has a participation rate of 40%, then only 40% of the return on the index would be credited. Here again, with the example of a 2% return on the underlying index, only being allowed to participate in 40% of that would actually give you 0.8% return to the annuity for that period. So, while these numbers may oftentimes look very good “on paper,” you can see why it is absolutely essential that you take some time and determine just exactly what it is that you’re getting here – because it may not necessarily pan out the way it is explained to you by an insurance or financial advisor (especially one who may not be familiar with how fixed indexed annuities work).
What About the Fees on the Horace Mann Destination Fixed Indexed Annuity?While a financial advisor may also present the Destination 6-year annuity to you by explaining that there are no M&E fees or annual maintenance fees, don’t think that you won’t be paying any fees at all on this product. Here, for instance, if you opt to take out more than 10% of the annuity’s contract value within the first full six years, you will be hit with a surrender charge. These start at a whopping 9%, and then gradually grade downward from there.
Horace Mann Destination Fixed Indexed Annuity 6-Year Option Surrender Charges
The Annuity Gator’s End Take on the Horace Mann Destination FIA 6-Year OptionWhere it works the best: This annuity may work the best if you are looking for:
- Safety of your principal – regardless of what occurs in the market
- The opportunity for index-linked growth
- Guaranteed lifetime income in retirement
- Want penalty-free access to most or all of your money within the first six years of purchasing the annuity
- Do not intend to use the lifetime income feature of the annuity