What’s Covered in this ReviewIn this review, we will be going over the following information on the MetLife PrimElite IV annuity:
- Product type
- Current rates
- Realistic long term investment 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.
Annuity And Retirement Income Planning Information That You Can TrustWhat you likely will notice is that, like just about any other annuity, the MetLife PrimElite IV annuity can perform quite well in some areas. However, there are other areas that may not be up to par – depending upon your specific financial goals, risk tolerance, and time horizon. If this is the first time that you have visited our website and you are not familiar with us, we are a fee-only financial planner who does not get paid to sell annuities to our clients – nor do we sell these financial vehicles at all. Unlike other fee-only financial advisors, we do however believe that these particular financial products can offer some investors with a primary piece of their overall financial planning strategy – provided that they are used in the proper manner. As our compensation is not related to the sale of annuities, we do not have any incentive either for or against them. With that in mind, all of our views about annuities are completely unbiased and impartial. With that, let’s go ahead and get started!
MetLife PrimElite at a Glance
|Product Name||PrimElite IV Variable Annuity|
|Type of Product||Variable Annuity|
|Standard & Poor's Rating||AA-|
|Phone Number||(800) 638-7732|
Opening Thoughts on the MetLife PrimElite IV Variable AnnuityGeneral, variable annuities are intended to do two key things. That is to grow principal and to produce income. But the truth is that these particular types of annuities really aren’t all that good at producing income. The reason for this is because of the risk that they present both to the investor and to the insurance company that offers them. Because a variable annuity’s value can typically fluctuate so much, the underlying insurance carrier can actually guarantee less income from this type of annuity than from safer options such as fixed annuities. So, for every dollar that an investor places into a variable annuity, it can essentially guarantee less retirement income than a fixed, or a fixed indexed, annuity would for the exact same amount of money that was deposited. And, the investor would not have to worry about all of the ups and downs in a fixed or fixed indexed product either. Given this, if you have a primary objective of producing income, then a variable annuity is not likely your best course of action. When it comes to investments, variable annuity products can provide investors with the opportunity for unlimited growth. However, as most investors in the market are aware, along with that growth opportunity will also come downside risk. In addition to that, variable annuities are also known for having high fees. One reason for this is because, within a variable annuity, you are invested in mutual funds – and these financial vehicles will generally have their own fees for management that are within the funds themselves.
Before we get into the gritty details, here are some legal disclosures…The following is an independent annuity product review. It does not constitute any type of a recommendation to buy or to sell an annuity product. MetLife has not endorsed this review in any way, nor do we obtain any type of compensation from MetLife (or any other provider) for providing this review This information is meant to be an independent opinion so that readers can view our personal perspective when they are determining the potential advantages and/or drawbacks of this particular annuity, as well as how it may (or may not) fit in with their specific financial portfolio, needs, and goals. Prior to purchasing any type of investment or financial product, it is essential to pursue your own due diligence, as well as to consult with a competent and properly licensed financial professional before moving forward. This way, you will be able to more precisely ensure that the product and/or service that you are considering will fit in with your individual circumstances. All of the names, the trademarks, and the materials that are used here in this annuity review are the sole property of their respective owners.
How MetLife Describes The PrimElite IVBased on the literature from MetLife, as well as MetLife’s website, the MetLife PrimElite IV annuity is described as a variable annuity that provides investors with a total of 39 different investment options, and the ability to select various asset allocations. The annuity also provides investors with a minimum fixed account rate guarantee. When purchasing the contract, investors can choose an optional death benefit, as well as fixed and variable income options. It is also possible to select an optional guaranteed withdrawal benefit (GWB), the Lifetime Withdrawal Guarantee. The contract, as with all deferred annuity contracts, has two phases: the accumulation phase and the income phase. During the accumulation phase, the earnings in the annuity have the opportunity to grow substantially, based on market performance. The income phase occurs when the annuitant begins to receive regular annuity payments from the contract. As with other types of annuities, the MetLife PrimElite IV allows the funds in the account to grow tax-deferred. However, because this is a variable annuity, a downfall in the market could still wipe away any gains – leaving an investor with a loss. And, for those who are inching closer to retirement, this could essentially have an impact on the amount of income that is eventually received.
How Financial Advisors Might “Pitch” This AnnuityAlthough variable annuities are not quite as popular today as they were prior to the market and economic downturn of 2008, these types of annuities can still fit in a certain niche, depending on the needs and goals of certain investors – particularly those who are seeking growth. Therefore, financial advisors may pitch this annuity based on the various investment options that are offered by this annuity. Certainly, another feature that is offered via the MetLife PrimElite IV is the guaranteed lifetime income during the income phase of the annuity. And, because people are living much longer today than at any other time in history, having a guaranteed stream of lifetime income can be a nice feature. Running out of income has become one of the biggest fears on the minds of retirees. Therefore, this can be a big selling feature with this, as well as with many other annuities. However, it is important to note that being a variable annuity, guaranteed lifetime income is not likely one of the strong points of the MetLife PrimElite IV. Due to the potential risk that may be inherent in the annuity during the accumulation phase, this annuity may not be ideal if you’re relying on lifetime income. That being the case, if you plan to use this annuity as a source of income, then you should take into careful consideration its projected income long-term. You may also wish to consider that there are other products in the marketplace that may be able to offer higher levels of guaranteed income – as well as even greater levels of protection from downward moving markets. While there is no ideal investment or product on all possible fronts, it is essential to have your priorities clear from the beginning. This means that you should have a clear idea prior to purchasing any type of annuity whether your primary objective is to grow your funds over time, or to produce a lifetime stream of ongoing income – because as much as an advisor may lead you to believe that both of these objectives can be met through the MetLife PrimElite IV, this is not necessarily the case. When making your ultimate decision regarding an annuity, be sure, then, that you are aware of how and where the product may be at risk for potential loss of principal. You should also be sure that you know how the income is determined, as well as how (or even if) it is guaranteed.
What About the MetLife PrimElite IV Annuity’s Fees?When reviewing annuities, you may find that variable annuities can tend to be one of the more expensive products as it relates to fees. In this regard, the MetLife PrimElite IV is not to be outdone. This annuity starts out with an up-front sales charge of 6%, meaning that you are at a “loss” of 6% right from the start. Therefore, regardless of what else occurs, you will need to make up for that “hit” right from the beginning in order to just break even. The MetLife PrimElite IV annuity will also have an annual Mortality and Expense Risk charge (also referred to as an M&E fee) of between 0.8 and 1.2% each year. The annual investment management fee will range between 0.49% and 1.51%. This annuity, like most other annuities, incurs a surrender charge. This one is over a period of seven years. In the first year, the charge is 8%. The charge remains at 8% during Year 1, and then grades down through Year 7, until it reaches 0% in Year 8 and thereafter. In addition, while there is no charge for the first 12 transfers in a contract year, thereafter the fee will be $25 per transfer. At this time, MetLife is currently waiving the transfer fee. However, the company reserves the right to charge the fee in the future.
The Annuity Gator’s End Take on the MetLife PrimElite IV Variable AnnuityWhere it works best:
- When considering the MetLife PrimElite IV annuity, it can oftentimes work best in situations where an investor wants to continue investing in a tax-deferred option, but has “maxed out” his or her other options such as their 401(k) (or other employer-sponsored retirement plan), as well as their IRA account(s).
- It may also be a good choice for those who may be concerned about outliving their income/savings in retirement, as it does offer a guaranteed lifetime income feature.
- However, because the annuity has surrender charges for the first seven years, it should be considered as a longer-term financial endeavor, and the funds that are used for this annuity should not be required for other needs such as emergencies or short-term necessities.
- If an investor is not planning to use the income benefit on the MetLife PrimElite IV, then this may not be a good product, and another, more suitable alternative should likely be sought. As this is a variable annuity, these products – due in large part to the risk that they can pose due to potential market downturns – are not always suited to those who are seeking guaranteed lifetime income.