What’s Covered in this Review?
In this review I’ll be covering the following information on the Security Benefit Foundations Fixed Index Annuity:
- Product type
- Current rates
- Realistic long term return expectations
- How this annuity is best 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 are currently thinking about purchasing an annuity, then it is important for you to know that these financial vehicles can be a logical option if you are looking for a guaranteed stream of lifetime income in the future, as well as some other key benefits.
But, before you run full force ahead with buying an annuity, it is also important for you to have a good understanding of what it is that these products do (and don’t do), as well as knowing how the type of annuity you’re thinking about works.
For instance, the Security Benefit Foundations fixed index annuity can provide you with the opportunity to earn an index-linked return, while at the same time protecting your principal from market downturns. Plus, when the time comes to convert your annuity funds to an income stream, you will be able to choose from a variety of income options, including the lifetime alternative, which can give you a regular income for the remainder of your lifetime – regardless of how long that will be.
Throughout the past several years, due in part to the continued volatility of the market, fixed index annuities have become very popular. Because of this growth in popularity, the number of financial and insurance advisors who offer these vehicles has also expanded. However, this isn’t necessarily a good thing.
As an example, because there are so many new annuity products coming into the market – many of which offer a plethora of different “bells and whistles” – they can end up to be quite confusing. Given that, unless your insurance or financial advisor focuses on annuities, it can be wise for you to do some additional research on your own so that you can be more sure about what you are getting into.
This is particularly the case as annuities can be long-term endeavors – and, due to the surrender charges that are typically involved – annuities can be very difficult, not to mention expensive, to get out of once you get in.
Annuity and Retirement Income Planning Information You Can Trust
If you have never visited our website before, then we would like to officially welcome you here to AnnuityGator.com. We are a team of financial and annuity experts who focus on providing comprehensive and unbiased annuity reviews online.
This has been our key mission for many years – and for much longer than any of our competitors. Due to our experience and the information that we provide, we have come to be a trusted source.
Throughout the past several years, there have been a number of “copycat” websites that have also popped up. But, if you look a bit more closely at the information provided on these sites, you may notice that a fair number of them are really just reiterating what our annuity reviews already say.
If you have been looking for information about annuities via the Internet, then it is probable that you may have come across numerous conflicting details about these fairly complex financial products. This, however, is not at all a surprise because there are many, many annuities available in the market today, and nearly everyone seems to have a differing opinion about them!
It is also possible that you have recently been invited to and attended an annuity seminar where, in return for spending time listening to the presenter (along with a free lunch or dinner), the person presenting provided you with details about the Security Benefit Foundations (or some other) annuity.
Following that presentation, it is highly likely that the financial or insurance advisor who spoke invited you into his or her office for a follow-up visit – with the intention of selling you an annuity.
Your attendance at that seminar may even be what has brought you here to our website, in search of more details about annuities and how they work, as well as which annuities may or may not be a good fit for you.
You may also have noticed other annuity-related websites in your quest for information. In many cases, you may have been “lured” into other websites due to their claims regarding:
Even though these claims can sound really great, the reality is that they may or may not all be true. With that in mind, it is critical that you first verify such claims before you move ahead with buying an annuity – any annuity – just as most people would do before committing to any other type of high dollar product.
If you are interested in learning more about the Security Benefit Foundations fixed index annuity, then the good news is that you are in the right place. In fact, we dare state that our AnnuityGator.com website is the only place where you will be able to get all of the key information that you need regarding annuities.
This doesn’t just include the good, but also the bad and the downright ugly. This is because we at Annuity Gator feel like knowing everything there is to know is the only way for people to make a truly unbiased buying decision.
Unfortunately, many financial and insurance sales agents will only highlight the best features about annuities, while only glossing over (or completely leaving out) the potential drawbacks. This is especially the case if you are working with a commissioned sales person who is primarily interested in making a sale.
That being said, we do want to make it quite clear that we believe annuities can and do in fact offer a nice list of very positive benefits. But this is really only the case if such benefits are a good fit for you and your specific financial goals.
Give that, the annuity review here is offered in order to provide you with more of the in-depth details about the Security Benefit Foundations fixed index annuity.
So, if you’re ready to get started, let’s dive in!
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Security Benefit Foundations Fixed Index Annuity at a Glance
|Product Name||Foundations Annuity
|Issuer||Security Benefit Life Insurance Company
|Type of Product||Fixed Index Annuity
|Standard & Poor's Rating||A- (Strong, with a Stable Outlook)
|Phone Number||(800) 888-2461
Opening Thoughts on the Security Benefit Foundations Fixed Index Annuity
Initially founded in an East Topeka, Kansas drugstore more than 125 years ago, Security Benefit Life Insurance Company has grown over time to be a provider of a wide range of wealth enhancement and protection products.
Through wars and natural disasters, as well as economic volatility, this insurer has remained a recognized leader in terms of financial performance, product and program innovation, and customer service. The company has a strong and stable financial foundation, and it has a positive reputation for making timely payments on its customers’ claims.
As of year-end 2016, Security Benefit had nearly $35 billion in assets under management and more than $21 billion in insurance reserves. The life insurance and annuity products from Security Benefit are offered via more than 30,000 licensed and appointed financial representatives through a network of 700 broker/dealers and independent marketing organizations.
Presently, Security Benefit Life Insurance Company, and its affiliate, First Security Benefit Life Insurance and Annuity Company of New York, provide fixed and variable annuities to approximately half a million owners in all 50 of the U.S. states.
Over the past several years, as consumers have sought a way to secure a guaranteed stream of income for life – along with the ability to keep their principal safe no matter what the market’s condition – fixed index annuities have become much more popular.
Yet, even though the advantages of a fixed index annuity can sound appealing, the truth is that whenever something sounds “too good to be true,” it usually is. And because of that, you should ideally gather additional information before you make a commitment. This is especially critical as the purchase of an annuity could require you to deposit a large chunk of your total retirement savings.
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. Security Benefit 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 out perspective when breaking down the positives and the negatives of this particular annuity. Before purchasing any type of insurance and/or investment 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 situation. All of the names, marks, and materials that were used for this annuity review are the property of their respective owners.
For more information on how to compare annuities so that you can better determine which one may be the best for you and your financial circumstances, click here
to obtain our free annuity report.
How Security Benefit Describes the Foundations Fixed Index Annuity
The Security Benefit Foundations fixed index annuity is described as a financial vehicle that can help to build strong retirement savings, along with an income strategy for your future. Investors may choose between either the Foundations 5 or the Foundations 7 annuity – which each have a different surrender charge period.
Because no one is able to predict what the market will do in the future, nor precisely determine how much income you will need down the road, it can be extremely helpful to have a financial product that protects principal regardless of what occurs in the market, and that will continue to provide you with income throughout your lifetime.
According to Security Benefit, the Foundations annuity can grow your principal value based on an annual guaranteed minimum interest rate (GMIR), and/or via the changes in the S&P 500 index over a specific period of time.
Some of the key highlights of this annuity include:
There are also some additional features on this annuity that can make it even more attractive, such as the ability to access some or all of your funds for unforeseen costs, such as a death benefit payout if the annuitant dies before receiving annuity payments.
And, if confinement in a nursing home or a hospital is required for longer than 90 days – or if you become diagnosed with a qualifying terminal illness – then the surrender charges and any applicable fees may be waived.
There is also a guaranteed lifetime withdrawal benefit (GLWB) rider on this annuity that can guarantee that you may withdraw from the Foundations annuity a specified amount each year, which is referred to as the lifetime annual income. If you end up only withdrawing the lifetime annual income each year, this amount will be available yearly – even if the account value of the annuity is zero.
- Principal and Minimum Interest Rate Guarantees – Your principal and minimum interest rates within the annuity are guaranteed (although principal may be reduced by any withdrawals and/or fees).
- Interest Potential without the Risk of Market Loss – As the underlying index goes up, you can receive interest rate credits, however, if the market goes down, your principal will be safe and not lose value.
- Tax-Deferred Growth – The funds that are inside of the annuity are allowed to grow and compound without being taxed over time, which can help to accumulate money faster in the annuity.
- Income Protection – There are several different payout options that may be chosen from, including an option to receive income for life.
- Premium Bonus – For all purchase payments that are received in the first contract year, Security Benefit will also add a bonus of 1% to the annuity’s account value.
How a Financial Advisor Might “Pitch” this Annuity
Today, because there are many retirees and pre-retirees who are concerned about keeping their principal safe, and having an income that is guaranteed for life, a financial or insurance advisor is likely to focus on the protection and income features of this annuity.
But, while growing your money, keeping it safe, and knowing that you will have an income for life can initially sound like the best of all worlds, there are also some things that you need to know about the Income Foundations annuity from Security Benefit before you dive in head first.
For instance, while you’ll have the opportunity to earn a nice rate of return that is based on the performance of the underlying index, this return can be limited due to the cap that is in place. As an example, in return for allowing your principal to remain safe, your upside potential is limited by being capped. So, hypothetically, if the cap on the annuity is 4%, and the underlying index had a return of 6% in a given year, then your return, based on the cap, would be limited to 4%.
In addition, as with most other annuities, this contract is somewhat illiquid in that you are only allowed to withdraw up to 10% of the annuity’s value during the first ten full years of the contract.
What About the Fees on the Security Benefit Foundations Annuity?
Even though annuities have received a somewhat tarnished reputation for the fees that they charge, you would likely be hard pressed for find any financial or insurance related product that doesn’t charge at least some amount for their purchase and/or their ongoing management.
When it comes to the Security Benefit Foundation’s annuity, though – or any annuity, for that matter – it is important that you know the “wheres” and the “how muches” in terms of where your money may be draining out.
It is also important to be aware of a potential market value adjustment (MVA) on this annuity. That is because an MVA can increase or decrease the account value in order to reflect changes in interest rates from the time that you initially purchase the annuity.
In the case of the Security Benefit Foundations annuity, the market value will reflect changes in the interest rates since you purchased the annuity, measured by the 10-year Constant Maturity Treasure (10-year CMT) interest rate. Here, if the 10 year CMT interest rate is (i) higher than or (ii) lower, by no more than 25 basis point than the 10 year CMT interest rate when you purchased the annuity, an amount is deducted from the account value.
As with many other annuities, the additional riders that can be added will also come with an additional fee. With the Foundations annuity from Security Benefit, additional fees will be charged if you opt to include the GLWB (guaranteed lifetime withdrawal benefit) rider.
There are also surrender charges levied if you take out more than 10% of the overall contract value within the first several years of owning the contract. These can differ on the Foundations 5 and Foundations 7 version of this annuity, as well as by your state of residence.
Security Benefit Foundations Annuity Surrender Charges
|Foundations 5||Foundations 5||Foundations 7||Foundations 7
|Year||Standard||CT and DE||Standard||CT and DE
The Annuity Gator’s End Take on the Security Benefit Foundations Fixed Index Annuity
Where it works best:
This particular annuity will usually work the best for those who are looking for:
Where it works worst:
Conversely, the Security Benefit Foundations Fixed Index Annuity may not fare so well for those who:
- The opportunity to obtain a higher rate of growth
- Safety of principal
- Lifetime income
- Want to fully participate in market gains
- Want or need to access their funds penalty-free within the first 5 to 7 years of purchasing the annuity
- Do not intend to use the guaranteed lifetime income feature
There are many factors that should ideally be taken into consideration if you are thinking about purchasing an annuity. These should include – but are not limited to – how the annuity can produce a return, how safe your money will be, how the income will pay out, and whether or not there are any other optional features that may be added to the annuity (as well as any added costs).
If you are in fact considering the purchase of a fixed index annuity, then you can be assured that your principal will be safe, regardless of what occurs in the stock market, or even the economy as a whole. These annuities will also provide you with an opportunity to grow your retirement funds, and to receive a guaranteed income in the future for as long as you need it.
However, there can still be some unanswered questions, and in this case, the only way to truly tell if this annuity would be beneficial for you is to test it with an annuity calculator. Therefore, if this is, in fact, something that you are still looking to pursue, then we can provide you with a more personalized peek at how the Security Benefit Foundations annuity may perform, based on your specific criteria. After that, once we have run the calculations, we can provide you with a free spreadsheet to review.
In doing this, you may find that by running a test on the Security Benefit Foundations annuity, there are some positives, however, there could also be some key areas where the annuity falls short. If so, there may be some other alternatives that would work much better for you.
So, if you still have any additional questions, or if you would like to have more information on the Foundations annuity from Security benefit, then please feel free to reach out to us via our secure contact form here.
Any Additional Questions? Did You Notice Any Mistakes in this Review?
While we do realize that this annuity review was a tad bit long, our feeling is that we would much rather provide you with a lot of details than with not enough. Therefore, if you did find that this annuity review was beneficial to you, then please feel free to forward it on and to share it with anyone else that you think may benefit from it as well.
In addition, we also know that details about annuities – and other financial products, too – can change somewhat quickly. With that in mind, if you happened to notice anything in this review that needs to be corrected and/or updated, please let us know that, too, and we will get on the revisions right away.
Is there another annuity (or annuities) that you would like more information on?
If so, just let us know and our team of annuity geeks will get on the case. We are always adding new reviews and information to our website, and look for any additional suggestions that you may have.
The Annuity Gator
Thanks for all the good information about Security Benefit annuities.