What will we be talking about in this annuity review?In this review of the Protective Life Insurance Company’s Income Creator annuity, we will be going over the following details:
- Type of annuity
- Pros and cons
- How the annuity works
- Who may be a good fit for this annuity
- Who this annuity may not be a good option for
Annuities can be complex. That’s where having an Annuity Investigator who loves math comes in. We make the complex, simple.The decision to purchase an annuity – or for that matter, any type of insurance or financial product – that can provide you with security, as well as an ongoing income stream in the future, is a big step in your retirement planning process. But, making a commitment to any long-term financial vehicle like the Protective Income Creator fixed annuity from Protective Life Insurance Company could definitely be a step in the right direction. However, before you dive in head first, it can be beneficial if you know all of the key facts, especially those that relate to how this product works, and how it may (or may not) help you in attaining your future financial goals. Throughout the past decade or so, fixed annuities like MYGAs have become much more popular. One reason for this is due to the guaranteed stream of lifetime income they can provide, along with locking in an interest rate for a set time frame. Unfortunately, though, because of the appeal of annuities, there are many more financial advisors who are offering these vehicles to their clients – and this is not necessarily a good thing. Because, while insurance and financial advisors will typically try to do what is best for their clients, they may not always be providing you with the entire story when it comes to annuities. This may be because annuities are complex – and oftentimes very confusing products…even for well-informed consumers. Plus, over the past several years, with the new array of annuity offerings that are being introduced into the marketplace, these products can also make your head spin with all of their “fine print”. In any case, even though reading over this information can be about as fun as getting a root canal, it is always recommended that you fully understand what it is that you are buying. This is particularly the case, as an annuity may comprise a substantial portion of your overall retirement savings. In addition, once you have made the commitment to purchase an annuity, it can be extremely difficult – and costly – if you want to get out. That’s where we come in!
Annuity and Retirement Income Planning Information that You Can TrustIf this is the first time that you have been to our website, we would like to personally welcome you here to AnnuityGator.com. We make up a team of experienced financial and retirement income planning professionals who are dedicated to providing in-depth reviews of annuity products. We’ve been doing this for a number of years now – far longer than most of our “copycat” competitors – and because of that, we have come to be known as a highly trusted source of annuity information online. If you’ve been looking for information about annuities via the Internet, then it is likely that you have come across many conflicting details about these financial vehicles. This isn’t really very surprising, though, because there are a lot of opinions (both positive and otherwise) about these products floating around the Internet. Although there are actually many different websites online that focus on providing annuity products and information, there are some that will attempt to lure you in with some pretty bold claims like:
- Lowest fees
- Highest income payouts
- Guaranteed lifetime income
- Top-rated companies
The Protective Life Income Creator Annuity at a Glance
|Protective Life Insurance Company
|Type of Product
|Fixed / MYGA Annuity
|A.M. Best Rating
Opening Thoughts on the Protective Life Income Creator AnnuityProtective Insurance Company has been in the business of offering financial enhancement and protection for more than 110 years. The company was founded in 1907, and since that time, it has grown and expanded – adding a wide range of products and services. At year-end 2019, Protective life had in excess of $900 billion of insurance in force, consisting of roughly 8.6 million policies. With more than $66 billion of invested assets, Protective is considered to be strong and stable financially, and in a good position to make good on its policyholders’ claims. The company is highly rated by the insurer rating agencies, including a(n):
- A+ from A.M. Best
- A+ from Fitch
- AA- from Standard & Poor’s
- A1 from Moody’s
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. Protective Life Insurance Company 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. 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, and how to determine which one – if any – may be the best for you, click here to obtain our free annuity report.
How Protective Life Describes the Income Creator AnnuityProtective Life Insurance Company describes the Income Creator annuity as a fixed, single premium, deferred annuity contract. As a multi-year guaranteed annuity (MYGA), this annuity locks in an interest rate for seven full years. When this time period has elapsed, the contract will automatically renew for one year. At that time, the new interest rate is guaranteed for one year, and withdrawal charges will no longer apply. (We’ll discuss surrender/withdrawal charges in more details later on in this annuity review). Going forward, new one-year guarantee periods will automatically begin – unless you instruct the insurance company otherwise. As of mid-May 2020, the Protective Income Creator annuity is offering a fixed interest rate of 1.20% for 7 years. With the death benefit offered on this annuity – at no added cost – if you pass away before starting the annuity’s income payments, your named beneficiary(ies) will receive the full amount of the contract value (minus any applicable premium tax). The annuity offers some other features, too, like a Lifetime Income Benefit that provides steady, guaranteed income in retirement, and that is designed to last a lifetime, no matter what happens in the stock market, or how long you live. Your annual withdrawal amount is calculated by taking the net premium amount since issue and then multiplying it by a pre-set withdrawal percentage. This is determined by:
- Whether you choose to take payments on a single or a joint life basis.
- The number of complete years that have elapsed since contract issue and benefit election.
- The covered person’s age (or in the case of two income recipients, it will apply to the younger individual’s age).
- Nursing Facility/Terminal Illness Waiver – You could have access to your money penalty-free after the first contract anniversary if you or your spouse is either confined to a qualified medical care facility for at least 30 consecutive days, or if one of you is diagnosed with a terminal illness that is expected to result in death within 12 months
- Unemployment Waiver – You may also be able to access your money to help with the financial burden of unemployment. In order to qualify for this benefit, you or your spouse must meet all of the following requirements:
o Employed full-time on the issue date of the annuity
o Unemployed for a period of at least 60 consecutive calendar days prior to claiming the waiver
o Unemployed on the date when the full surrender or partial withdrawal is requested
How an Insurance or Financial Advisor May “Pitch” this Annuity to Clients
Given that the Income Creator is a fixed rate product, it is likely that an insurance or financial advisor would key in on the guarantees that this financial vehicle offers. Here, you can secure a set rate of interest – which is guaranteed for the first seven full years – no matter what happens with the stock market or interest rates in the economy.
Advisors will also likely focus on the guaranteed stream of income that this product can offer you (as well as another person, if applicable), in that you will not have to worry about running out of income when you need it most.
But even with these nice guarantees, there are some things that you still need to look out for if you are considering the purchase of this annuity. For example, the initial interest rate is locked in for seven full years.
Then after that, you will be subject to possible subsequent interest rate changes every 12 months going forward. Given the historically low interest rate environment that we have been in for the past decade or so, though, this rate isn’t likely to be anything stellar.
You are also subject to surrender charges during the entire 7-year rate lock period. So, if you’re still considering the purchase of this annuity, you really need to use only funds that you won’t need for financial emergencies or other obligations during that time…otherwise, it could cost you!
What About Any Fees on the Protective Life Income Creator Annuity?
While you won’t be dinged with a first-year agent commission on the Income Creator annuity, there are some added costs that you’ll need to look out for. First off, if you want to add the Lifetime Income Benefit, you will be charged 0.95% annually. So, even though this benefit can provide you with some income security, it could also impact your overall return during the accumulation period – especially because interest rates are so painfully low right now.
There is also a 7-year surrender period, so if you take out more than just 10% in any of these first seven years, you will incur a penalty. In addition, you could also be charged with tax, and even an additional 10% “early withdrawal” penalty from the IRS if you make such withdrawals before you turn age 59 ½.
Protective Life Income Creator Annuity Surrender Charge Schedule
The Annuity Gator’s End Take on the Protective Life Insurance Company’s Income Creator Annuity
Where it works best:
This particular annuity will typically work the best if you are looking for:
- A long-term interest rate guarantee (7 years initially)
- Safety of principal
- Guaranteed lifetime income
Where it works worst:
This annuity may not work well if you:
- Want access to most or all of your funds over the first seven years without paying a penalty
- Are looking for the opportunity to generate a higher return
- Do not intend to use the lifetime income feature
In order to really know how to best compare the annuity options that could be right for you, click here so that you are able to download our free annuity report.
There is a fairly lengthy list of criteria that should be considered when you are determining whether or not a particular annuity may be right for you. With all annuities, the funds that you deposit in premium should be considered a long term commitment. So, with that in mind, you should feel comfortable with the annuity that you choose.
In regard to the Income Creator annuity from Protective Life, there can be some very attractive features. But this annuity may also fall short in some areas – and quite frankly, there may be some better alternatives that are available to you.
If you still have any questions or concerns about this – or any other – annuity, or even if you would just like some additional assistance with reviewing the features and benefits of annuities, then please feel free to contact us through our secure contact form here.
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The Annuity Gator
P.S. If you would like to read more of our Protective Life annuity reviews here are some links to check out:
- Independent Review of the Protective Life Fixed Deferred Annuity.
- Independent Review of the Protective Life’s Indexed Annuity II.
- Independent Review of the Protective ProSaver Secure ll Fixed Annuity.