Independent Review of the Ameritas Compass Index Annuity

What Will We Be Covering in this Annuity Review?

In this review, we will be going over the following in-depth details regarding the Ameritas Compass Index Annuity:

  • Type of ProductIndependent Review of the Ameritas Compass Index Annuity
  • Fees / Charges
  • Rates
  • Realistic long-term return expectations
  • How the annuity is best used
  •  How the annuity 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 considering the purchase of an annuity because you would like to attain tax-deferred savings, along with the assurance that you will have an ongoing income stream during your retirement years, then the Ameritas Compass Index Annuity could be a good possibility for you.

Yet, before you go out and make a long-term commitment on this – or on any – annuity, it is always a good idea to first take a closer look at how the product works, and how it may or may not work in your particular situation.

Over the past decade or so, fixed indexed annuities have become extremely popular, in large part because they can offer you a guaranteed stream of income during retirement, which can, in turn, provide you with peace of mind in knowing that you won’t run out of income, regardless of how long you may live.

Due to the increased popularity of these types of annuities, the number of insurance and financial services reps who are offering them has expanded a great deal. However, this may not be a positive thing.

One reason for this is because, while these professionals typically work hard to offer the best possible information for their clients, because fixed indexed annuity products are complex and have a lot of moving parts, even the insurance and financial advisors who sell them may not always be all that familiar with the intricate details about them.

However, because fixed indexed annuities – or for that matter, any annuities – can oftentimes require a large percentage of your overall savings, you really need to know how the product will work because if you change your mind later and want to get out of it, you will find yourself paying a pretty hefty surrender penalty.

Annuity and Retirement Income Planning Advice You Can Trust

If this is the first time that you have visited our website, please allow us to personally welcome you here to AnnuityGator.com. We are a team of annuity experts who are highly focused on offering in-depth, yet non-biased, annuity reviews. We have been doing this for quite some time now – much longer than our competitors – and because of that, we have come to be a trusted source of annuity information.

When looking for details about annuities via the Internet, it’s possible that you have run across a lot of very conflicting opinions about them. This, however, is not really all that surprising. That is because there are many different annuity products available, and many people – both consumers and financial advisors alike – will often have differing thoughts.

It could also be that you have recently attended an annuity seminar where, in return for a free lunch or dinner, the presenter provided you with a great deal of information about the Ameritas Compass Index Annuity or some other similar annuity. You might even have set a follow-up meeting with the presenter, which in turn, has led you here to the Internet in search of more detailed information about this (and/or other annuities).

But while there are many very good websites out there online that are keyed in on offering annuity products and information, there are some that will attempt to “lure” visitors in by making some pretty bold claims, such as the following:

  • Lowest Fees
  • Highest income payouts
  • Guaranteed lifetime income
  • Top-rated companies

Sound familiar?

Although these highlights might sound very enticing, it makes it all that much more important to know whether or not these claims are actually true. This is where we come in. In fact, if you have come to our site in search of more information on the Ameritas Compass annuity, you are definitely in the right spot.

Here you will not only find the nice, rosy details about everything good that this annuity offers, but also the factors that may be considered as drawbacks. That is because we feel that knowing the entire picture is really the only way to make a well-informed decision as to whether or not the annuity will be right for you.

If you’ve done any amount of investing in the past, you may notice that insurance and financial advisors will often tend to happily give you all of a product’s benefits, yet will simply gloss over the disadvantages – if they even discuss them at all.

When it comes to fixed indexed annuities, for instance, advisors will usually go into great depth about how the product offers the opportunity for higher growth than that of a fixed annuity, while at the same time keeping your principal safe. We don’t think it’s right to be just one-sided, though.

Just to be clear here, we want to state for the record that we feel annuities can provide investors with some very nice benefits. However, this is only the case if the product fits in with your specific short- and long-term goals.

The review that you are in the process of reading right now was created with the intent of assisting you with better understanding all of the “fine print” that is associated with the Ameritas Compass index annuity.

So, if you’re ready to get started, let’s go!

Ameritas Compass Index Annuity at a Glance

Product NameCompass
IssuerAmeritas
Type of ProductFlexible Premium Fixed Index Annuity
S&P RatingA+ (Strong)
Phone Number(800) 745-1112
Websitehttps://www.ameritas.com/

Opening Thoughts on the Ameritas Compass Index Annuity

Ameritas Mutual Holding Company has more than 130 years of experience in the insurance arena. This company offers a full line of annuities, which include fixed, variable, and indexed. The company designs these products to perform for the long term. In fact, according to Ameritas, its core strength lies within its insurance companies. These include Ameritas Life Insurance Corp. and Ameritas Life Insurance Corp. of New York.

As of year-end 2016, Ameritas insurance companies’ general account invested assets base was nearly $13 billion. Invested fairly conservatively, Ameritas is considered to have a strong financial foundation and, in turn, can pay out its policyholders’ claims in a timely manner.

The company is a mutual entity, which means that its policyholders are essentially part owners. Given the financial strength and stability of Ameritas, this insurer has received very good ratings from the insurer rating agencies, including an A+ (Strong) from Standard & Poor’s, and an A (Excellent) from A.M. Best.

Due to the constant volatility of the stock market over the past several years, fixed index annuities have become extremely popular with investors as a way to both grow and protect principal, as well as to obtain an ongoing income in retirement. However, while these features may seem highly attractive at first glance, it is important that you look at the whole picture because there is typically some type of “tradeoff” required.

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. Ameritas 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 Ameritas Describes the Compass Index Annuity

Ameritas describes the Compass Index Annuity as a product that offers the following benefits:

  • Upside potential
  • Downside protection
  • Balanced safety and growth

This annuity is designed to provide the potential for growth, without the risks that are associated with investing in the stock market. This growth opportunity is balanced with a 0% “floor”, protecting the annuity from negative market conditions.

Here you have the ability to allocate your funds to the following types of financial vehicles:

  • Fixed Account – The money in the fixed account will earn a fixed rate of interest.
  • Index Options – Money that is in an index option earns an interest rate that is in part linked to the performance of an underlying market index. The equity indexes that are available with this particular annuity include the S&P 500, the Russell 2000, and the MSCI EAFE index.
  • Combination – In order to give the portfolio added balance, you could also allocate your money to both the fixed and the index account options in any whole percentage that you select.

Regardless of the allocation that you select, the funds that are inside of the annuity will grow on a tax-deferred basis, meaning that no tax is due on the gain until the time of withdrawal. This can allow the money inside of the annuity to grow and compound exponentially over time.

The annuity also has some other features such as a death benefit, and the ability to add an optional Guaranteed Lifetime Withdrawal Benefit. For all of the in-depth details, you can take a peek at the product brochure HERE.

How an Insurance or Financial Advisor Might “Pitch” this Annuity

Over the past several years – especially since the 2008 U.S. recession – the safety of principal has been a key concern for many investors, particularly as they inch their way towards retirement. Unfortunately, the more traditional “safe” financial vehicles, such as CDs and regular fixed annuities, can offer safety, however, their rates are so painfully low that they can’t even come close to meeting future inflation, much less beating it.

With a fixed indexed annuity like the Compass from Ameritas, you can alleviate a lot of this worry. That is because this type of annuity offers the opportunity to return higher than a traditional fixed annuity (up to a certain set “cap”), while also keeping principal safe – regardless of what happens in the market. The icing on the cake is the fact that, if the lifetime income option is chosen, the worry about running out of money in retirement has also been taken off the table.

Because of this, though, insurance and financial advisors who offer this type of annuity tend to pitch a “best of all worlds” scenario. This, however, can (and does) typically come with some tradeoffs that may not necessarily be all that appealing. One of these is the cap on upward returns.

As an example, if an indexed annuity has a cap of 5%, but the underlying index that the annuity is tracking has a stellar year and it returns closer to 10 or even 15%, the return that is credited to the annuity account will be capped at 5. So, while you do have the opportunity to end up with a higher return than a regular fixed annuity with a set rate of interest, the reality is that the 7 or 8% returns that are touted by some of the annuity marketing websites are not all that likely – especially on an ongoing basis.

Also, as with most other fixed indexed annuities, the index that is used is basically a price index, and it will not reflect the dividends that are paid on the underlying stocks in that index. And then there are the fees…..

What About Fees on the Ameritas Compass?

Even though annuities can provide you with flexibility and lifetime income, you need to watch out for the fees, as these could have a sizeable impact on what you ultimately return – and in some cases, if you decide that this really isn’t the right product for you, you could find yourself paying a “penalty” just to get your money back.

For instance, the Compass index annuity from Ameritas has eight full years of surrender charges. This means that if you withdraw more than 10% of the contract value within these first several years, you’ll be hit with a surrender charge. These start at 8%, and they gradually grade down from there:

Ameritas Compass Index Annuity Surrender Charge Schedule

Contract Year123456789+
Charge %887654320

Should you take such a withdrawal before you turn age 59 1/2, then you can also face an additional 10% “early withdrawal” charge from the IRS.

There are other possible charges, too. If you choose the optional GLWB (Guaranteed Lifetime Withdrawal Benefit), you will also incur a fee. The amount of this charge depends on whether the annuity is set up to pay out income to just one person, or for two. In this case, a single life option can cost you between 0.75% and 1.25% (depending on your state), and between 1.50% and 2.00% for joint lives (also dependent on your state of residence).

The Annuity Gator’s End Take on the Ameritas Compass Fixed Indexed Annuity

Where it works best:

This particular annuity will usually work the best for those who are looking for:

  • Safety of principal
  • The opportunity for index-linked growth
  • Guaranteed lifetime income in retirement

Where it works the worst:

The Compass Index Annuity may not be an ideal fit for you if you:

  • Need access to most or all of your money within the first several contract years – in this case, eight
  • Do not intend to use the lifetime income feature of the annuity

In order to truly get an idea of whether or not a fixed indexed annuity such as the Ameritas Compass annuity or similar product is right for you, click here so that you can access our free annuity buyer’s report.

In Summary

There are numerous factors that should be considered when you are thinking about the purchase of an annuity. One of the primary reasons for that is because these products could require that you plunk down a large amount of your overall retirement savings. So, you definitely want to know that you’re making the right choice.

In any case, an annuity should always be considered as a long-term financial decision – and because of that, it is truly important that you are confident about how the product may or may not fit in with your specific financial goals.

When you are considering a fixed indexed annuity, you can be comfortable in that your principal will be safe from market fluctuations, as well as in that you can set it up to provide you with an ongoing retirement income in the future. Given that, you can also attain the security that you won’t run out of income during retirement.

With regard to the Ameritas Compass fixed indexed annuity product, there certainly can be some advantages available. However, this annuity may still also fall somewhat short, and quite frankly, there may be some better options that are out there for you – primarily if you are in search of guaranteed lifetime income, along with the opportunity for growth.

Have Any Additional Questions on the Ameritas Compass Indexed Annuity? Did You Notice Any Mistakes in this Review?

We realize that this annuity review went a tad bit long, so we definitely appreciate you sticking with us thus far. However, in this regard, we would much rather that you have “too much” information on this product than to not have enough. So, if you found this annuity review to be beneficial, please feel free to pass it on and to share it with other people who could also find value in it.

We also know that, just as with other financial products and services, the information about annuities can change quite frequently. So, if you happened to notice any information in this annuity review that may need to be updated or revised, then please let us know that, too, and we will be happy to make any of the needed updates.

Are there any other annuities that you would like us to review?

If so, great! Just give us the name of the annuity (or annuities), and our team of highly trained annuity experts will get to it as quickly as we possibly can.

Best,

The Annuity Gator

Independent Review of the Ameritas Compass Index Annuity

 

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