What Will We Be Covering in this Annuity Review?
In this review, we will be going over the following in-depth details regarding the CUNA Mutual MEMBERS Index Annuity:
- Type of product
- 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 CUNA Mutual MEMBERS Index Annuity could be a good possibility for you.
However, before you commit to this – or for that matter, to any – annuity, it is highly recommended that you take a closer look at how it works, and how it may or may not fit in with your specific financial needs and objectives (both now and down the road).
Throughout the past several years, fixed index annuities have become quite popular. This is due in large part to the fact that these financial vehicles can offer a guaranteed income stream during retirement. This, in turn, can give you the peace of mind in knowing that you won’t outlive your income, no matter how long you may live.
Because of the increased popularity of index annuities, many insurance carriers are continuing to add new products to their proverbial shelves. Likewise, there are more financial and insurance professionals offering index annuities – but this is not necessarily a good thing.
One of the main reasons for this is because, even though advisors 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 you’ve never visited our website, then please allow us to officially welcome you to Annuity Gator. We are a team of financial pros who are keenly focused on providing comprehensive, yet unbiased, annuity reviews. We’ve been at this for quite a while not – 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 CUNA Mutual MEMBERS Index Annuity or some other similar product.
In fact, you may have even set a follow-up meeting with the seminar presenter, which in turn, has led you here to the Internet in search of more detailed information about this (and/or other annuities).
Yet, even though there are a number of good websites online that provide information about annuities, there are some other sites that will try luring you in by making some pretty bold claims about annuities like:
- Lowest fees
- Highest income payouts
- Guaranteed lifetime income
- Top-rated companies
It’s certainly easy to see why these claims are so enticing. But the problem is, they aren’t necessarily true! In fact, they are oftentimes based on “what ifs,” rather than on hard evidence. So, this is where we come in.
On our annuity review database, you will find the whole gamut of information about these products. This includes good features, as well as the not-so-good. And, while discussing annuity drawbacks might end up turning some people away from these products, it is much better to know the whole story up-front, rather than making an expensive (and long term) mistake with your retirement savings.
In order to be perfectly clear, here, we do want to let it be known that we like annuities here. In fact, these products can provide some wonderful benefits – but this is really only the case if the product actually fits in with your specific financial 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 CUNA Mutual MEMBERS Index Annuity.
So, if you’re ready to get started, let’s dive in!
CUNA Mutual MEMBERS Index Annuity at a Glance
|Product Name||MEMBERS Index Annuity|
|Type of Product||Single Premium Deferred Index Annuity|
|Phone Number||(800) 356-2644|
Opening Thoughts on the CUNA Mutual MEMBERS Index Annuity
Founded more than 80 years ago by credit union leaders who were looking for an insurance and investment partner they could trust, CUNA Mutual offers a wide array of financial products to help its customer grow and protect wealth.
In fact, CUNA Mutual is self-described as “A financial services company serving financial institutions and their clients worldwide.”
As of year-end 2017, the company has over $20.5 billion in assets and had taken in roughly $3.5 billion in total revenue. Due in large part to its financial strength and stability, CUNA Mutual is rated highly by the insurance company rating agencies with an A from A.M. Best, an A2 from Moody’s Investors Service, and an A from S&P Global.
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 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. CUNA Mutual 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 CUNA Mutual Describes the MEMBERS Index Annuity
CUNA Mutual describes the MEMBERS Index Annuity as a single premium deferred index annuity that offers both downside protection and market-linked returns.
In this product, your purchase payments may be allocated between two accounts, and you can re-allocate between accounts each anniversary, should you decide to do so. The two accounts include the:
- Index Account – The Index Account is your link to market performance, and the interest that is based on the market’s movement is credited to this account on each contract anniversary throughout the period of time that you select (i.e., the index period).
- Guaranteed Growth Account – The Guaranteed Growth Account is your optional “safe haven” from market volatility. If you choose to invest a portion of your payment into this account, then you will experience steady growth – even during market downturns. This account credits interest at a guaranteed rate that is declared each contract year.
For added peace of mind, there is a minimum guaranteed rate of interest that will apply at the end of your index period – regardless of your account allocations.
The index periods that you can choose from are five, seven, or ten years. For the funds that you allocate to the index account, you will benefit from market linked returns throughout the selected period of time.
During your index period, the interest rate on the index account is based in part on the annual performance of the S&P 500 index. If this index goes up, then your account will be credited with the percentage increase – up to a cap, or maximum.
That interest is then locked in so it cannot be lost – even if the underlying index performs poorly in the future. In fact, if the S&P goes down, your account value is guaranteed not to decrease. Rather, it will simply be credit with 0% for that period.
The table below shows how the performance of the S&P 500 index affects the interest that is credited to the value in the index account. In this example, it is assumed that $100,000 is contributed to the MEMBERS Index Annuity up-front and that the index has a cap of 7%.
|S&P 500 Performance||Assumed Rate Cap||Your Index Interest||Contract Value|
For any of the funds that you opt to allocate to the guaranteed growth account, you will earn daily interest at a declared rate that is determined each year. You are allowed to change your allocations at any time – and if you do, the change will take effect on your next contract anniversary.
At the end of your index period, you can decide to sign up for another index period of the same duration. Or alternatively, you can continue your contract in a one-year fixed account. You could also decide to convert your account value over into a guaranteed income stream or withdraw your funds in one lump sum.
There are a few other “bells and whistles” included with the CUNA Mutual MEMBERS Index Annuity. For instance, if you are confined to a nursing home or a hospital for 180 consecutive days, you may access all of your funds in the annuity without incurring a surrender charge. Likewise, if you are diagnosed with a terminal illness with a life expectancy of less than one year, you may also withdraw all of your funds without a surrender penalty.
As with other annuities, your money will grow tax-deferred, meaning that it can compound over time without you having to pay taxes on the gain (until the time of withdrawal).
For more in-depth details regarding the CUNA Mutual MEMBERS Index Annuity, you can take a look 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.
But with a fixed indexed annuity like the CUNA Mutual MEMBERS Index Annuity, you are able to 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…
Are There Any Fees on the CUNA Mutual MEMBERS Index Annuity?
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 surrender period that is tied to your CUNA Mutual MEMBERS Index Annuity will correlate with the length of the rate guarantee period that you select. In this case, then, the five-year guarantee will have five years of surrender charges, the seven-year guarantee will have seven years of surrender charges, and the ten year will impose surrender charges for ten full years if you opt to take out more than 10% of your annuity’s contract value.
The Annuity Gator’s End Take on the CUNA Mutual MEMBERS Index 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 MEMBERS Index Annuity from CUNA Mutual 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, the number of years that you choose for your rate guarantee period
- 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 MEMBERS Index Annuity or similar product is right for you, click here so that you can access our free annuity buyer’s report.
There is a long list of criteria 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.
In the case of the CUNA Mutual MEMBERS Index Annuity, there can definitely be some great benefits. But that being said, this particular annuity could 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.
Do You Have Any Additional Questions on the CUNA Mutual MEMBERS Index Annuity? Did You Find Any Mistakes in this Annuity Review?
We understand 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.
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The Annuity Gator