Independent Review of the Forethought Choice Income Annuity
What is covered in this review?
In this annuity review, we will cover the following information on the Forethought Choice Income 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.
You may initially notice that, similar to other annuities, the Forethought Choice Income annuity will perform quite well in certain scenarios. However, not all annuities are the best product for all situations. This is especially the case, depending on your particular goals for the annuity.
Annuity and Retirement Income Education That You Can Actually Trust
It is entirely possible that you have stumbled upon our website for the very first time and that you are not familiar with what it is that we do. But, the good news is that you are in the right place.
That is because, if you have been looking for information on annuities and “Googling” the term annuity, then it is likely that you have even seen some of the annuity marketing sites that make bold claims for the sole purpose of obtaining your contact information. These websites will often state things such as:
- Highest Payouts
- 7-8% Returns
- Lowest Fees
- No Market Risk!
- Guaranteed Lifetime Income
- Top Rated Companies
Does this look familiar?
What we know from our years of experiences is that none of these potential “benefits” will really even matter unless and until you know why it is that you are getting the annuity in the first place. And, when taking a closer look, we also determined that many of these annuities really can’t even provide the returns that are being claimed.
It is probable that you have also run across some other websites on the Internet that is adamantly opposed to annuities. They may even state that they “hate” annuities. But in many instances, these sites have no idea how annuities even work!
The truth is that both of the above approaches to annuities are inherently flawed – and neither of them will benefit you in any way.
What you will find, however, is that the website you are on right now is completely different. Here at Annuity Gator, we offer the most objective, independent, and thorough annuity reviews that you can get online. We have also been providing these reviews for much longer than many of these “copycat” sites. We offer these annuity reviews because we want you to be able to decide for yourself whether or not the annuity you are reading about will or will not be able to benefit you, based on your specific financial objectives.
So, let’s get started.
Forethought Choice Income Annuity at a Glance
|Product Name||Forethought Choice Income Annuity|
|Issuer||Global Atlantic - Issued by Forethought Life Insurance Company|
|Type of Product||Fixed Indexed Annuity|
|Standard & Poor's Rating||A-|
Opening Thoughts on the Forethought Choice Income Annuity
Throughout the past several years, given the unpredictability of the market, as well as the vast amount of Baby Boomers who are retiring and living longer life spans, the thought of growing and protecting principal within the same product can be enticing, especially when that very same product can then be converted into a guaranteed income for life.
This is one of the key reasons why this product has been presented to investors as a way to make their retirement income plan essentially “stand out”, and to provide the confidence in knowing that funds will be protected from market downturns and income will be there for the remainder of their lives.
The annuity also touts its ability to “lock in” gains from year to year – which is another basic element to fixed indexed annuities. Known as the reset feature, the accrued values that are attained each period will become the beginning value for the following year. If, however, there is a loss, there will be no drop in value, so there will be no need to “recover” losses for the investor.
The Choice Income annuity also offers a couple of other benefits such as a terminal illness and nursing home waiver, which allow the investor to access funds should they either be diagnosed with a certain illness or be confined to a skilled nursing facility for a certain period of time.
Yet, while all of these benefits may sound great on the surface, the reality is that the great returns that are oftentimes assumed with fixed indexed annuities such as this are not necessarily always attainable. In fact, rarely will this happen the way in which sales agents explain it.
Before getting into the details, here are some legal disclosures we need to provide…
This is an independent annuity review, and it is not a recommendation to purchase or sell a product. Neither Forethought Life Insurance Company or Global Atlantic has provided us with any compensation for offering this review, nor have they provided us with any compensation for it. This review is just simply for the purpose of showing our personal perspective on the positives and the drawbacks of this particular annuity. Prior to purchasing any type of financial product or service, it is important that you conduct your own due diligence and that you consult with a properly licensed financial advisor. Doing so can help you in determining whether or not the financial vehicle may be right for you. All of the names, trademarks, and materials that were used in this review are the property of their respective owners.
How Forethought Describes the Choice Income Annuity
Based on the Forethought / Global Atlantic brochure that markets the Choice Income fixed index annuity, the product is presented using some key points, such as:
- Providing the ability to receive interest credit based, in part, on the performance of an equity index or multiple indices
- Locking in potential gains for a defined crediting period
- Providing protection against market losses
- Accruing interest tax-deferred
- Helping to create a legacy with death benefit proceeds
- Creating a predictable lifetime income stream
How Financial Advisors Might “Pitch” This Annuity
Over the past several years, many financial advisors have been pitching fixed indexed annuities to their clients, given these products’ ability to provide market-linked growth, in conjunction with protection of principal, as well as a guaranteed lifetime income.
In the case of the Forethought Choice Income, it is likely that a financial advisor would key in on the predictable lifetime income stream that this annuity can provide. With this product’s guaranteed lifetime withdrawal benefit, clients can have a predictable income in retirement. And, this income stream can be turned on anytime after age 55. (There is an additional cost for this, as the GLWB is an additional rider).
Certainly, the other benefits of owning a fixed indexed annuity would also likely be pitched, such as the ability to protect principal. This would be especially important to those who are quickly approaching retirement and may not have much time to make up for any market losses that would otherwise be incurred.
But, while the Choice Income annuity does provide some nice features, these may not work exactly as they are described by all financial sales agents. In fact, whether knowingly or unknowingly, these types of annuities can often be misrepresented – which can, in turn, lead to disappointment by their purchasers.
One reason for this is because fixed indexed annuities, while they are tied to the market index, cannot typically return 7-8% per year. In fact, far from it. In most cases, these annuities may produce in the neighborhood of 2-4%. So, if an agent is promising anything higher, then he or she is either unfamiliar with how fixed indexed annuities work, or they are just trying to make a quick sale.
Annuity Gator’s Take on the Forethought Choice Income Fixed Indexed Annuity
Where it works best:
- For those who are seeking guaranteed lifetime retirement income
- For those who are seeking guaranteed lifetime income for a spouse
- For those who are happy with lower long-term returns
- For those who expect to live a long life, based on a family history of longevity, and don’t want to run out of savings or income
Where it works worst:
- For those who do not plan to use the lifetime income benefit
- For those who are seeking high returns (anything higher than 2-4%)
- For those who are looking for high long-term growth
When shopping for the right annuity, one of the most important things to understand is what actually constitutes a realistic return. When it comes to a fixed indexed annuity, just because these products are linked to a market index, a real return of 7-8% is not likely to happen.
So, if you are strictly seeking guaranteed income without any market risk, there are likely some better alternatives available to you. However, if you are looking for a financial vehicle that cannot lose principal, and you are ok with lower returns that are in the single digits – and you want a strong company backing up the investment – then this particular annuity could be a good option for you.
We still feel that there are many financial sales agents out there who do not understand how to properly present fixed indexed annuities – and because of that, they substantially overpromise the benefits that these vehicles can produce. Unfortunately, because of that, it can lead to disappointment for their clients. But it can also lead to a retirement income stream that is not what you anticipated if you get into a product that isn’t what you thought it was.
The only way to really know if this annuity is a good fit for you is to have it tested. We offer this testing for free here at Annuity Gator. So, just contact us and we will do this for you in order to illustrate the returns that this annuity can provide for you based on your financial situation. If your sales agent was upfront with you, then the numbers should match up. If not, then you may want to move on to another agent.
Have Any Additional Questions on the Forethought Choice Income Annuity? See Any Mistakes?
If you have any additional questions on the Forethought Choice Income annuity, please let us know.
Annuities can be fairly confusing products, and a lot of financial advisors are really pushing these vehicles on their clients – regardless of whether or not the annuity is even right for them. But you really need to know all the facts about an annuity before you move forward with purchasing it – otherwise, you could end up regretting it later. This is because annuities are long-term investments that often consist of high surrender penalties. For some people, these products do not make any sense, but for others, they can.
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Also, like most people, we can make mistakes. So, if you happen to notice any in this review, then please contact us and let us know. We are always happy to make any corrections that are needed and to give credit where it is due. If you have any questions or concerns, please reach out and contact us as well. I want to ensure that this information is as clear and as helpful to as many people as possible.