Today’s review is on the CUNA Mutual Members Horizon Variable Annuity, with the purpose of showing you it’s strengths and weaknesses. Because in order to make an informed decision, it is important to consider all available facts such as the following:
- Product type
- Investment options that are available and their realistic long-term investment return expectations
- How it can best help your financial plan
- How it’s most poorly used as part of your financial plan
AIG Polaris Retirement Protector Variable Annuity Quick Facts
|Product Name||Members Horizon|
|Type of Product||Variable Annuity|
|Standard & Poor’s Rating||“A” (Good)|
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Before we go into detail, here is an important legal disclosure.
This review of CUNA Mutual Members Horizon Variable Annuity is an independent review at the request of readers. Intended to explain my perspective when breaking down the positives and negatives of this particular model annuity. This is an independent product review, not a recommendation to buy or sell an annuity. Equitable has not endorsed this review in any way, nor do I receive any compensation for this review. Before purchasing any investment product be sure to do your own due diligence and consult a properly licensed professional, should you have specific questions related to your circumstances. This review is not intended to give specific advice and your adviser may know more about your circumstances to make an appropriate recommendation. All names, marks, and materials used for this review are property of their respective owners.
Before we go into the review, some information on CUNA Mutual Insurance Company
CUNA Mutual Group is a mutual insurance company that provides financial services to cooperatives, credit unions, their members, and other customers worldwide. CUNA Mutual Group sells commercial and consumer insurance and protection products.
CUNA Mutual Group provides retirement plan services to small businesses and credit union employees. The Madison, Wisconsin-based company also provides auto, home, life and loan protection products to credit union members through its TruStage brand.
There are a few ways that Agents might pitch CUNA Mutual Members Horizon Variable Annuity
- Lifetime income without fees
- Flexible Investment Options
Is any of this True?
Annuities are complex products, and the CUNA Mutual Members Horizon Variable Annuity is not an exception, this annuity offers income payment options without needing an income rider, however, the income payments will be established as a fixed amount that cannot be increased after the first payment schedule.
This variable annuity can be purchased as a single or joint individual and with qualified or non-qualified. There are different investment options for this annuity that we will explain further in this review.
Remember that variable annuities do not offer principal protection, and don’t guarantee positive returns. There is a risk factor here and is possible that this annuity doesn’t give you any returns but still charge you the fee. It is important to always compare different alternatives with a professional that can get all the numbers right and give you a comprehensive analysis.
CUNA Mutual Members Horizon Variable Annuity Fee Breakdown:
Surrender Charge Fees: For series C contracts there are no surrender charge fees. Below you can find the surrender fees for the Series B contract.
|Contact Maintenance Fee||1.50%-1.75%|
|Portfolio Operating Expenses (Funds)||0.13%-1.77%|
|Aprox. Current Fees Without Riders||2.95% + $75|
This annuity does not have an income rider fee, which is a good thing, because most annuities with this type of rider usually charge an extra fee that would just add up to the base fees and make your money drain in the long-term. When adding all the fees of this annuity is about 3% per year which will be there whether the annuity performs well or not.
In order for this annuity to perform well and keep your money growing it has to beat that 3.00% annualized over the years that you hold it, in case it does, you have to subtract your returns by 3.00% every time and that would be the real return excluding inflation.
Make sure you evaluate every option before making any rash decision, there is always a way to make your numbers work, find a Certified Financial Planner that can create a comprehensive Retirement Income Analysis for you and show you real scenarios of how you can have a better and worry-free retirement.
Investments for CUNA Mutual Members Horizon Variable Annuity
The way the investments for this annuity work is as following, there are four Allocation Levels that you can choose under the contract: Level C (Contract Allocation Level), Level V (Variable Subaccount Allocation Level), Level I (Index Allocation Level), and Level R (Risk Control Allocation Level). You can select a percentage on each of the allocation options.
There are a variety of funds that you can invest in this annuity, from fixed income (bonds) to equity local and international funds, there are also allocation strategies and money market funds. Below you can see the funds returns.
How do the Income Payout Options for CUNA Mutual Members Horizon Work?
The way that CUNA Mutual pays the Income Payments is through a fixed amount specified at the beginning of the contract, this amount cannot be changed after the payments commence.
Option 1 – Installment Option:
This option will pay monthly income for a chosen number of years, not less than 10 years not more than 30 years. In case the annuitant dies before the income payments have been made in full, there are two options available, either income payments will be continued for the remainder of the period to the payee, or the present value of the remaining income will be paid in full as lump sum amount.
Option 2 – Life Income Option – Guaranteed Period Certain:
This option will guarantee fixed monthly lifetime income payments to the annuitant. If the annuitant dies there are two option, first option the other payee will receive the income for the guarantee period, in the second option the payee will receive the lump sum of the remaining amount plus interest. The guarantee period certain choices will be lifetime, 5, 10, 15 or 20 years.
Option 3 – Joint and Survivor Life Income Option – Guaranteed Period Certain
This option will pay the guaranteed fixed income as long as either of the annuitants’ lives. In case both annuitants die, and the income payments have been made for less than 10 years, then the income payments can be paid to the beneficiary or paid in a lump sum plus interest.
This Annuity works Best:
- For those who like low returns
- Tax-deferred growth.
- For those looking for lifetime income
This Annuity Works Worst:
- Those who need liquidity.
- For those looking for high returns and low risk.
- For those who want principal protection.
The CUNA Mutual Members Horizon Variable Annuity has some good things like the lifetime income payments that are rider free, however, it comes with many limitations, for example, you don’t have the possibility to increase your income, so this means inflation is going to hit you over time. Another okay aspect of this annuity is that you can only 5 years and then you can withdraw your money without a surrender fee, however, there is no guarantee that in those 5 years your money will grow, the only guarantee is a 3% fee. Even though this variable annuity has different funds you can invest in, in my opinion, the investment options are limited, you should have more options for a lower fee.
If you have this annuity or are planning to buy one don’t hesitate and contact us, we are experts on this topic, and we have saved thoughts of dollars to our clients by helping them get out of these expensive and most of the time unnecessary products.