F&G Accelerator Plus 10 Annuity is an independent review intended to show you where Annuity Review F&G Accelerator Plus 10 Annuity is strong and where it has weaknesses. In order to make an informed decision, it’s important to consider all available facts. On the other hand, comparing this Annuity against other conservative alternatives can be valuable. Also Fully understanding the income rider and what kind of returns are realistic. In this review, we will cover:
- Product type
- Investment options that are available and their realistic long-term investment F&G Accelerator Plus 10 Annuity expectations
- Understanding the difference between interest and Income in Annuity Speak.
- Features that make it a positive addition to your portfolio
- How it’s most poorly used as part of your financial plan
F&G Power Accelerator Plus 10 Annuity Quick Facts
|Product Name||F&G Power Accelerator Plus 10|
|Issuer||F&G Annuity and Life|
|Type of Product||Fixed Indexed Annuity|
|Standard & Poor’s Rating||“A-” (Excellent)|
Before we go into detail, here is an important legal disclosure.
This review of F&G Power Accelerator Plus 10 Annuity is an independent review at the request of readers. This review explains 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. Fidelity and Guarantee Life Insurance Company 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. This review doesn’t 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.
Below, you can find some information about the company:
Fidelity and Guaranty Life Insurance Company provides annuities and life insurance for over 700,000 policyholders across the United States. The company was founded in 1959 and is based in Des Moines, Iowa.
You can learn more about this from https://www.fglife.com
How do Agents Typically Pitch the F&G Accelerator Plus 10 Annuity?
- Market returns with less risk
- Tax-deferred accumulation.
- Guaranteed Lifetime income
Is Any Of This True?
Market Returns with Less Risk?
While the Illustrated Rates for the most popular Barclays Index Look very Good and Exciting like you’ll earn 5-9% compounded growth. It’s important to understand how the Barclays Trailblazer Sectors 5 Index Option Past Performance has been generated and if that type of Performance Generation is possible and likely to continue into the future.
We will cover Barclay’s Strategy detail in this Article. Help you understand the Barclays index so you can make the best Decisions to Retire with Confidence. Long Term U.S. Government Fixed income has been a large generator of the returns of the index in the past. Interest rates have come down dramatically over the last 30 years with the current 30-year interest rate of 1.4%!
An Important Question that any Purchaser of this Annuity raises is. How much Lower can Rates go to provide the same upside as bonds over the last 20 years? Understanding this important concept is to exactly how you understand that you should not expect the future performance to be similar to the past July Returns shown in F&G Accelerator Plus 10 illustrations.
I’m not saying this is a horrible Annuity by any means. Compare your options against Index’s that may not have the large dependence on the continued lowering of rates. The Barclays Trailblazer Sectors 5 Index Option needs a lowering of rates to generate it’s future returns because current yield to maturity on a 20 year bond is only 1.4%
Did you know the index has to Target a 5% Volatility? This is important to understand how it works and how much the Barclays index needs to maintain in fixed Income and other very stable assets at any given time.
F&G Power Accelerator Plus 10 Annuity fees in detail:
Annual admin fee: 1.25% of daily net assets?
Free Withdrawal fee: Up to 10% annually.
Surrender charges: This Annuity has a 10 year Surrneder
In order to provide liquidity you have 10% free withdrawal. In case this happens you’ll have penalty-free access to 10% of the vested account value in years 2-10. Any other withdrawals will incur surrender charges and MVA. The surrender charge in contact year one is 14% of the withdrawal, and this percentage decreases each year for 10 years.
What are the investment options for F&G Power Accelerator 10 Annuity?
F&G Accelerator Plus 10 Barclays Trailblazer Sectors 5 Index Option
Trailblazer aims to try a diversified portfolio assets with the highest return potential for a given level of risk. It has the ability to change your portfolio as often as daily to adapt to shifting market conditions. In order to control risk, the index aims to limit its annual volatility to a 5% target level. The index is dynamically rebalanced into the new optimal portfolio each time the 5% is triggered. However, always have in mind that 5% volatility is very low, just the S&P 500 has 16% volatility.
The Trailblazer portfolio consist in a mix between Stock ETFs, Bond ETFs and Cash reserves. Below you can see the market.
So How does the Allocation Work?
On each trading day Trailblazer looks at every possible combination of its underlying assets. Trailblazer does not impose any restrictive caps or flaws on the weight of any underlying asset. First, the index calculates the volatility of every portfolio combination based on how volatile each component has been and how the components have moved relative to each other, then the index eliminates all the combinations whose volatility exceeds the 5% target level. After that, the index selects the combination that has the highest return potential by picking the combination of assets with the highest weighted average volatility. In other words, based on the trade-off between risk and return the index assumes that there is a direct relationship between how volatile asset has been in the past and how high its return potential can be going forward.
Trailblazer determines at the end of each trading day whether it needs to rebalance the portfolio. If you meet any of these conditions. it will trigger rebalancing. If the
- Volatility of the current portfolio exceeds the 5% target level by more than one percentage point.
- Volatility of any of the underlying assets has changed by more than five percentage points since the last rebalancing.
- There is a difference of 10 points or more in the total weight allocated to equities. Or fixed income between the current portfolio and the newly identified portfolio. Trailblazer will adjust its portfolio to match the new optimal portfolio for that day if a rebalance has been triggered.
In order to track the 5% volatility target more closely, the index will increase or decrease its level of exposure to the portfolio, subject to a minimum of zero and a maximum of 150% if the portfolio’s actual volatility deviates from a target level of 5% the more volatile the portfolio has been the lower the exposure level tends to be and vice-versa.
This seems a little confusing to understand but what you have to pay attention to is the low returns this index has given investors for the last years.
F&G Accelerator Plus 10 S&P 500® Index Option
The S&P 500 is an Index that is compiled of the 505 largest stocks there are in the market place, representing the leading Industries of the US economy. The S&P 500 is often used as a measure of how the stock market is doing in general. The companies in this index are chosen for Market Size and Liquidity. Among the top 25 listings in the S&P 500 there are technology firms and financial businesses.
This might sound like a good choice however with this option you are going to be limit with a 4% current cap of the S&P 500 Returns. The returns for the last 100 years of the S&P 500 has been around 10% annualized. This means that if you choose this option you’ll be missing a lot of market upside along the years.
The Riders For F&G Accelerator Plus 10
Rider Fee: 1.15%
Enhanced Guaranteed Withdrawal Payment Rider
This rider allows you to withdraw money from your annuity in case of disability The Enhanced Guaranteed Withdrawal Payment is established at the time of impairment is approved and only decreases if there are Excess Withdrawals. The contract must have been in force for at least 3 years and the annuitant must have reached attained age 60.
Home Health Care Rider
If the annuitant requires Home Health Care Services by a licensed Home Health Care provider as a result of being impaired in performing two out of six activities of daily living as outlined in your contract for at least 60 days, and such care begins at least one year after the contract’s effective date of issue.
Nursing Home Benefit Rider
If you are confined to a licensed nursing home for more than 60 days. And your confinement begins at least one year after the annuity’s effective date. Surrender charges will be waived on withdrawals made during the period of your confinement.
Terminal Illness Benefit Rider
If you are diagnosed with an illness or condition that causes your life expectancy to be less than one year. And the diagnosis takes place at least one year after the annuity’s effective date. Surrender charges will be waived during this period of a terminal illness.
Are These Riders Worth the Fee?
It is important that you understand what these riders really allow you to do. The Long term care or terminal illness rider allows you for a larger than the typical withdrawal of your own money. This will reduce any money that would go to the beneficiary. It illustrates withdrawal benefit enhancement. Often times, agents making it seem like it’s additional income but what it actually comes down to is that you withdraw your “Own Money” in case an unexpected event happens in your life, and not only that, they charge a 1.15% fee for it.
For example, a person, age 60, invests $300,000 in the F&G Power Accelerator Plus 10 and plans to defer it until age 75 when he retires. At age 75, his account has an income guarantee of $369,114 and his lifetime withdrawal rate of that value is 5.50%. This guarantees him $32,639 annually for the rest of his life from the age of 75. However, he cannot take the lump sum of that money.
In case the person has taken lifetime income for 15 years, he has received $489,585 total from this annuity. That’s 61.86% in 30 years or 2.06%, not compounded, per year which barely keeps up with inflation. This is due to the sum of the rider fees and the low returns this annuity can provide you. This shows how they really aren’t earning the 5% that the income base makes it seems. If your happy with locking in a 2.06% return for 20 years guaranteed then go for it! If your not then you may want to consider another investment vehicle.
The F&G power Accelerator Plus 10 Annuity
Where does it work best:
- Safety of principal
- Taxed deferred growth
- Guaranteed Lifetime Income
Where it works worst
- Access to the funds within the annuity’s 10-year surrender charge period
- For those who want or need high levels of growth
- For those who won’t want to keep the annuity for the rest of their life
Annuity Edu’s Summary on the F&G Power Accelerator Plus 10 Annuity
In conclusion, this F&G Power Accelerator Plus 10 Fixed Indexed annuity has some good features. Moreover, this F&G Accelerator Plus 10 annuity limits your return with the low caps, Volatility controlled indexes that are highly dependent on lowering of rates, and the highs fees for questionable value. The Barclays Index limits your return on 5% max volatility which does not give you enough exposure to have good returns in its allocations. The S&P 500 gives you only a max return of around 4% including cap rates, which in my opinion is not fair for any investor. In this case, if the market hits 20% for that year you will only getting 4% (fees included) and the insurance company will keep the remaining 16% which leaves a lot of money on the table.
I’m not against annuity but in this case, the balance does not stand for the buyer but for the insurance company. You might be better off having a well-balanced all weather portfolio without high cap rates and where you can withdraw the amount that you need without high surrender charges. Or just simply buy a different annuity that would provide you with the required value that you and your portfolio need for a peaceful retirement.
In my view annuities are best used to enhance your asset allocation and improve the return or reduce the risk.
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All the best,