Fidelity & Guaranty Life Retirement Pro Single Premium Annuity Review
This review will show you the strengths and weaknesses of the Fidelity & Guaranty Life Retirement Pro Single Premium Fixed Indexed Deferred Annuity. We will walk through features, potential returns and the details of how Fidelity & Guaranty Life Retirement Pro works, so that you can know what to expect. As with all annuities some aspects work well, and others work poorly. Therefore, to make an informed decision it is important to consider all available facts. This annuity has the horrible features that drive me to create these reviews to help retirees educate themselves before they buy. The income base versus cash value components are very misleading with this annuity as you’ll learn throughout this review.
In this review we’ll cover:
- Product Type
- Investment options that are available and their realistic long-term investment return expectations
- Understanding the income rider
- Understanding the death benefit
- How it can best help your financial plan
- How it’s most poorly used as part of your financial plan
Fidelity & Guaranty Life Retirement Pro Quick Facts
|Product Name||F&G Retirement Pro|
|Issuer||Fidelity & Guaranty Life Insurance Company|
|Type of Product||Fixed Indexed Deferred Annuity|
|Standard & Poor’s Rating||“BBB+” (Good)|
Before we go into detail, here is an important legal disclosure.
This review of the Fidelity & Guaranty Life Retirement Pro Annuity is an independent review at the request of readers. Intended to explain my perspective when breaking down the positives and negatives of this model annuity. This is an independent product review, not a recommendation to buy or sell an annuity. Fidelity & Guaranty Life Pro Annuity 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. Consult a properly licensed professional, should you have specific questions related to your circumstances. This review is not intended to give specific advice. 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.
Information about Fidelity & Guaranty Life
Fidelity & Guaranty Life is an insurance holding company that helps middle-income Americans prepare for retirement. In the workplace, Fidelity & Guaranty Life strives to create a culture that rewards engagement, teamwork, and results. They focus their efforts on activities that benefit the long-term interests of policyholders, shareholders, and the community. Fidelity & Guaranty Life along with its employees are 100% dedicated to giving back to the community through charitable donations and volunteer work.
In addition to financial support for the community, employees enjoy giving their time toward worthy causes in the cities where they work. The Baltimore community has participated in the annual “Rebuilding Together” project for many years. Wherein employees and their families volunteer time and materials to refurbish Baltimore area homes for needy families in the community. In Iowa, FGL employees have participated in volunteer events such as packing meals for Meals from the Heartland. Employees ship meals all over the world and are a reason in fighting starvation and hunger.
You can learn more about this from www.home.fglife.com
How do Agents Typically Pitch This Product?
- A way to make a high level of guaranteed lifetime income
- A 7% upfront bonus
- Guaranteed growth with market upside potential
- No risk of market loss
- Double-digit benefit-based caps that give higher income potential
- Increased growth potential from a next generation guaranteed withdrawal feature
- 10% guaranteed growth
Is any of this True?
Things aren’t always what they seem on the surface!
From what I see the high cap is in the income base only, but the cash value (Account Value) cap is very low and it seems misleading.
When looking further into the details there is a double-digit cap interest rate cap credited from the Index, however, this is only credited to the Benefit Base and not the Account Value. The Benefit Base is not cash or a value surrendered or withdrawn. The truth is that the real returns are very low with this annuity. The Minimum Fixed Guaranteed Interest Rate on the Account Value is only 0.25% and the Annual Withdrawal Amount Guaranteed is around 3.3% annually. Therefore, like with the earlier B- rated F&G annuities that we’ve discussed, its return is lower than perceived.
However, it does have a strong Death Benefit feature, if the annuitant passes away then the beneficiaries receives the income base. Which over time, that income base grew with the index (14% cap rate) as the death benefit. While the death benefit may fit your goals, it’s important to consider the benefits to you if you live an average or longer life.
A question to ask yourself is…
“Will this annuity combine with your other assets to give you the returns you need to support your lifestyle?” This is what Retirement planning annuity analysis is all about.
My goal is to help you understand more about the details and exactly what you can expect, so you can see deeper into an overly simplified sales pitch. So, let’s walk through the details beginning with the Premium Bonus.
A 7% Premium Bonus sounds great! However, what most sales agents fail to initially pitch is that there is a vesting schedule on this Premium. Meaning, that a male, age 62, with a $100,000 premium does not begin his accumulation period with an Account Value of $107,000 that grows until he is ready to begin receiving withdrawals. The vesting schedule below means that only a percentage of the premium each year earns interest. To gain interest on the full 7% bonus this male retiree would have to keep the annuity for 12 years.
Understanding the Guaranteed Minimum Withdrawal Benefit Rider and Benefit Base
The strongest part about these features is that they come with the annuity at no extra fee. Besides that, a lot of what this annuity promotes is misleading.
Let’s use our example of a male, age 62, with $100,000 to invest to further explain how this feature works.
After 5 years our annuitant would like to start receiving income. The annuitant was informed that this Indexed annuity can grow up to 14% a year with the S&P 500 annual point to point.
However as mentioned before, it is his Benefit Base that grows at this rate and not his Account Value. His Account Value is only guaranteed a growth of 0.25% annually up until his 83rd Birthday.
After 5 years of owning the annuity, the annuitant can begin his withdrawals with a guaranty of 3% a year withdrawal or $6,608 annually for 15 years. After owning the annuity for 20 years he has received only $105,728 total from his annuity. He wasn’t really earning those high base increase numbers if after 15 years he’s only received 5% more then he put in.
Double digit Benefit Based Caps that give higher income potential?
To receive credit from growth in the Benefit Base, a Breakthrough Value has to be either be met or exceeded by the Benefit Base.
The Breakthrough Factor determines the Breakthrough Value, which is 160% multiplied by the amount of the premium.
When the Benefit Base exceeds this value, the interest rate (up to the 14% cap rate) from the performance of the S&P 500 credits the following year.
In our example our annuitant has a Breakthrough Value of $160,000 (160% multiplied $100,000.) Therefore, his Benefit Base would need to exceed $160,000 in any of the policy years to receive the growth potential. The Benefit Base is above the Breakthrough Value when the cap rate on the index is at 14% and the S&P 500 performs at that percentage for at least 5 years. Considering that for the last 10 years, the average credited to the Benefit Base from the index was 8.83%, makes the chances of surpassing the Breakthrough Value or achieving any credit or growth from the index to our annuitants Account Value quite slim.
The Surrender Charge
Considering that the premium gains so little, the surrender period for the F&G Retirement Pro annuity is very long and the charges are high. Therefore, buying this annuity is a long-term commitment.
Where does it work best?
- Producing a guaranteed pension like income stream
- Those that are not looking to earn more than 2% on their capital
- Those who value safety of their principal over return and can afford to underperform Inflation
Where does it work the least?
- Those who need to outperform inflation in retirement
- Those needing a large return on their investment
- Those who need a return of over 2% annually
Annuity Edu’s Summary on the Fidelity & Guaranty Life Retirement Pro Annuity
Overall, Fidelity & Guaranty Life Retirement Pro has very low returns which is something to consider if you need your premium to support their lifestyle throughout retirement.
The 14% cap rate that it offers is high, but it’s important to note that it’s on the base. Once income is elected, the odds are very very low of ever getting an increase due to the horrible caps on the cash value. The 7% premium bonus is also not as it seems it is immediately vested to the Benefit Base and Death Benefit then divided over a 12-year vesting period than it being a bonus added to their premium that vests throughout their planned accumulation phrase.
Buying an Equity Indexed annuity is a long-term commitment. Especially with this annuity as its Surrender schedule is long in comparison to other annuities of this class.
Hopefully after reading this Fidelity & Guaranty Life Retirement Pro review you can see this double-digit lifetime income potential pitch for what it is.
It is important to test all annuities versus various others to see which one fits your goals and objectives the most. This is something we do for free here at annuityedu.com. Test the annuity and see if it is a good fit for you.
We’ll use our proprietary calculator to illustrate how this annuity will likely perform in your specific situation so you can see through the fake numbers and understand the real rate of return.
To be sure, Click here to request a complimentary, no obligation Annuitycheck® Report to test an existing annuity or an annuity before you buy. If your agent was honest with you, the numbers will match up – if not, well at least you know before you buy.
Have Questions on the Fidelity & Guaranty Life Retirement Pro Annuity? Have any comments?
If you still have questions about this annuity, or you’re an investor that’s still confused about the Fidelity & Guaranty Annuity. You can reach out to us by email. We can’t always respond right away, but we strive to respond within 24 hours.
We hope you found it helpful as you’re conducting your own research on Fidelity & Guaranty Annuity. Thank you for visiting our site.
All the best,