Today’s review is on the Genworth MyClearCourse 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
Genworth MyClearCourse Variable Annuity Quick Facts
|Type of Product||Variable Annuity|
|Standard & Poor’s Rating||“BB+” (Vulnerable)|
Before we go into detail, here is an important legal disclosure.
This review of Genworth MyClearCourse 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 Genworth Financial
Genworth Financial is an S&P 400 insurance company. The firm was founded as The Life Insurance Company of Virginia in 1871. In 1986, Life of Virginia was acquired by Combined Insurance, which became Aon plc in 1987.
Genworth Financial has three segments: Retirement & Protection, US Mortgage Insurance, and International. Products and services include life and long-term care insurance, mortgage insurance, and annuities.
There are a few ways that Agents might pitch Genworth MyClearCourse Variable Annuity
- Low Fee
- Rider free lifetime income
Is any of this True?
Genworth MyClearCouse is a standard Variable Annuity that offers tax-deferred on your accumulation money. This annuity might seem like a low fee annuity. But is it really? Do the low fees guarantee better returns? Those are two questions that you have to think about before thinking of buying this annuity. Later on, I will address everything related to this Variable Annuity and you might decide for yourself if it is worth it or not to buy it.
Genworth MyClearCourse Fee Breakdown:
Surrender Charge Fees: No surrender charge
|Mortality & Expense Charge||1.00%|
|Fund Expense Fee||0.92%|
|Aprox. Current Fees||1.92%|
Genworth MyClearCourse is a low-fee variable annuity. It does not have any hidden fee like most variable annuities. However, if you choose living benefits other fees may apply. Also, there is no surrender charge in this annuity, which means you have access to all your money anytime, but it is important to remember that if you withdraw your money you still will have to face a tax-burden.
Investments for Genworth MyClearCourse Variable Annuity
The Genworth Commonwealth Variable Annuity offers a really limited variety of funds that you can choose also allocate part of your money to the S&P 500, which is not bad, but remember that you’d be paying 0.92% in management fees for limited fund options and for an index that is totally free to invest in. So I think this is the downside of this annuity because every fund that they invest your money for you, you can do it yourself and even improve their returns. So, I don’t think the investments for this annuity are as valuable as they might put it.
If you want better returns and low risk, you’d be better off by contacting an expert, preferably a Certified Financial Planner that can give you a comprehensive analysis of your financial situation and can show you different strategies that can meet your retirement or investment goals.
If you elect fixed income payments, the guaranteed amount all the payments made will equal or exceed those required by the state where the contract is issued.
How do the Income Payments for Genworth MyClearCourse work?
The annuity commencement date is selected at contract issue, and it allows you to receive monthly income from your annuity for a period of 20 to 23 years.
Payments will continue for the life of the Annuitant under the Life Income with period certain plan if he or she lives longer than the period certain. If the Annuitant dies before the end of the period certain, the insurance company will continue the remaining payments for the remaining period to you or to the designated payee.
The Guaranteed Payment Floor
The way the Guaranteed Payment Floor is determined is at the first purchase payment, when that first initial purchase is made, at the same time it purchases a minimum guaranteed amount of annual income that is paid monthly, and that would be the Guaranteed Payment Floor amount. However, that amount can be change if you make additional purchases.
Optional Payment Options
The way the monthly income payment is calculated is by taking the greater of 1) The guaranteed payment floor divided by 12; 2) and the Level Income amount. For this case, the Annual Income Amount is used to determine the Level Income Amount, so it would be the monthly amount that would result from applying to this option. For the subaccount, the initial Annual Income Amount would be equal to the annual payment rate per $1,000 for your income plan sing the Settlement Age of the Annuitant divided by the Annuity Commencement Value, less any premium tax and $1,000.
In our last review on the Genworth variable annuity explains how the Optional Payment options work for Genworth annuities, so in case you want to know check out article here.
A good aspect of this annuity is that you can receive income without purchasing an income rider, which is a very appealing aspect on this annuity, in case you want to receive lifetime income.
However, sometimes what looks free sometimes is does not come for free. What I mean for this is that maybe the fees are low in this annuity, but you also have to look at the returns here, because you might as well put your money somewhere else where it’d probably earn you more interest and still pay a low fee of 1 or 2% but with much better returns.
This Annuity works Best:
- Lifetime income without rider fees
- 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 wanting variety of investment options.
The Genworth MyClearCourse Variable Annuity as we mentioned before is a low fee annuity that comes with limited fund options and low returns. Remember that because something is cheap it doesn’t necessarily mean is good. Maybe the income payment options are good if you are thinking about taking income in the future because they don’t have a rider fee, but also remember that there is not necessary to have a variable annuity with lifetime income in order preserve your money for the rest of your life. You just need to get your numbers right and look for withdrawals that can make you have a great retirement and at the same time making sure you won’t run out of money, and often times you don’t need an annuity for that.
If you need more information about this annuity or any other annuity that you might want to know about feel free to contact a Certified Financial Planner that can evaluate your current situation and provide you with the best solutions for your retirement.