Today’s review is on the Sun Life Masters Flex II 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
Sun Life Masters Flex II Variable Annuity Quick Facts
|Product Name||Masters Flex II|
|Issuer||Sun Life Financial|
|Type of Product||Variable Annuity|
|Standard & Poor’s Rating||“AA” (Very Strong)|
+1 (800) 786-5433
Before we go into detail, here is an important legal disclosure.
This review of Sun Life Masters Flex II 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 Sun Life Financial
Sun Life Financial, Inc. is a Canadian financial services company; it is primarily known as a life insurance company. Being one of the largest life insurance companies in the world; it is also one of the oldest, with a history spanning back to 1865.
Sun Life Financial has a presence in investment management with over CAD$1 trillion in assets under management operating in a number of countries. Sun Life ranks number 273 on the Forbes Global 2000 list for 2019.
There are a few ways that Agents might pitch Sun Life Masters Flex II Variable Annuity
- Credit of 0.15% every year
- Lifetime withdrawals
- Tax- deferred growth
Is any of this True?
The Sun Life Masters Flex II is a standard Variable Annuity that gives you tax-deferred growth on your gains along the years you have the annuity. This is something that all annuities have, so it not a special characteristic.
Sun Life Financial gives you the option of lifetime withdrawals and other living benefits, but for an extra rider fee. We are going to review how those fees might affect your account value over the years, and also if it is worth it to have them, in case you decide to purchase this variable annuity.
They do offer you a lifetime credit of 0.15% every year based on your contract value or premiums paid, however, you have to be aware that agents sometimes hide that in order for you be eligible for this credit you need to have at least 1 million on your account value, only that way you can get the credit, and in case your account value falls down 1 mill the credit will still be on every year.
Sun Life Masters Flex II Fee Breakdown:
Surrender Charge Fees: 4- year schedule
|Surender Charge %||8%||8%||7%||6%||0%|
|Type||Masters Flex II|
|Mortality & Expense Charge||1.30%|
|Admin Fee (waived over 100k)||0.15%|
|Sun Income Riser III Living Benefit (optional)||1.95%|
|Sun Income Maximizer Living Benefit (optional)||1.95%|
|Sun Income Maximizer Plus Living Benefit (optional)||1.95%|
|Fund Operating Expenses||0.72% – 2.48%|
|Approx. Total Fees Without Riders (including approx. fund fee)||3.45%|
|Approx. Total Fees with Max Riders (including approx. fund fee)||7.45%|
It is important to say that the combination of all riders for this annuity can be as high as 4.00% so you can’t select all of them in this case. However, as we see above the fees are too high anyways, may bet not as high as other similar products we’ve reviewed but it definitely takes away a lot of the profits in case the annuity performs well along the years that you have it.
If you bought this annuity and bought the one of the high fee riders, remember that it is not worth it to pay a rider fee for a variable annuity if you are planning to stay in it short-term, riders work best if you try to keep the annuity forever. In case you have you have one annuity with similar high fees income riders, you’d be better off by having an expert taking a look at your annuity to see if those fees are worth the investment, and if not to look for possible solutions for your situation.
Investments for Sun Life Masters Flex II Variable Annuity
The Sun Life Masters Flex II Variable Annuity offers a range of investments that you can choose from, however, all of them come with a fee, so it is important that you add those fees to your contract fees when your calculating them, and also have an expert that can do an analysis on those funds to see which ones betters align with your financial goals.
What we’ve found is that many of the funds that variable annuities have available to choose to have a higher fee in the annuity itself than if you buy them on your own. So that’s why we always run an analysis for our clients and compare how much they can be saved just by having the same funds but outside of the annuity.
There are some limitations that come if you decide to buy a living benefit with this annuity. For this case you will not be able to choose any fund that this annuity has, you will be restricted to a particular number of funds. Also, there is an option called “Build your own portfolio“ that basically allows you to build your own “Portfolio“ of funds available for this option with a max of 18 funds. The amount that you can invest in each fund is assigned to each asset class and you can see it below.
|Living Benefit||SIR III||SIM||SIM Plus|
|Designated Funds||100% must be allocated among specified Funds; or 100% to asset allocation models||100% must be allocated among specified Funds||Same as SIM|
|Portfolio Model (Build Your Own Portfolio)||Allocation Ranges: • 30%-50% Fixed Income Funds • 40%-60% Core Retirement Strategies Funds • 10%-30% Asset Allocation Funds • 0%-20% Core Equity Funds • 0%-20% Growth Equity Funds • 0%-10% Specialty Funds||Allocation Ranges: • 0%-60% Balanced Funds • 40%-100% Fixed Income Funds||Same as SIM|
For more information on the funds for this annuity check this link.
Sun Life Masters Flex II Variable Annuity Riders
Sun Income Riser III Rider (SIR III)
This is a Guaranteed Withdrawal benefit rider and basically what it does is, it offers you lifetime withdrawals with an opportunity to for a bonus, which is 7%, to be added to your benefit base if you defer taking withdrawals during a specified time period under your contract. Remember that this rider is only worth it if you plan to use it for the rest of your life, but its only purpose is to deplete your benefit base with withdrawals and high fees and then offering you a fixed withdrawal rate forever.
Sun Income Maximizer (SIM)
This rider offers you a similar benefit as the SIR III, with the only difference that it includes a higher bonus than the SIR III, and offers a benefit base enhancement equal to 200% of your first-year Purchase Payments. The bonus for this option is 8%.
Sun Income Maximizer Plus (SIM Plus)
The SIM Plus Rider offers the bonus of 8% and the benefit-based enhancement plus the opportunity to increase the amount of your annual withdrawal over time regardless of the market performance.
This Annuity works Best:
- High fees if you choose lifetime benefits
- Death Benefit Enhancers.
- Tax-deferred growth.
- 4-year surrender schedule
This Annuity Works Worst:
- Lifetime Benefits
- Those who need liquidity.
- Principal Protection
After reviewing the Sun Life Masters Flex II Variable Annuity, we can conclude that this Annuity has really high fee riders that seem to be good on paper but in reality they only work if you are in this annuity forever, and also they if you decide to go this way your money will drain to zero, just for a fixed withdrawal benefit that will not keep up with inflation once your money is gone. If we can get a good thing about this annuity, is the fact that the surrender schedule is not that long, only 4 years, however, the base fees are around 3%+, so that means your returns are going to be affected significantly those 4 years.
As I mentioned earlier some of this funds, and even better funds, can be found outside this annuity for a lower fee, so that’s why is important for you to do your research and consult the opinion of a Certified Financial Planner, which is the highest accreditation in the industry, with his expertise you are not only be able to have peaceful retirement but also very possibly keep your money for next generations.