Introduction
Fixed Index Annuities are contracts between the annuitant and an insurance company in which the insurance company promises to credit interest based on the performance of a certain stock market index. Fixed Index Annuities have an inbuilt capital protection feature, so your principal will remain safe even if the index goes down.
Annuities are complex products, and many advisors try to missell them without properly understanding the buyer’s needs. Thus, you must educate yourself on these products and not solely depend upon the annuity agent’s high-pressure sales pitch.
This article provides an in-depth review of the Atlantic Coast Retirement Plus Multiplier Fixed Indexed Annuity. The Atlantic Coast Retirement Plus Multiplier Annuity is a deferred, fixed-indexed annuity that may be a strong choice for those seeking a well-rounded policy with growth potential, principal protection, diverse indexing options, and an optional accelerated lifetime income rider. Based on extensive research and due diligence, this review offers an unbiased analysis of the plan.
The review of the Atlantic Coast Retirement Plus Multiplier Fixed Indexed Annuity will be broken into multiple subcategories:
- Product Description
- Product Policy
- Rates and Costs
- Riders
- What Makes This Product Stand Out?
- What I Don't Like
- Company Details
- Conclusion
Product Description
The Atlantic Coast Retirement Plus Multiplier is a Fixed Indexed Annuity (FIA) that offers annuitants the opportunity to earn a portion of returns linked to a market index without exposure to downside market risk. This plan is well-suited for individuals approaching retirement who wish to grow and protect their savings. It also appeals to those seeking guaranteed, accelerated lifetime income or planning to leave a legacy for loved ones, while simultaneously safeguarding and enhancing their retirement funds.
Let’s have a look at the high-level fine print of Atlantic Coast Retirement Plus Multiplier Fixed Indexed Annuity, and then we will discuss each point in detail.
| Product Name | Retirement Plus Multiplier |
|---|---|
Issuing Company | |
AM Best Rating | B++ (5th of 13 ratings) |
Withdrawal Charge Period(s) | 5, 7 and 10 years |
Maximum Issue Age | 85 Years |
Minimum Initial Purchase Amount | $5,000 |
Surrender Charge Schedule | Varies for different tenure policies |
Crediting Period and Strategies |
|
Plan Types |
|
Indexes |
|
Free Withdrawals | 10% of the annuity’s Accumulated Value; per year. |
Death Benefit | Upon the annuitant’s death, the beneficiary can either choose from (i) Accumulated Value (Lumpsum) or (ii) Minimum Guaranteed Surrender Value
|
Riders | Annuitants can choose one rider from two optional chargeable riders:
|
Surrender Value | Greater of Accumulated Value (less any withdrawal charges/MVA) and the Minimum Guaranteed Surrender Value |
RMD Friendly | Yes |
The Atlantic Coast Retirement Plus Multiplier Fixed Indexed Annuity is almost identical for all three policy tenures, except for the crediting strategies and surrender charge schedule. For ease of discussion and better clarity, we will discuss the Atlantic Coast Retirement Plus Multiplier 7 Fixed Indexed Annuity for the rest of the article.
Product Policy
How does the Atlantic Coast Retirement Plus Multiplier Fixed Indexed Annuity policy work?
Any annuitant (maximum age at the time of policy issue: 85) can purchase the Atlantic Coast Retirement Plus Multiplier Fixed Indexed Annuity with a minimum initial purchase amount of $5,000, and in return, they will earn market index returns (calculated through a formula that we will discuss shortly), credited as per the chosen crediting period. Apart from the regular crediting period, there are various events that may trigger earnings credit: On free withdrawals, for a long-term care event or terminal illness or injury event, or when a death benefit is payable.
The Atlantic Coast Retirement Plus Multiplier Fixed Indexed Annuity offers the annuitant the ability to choose from one of the two indexes to determine their earnings crediting formula. Both of these indexes have three strategies each and a fixed-rate guaranteed interest strategy to choose from (making a total of 7 strategy options). We will discuss each available index briefly:
1. S&P 500 Index
The S&P 500 index is one of the most popular and oldest indexes in the world. It tracks 500 large-cap publicly traded stocks listed in the United States. It is a reliable index and has often succeeded in the test of time.
It is very important to note that the Atlantic Coast Retirement Plus Multiplier Fixed Indexed Annuity offers the S&P 500 index with participation or caps in place, meaning that your interest-earning capacity is capped. These rates tend to change frequently; I will discuss the rates in detail shortly.
2. Goldman Sachs Aging of America Dynamic Balance Index
This index dynamically allocates to equities, represented by the Aging of America Index, and U.S. fixed income, represented by the 10-Year U.S. Treasury Rolling Futures Index. The Aging of America Index aims to provide targeted exposure to companies in the healthcare and real estate sectors that stand to benefit from the growth of the older population in the United States. Exposure to the 10-Year U.S. Treasury Rolling Futures Index, a recognized fixed income benchmark, is adjusted based on a daily momentum signal. The Goldman Sachs index also incorporates a 5% volatility cap to help generate more stable, smoother returns over time; however, this cap can limit the index's true return potential.
It is very important to note that the Retirement Plus Multiplier Fixed Indexed Annuity comes with cap rates, or participation rates for these indexes, meaning that you will be credited only a part of the index return to your annuity. These rates tend to change frequently; I will discuss these rates shortly.
Note: In addition to allocating the funds in the following indexes, the annuitant also has the option to allocate funds at a fixed interest. These Fixed Rates tend to change from time to time. The Fixed Rate for the 7-year withdrawal charge period at the time of writing this article was 4.00%, which is decent when we compare it with competitors. You can view the latest fixed rates of this annuity.
Rates and Costs
The earnings crediting formula
The earnings crediting formula is the most important part of this annuity discussion. It is important to know that we don’t simply get the index return credited to our annuity. There are a few rates and caps that the company has in place that affect our earnings. These rates tend to change over time, and the updated rates can always be checked with the help of your trusted advisor and/or on the company’s website. You can view the latest indexing rates of this annuity.
The Atlantic Coast Retirement Plus Multiplier Fixed Indexed Annuity uses seven crediting strategies:
| S&P 500 Index | Goldman Sachs Aging of America Dynamic Balance Index |
|---|---|
1-year Point-to-Point Option with Participation Rate | 1-year Point-to-Point Option with Participation Rate |
1-year Point-to-Point Option with Cap Rate | 2-year Point-to-Point Option with Participation Rate |
2-year Point-to-Point Option with Participation Rate | 3-year Point-to-Point Option with Participation Rate |
Fixed Account Interest Option | Fixed Account Interest Option |
- Point to point with Cap: The cap rate is a key term in a Fixed Indexed Annuity (FIA). It defines the maximum rate at which your interest-earning potential is capped. For example, if an index returns 13%, but your contract’s cap rate is 7%, you will receive an interest credit of only 7%. No matter how much the index exceeds the cap rate, the maximum interest you can earn is limited to the cap rate.
- Point-to-Point Participation Rate: The amount of interest that the company will credit is based on a declared participation rate on the selected index on a point-to-point basis. Once the index gain is determined (if any), it is multiplied by the participation rate. The remaining amount is credited to the contract for that term. Formula to calculate interest credit for strategies with participation rate: (Participation Rate % X Index Return).
- Fixed Rate: If you opt for a fixed rate, you simply earn the fixed rates for a particular period specified by the company before your policy begins. These rates usually tend to be very low compared to other fixed avenues, such as CDs and MYGAs, so you should avoid fixed rates in a general scenario. The 1-year fixed rate on this policy at the time of writing this article was 4.00%, which is decent compared to other similar annuities.
These strategies offer flexibility to allocate across different indexes, tenures, and indexing options. For example, you might allocate to the S&P 500 Index with a 1-year annual point-to-point option using a cap rate and simultaneously choose a 1-year point-to-point option with a participation rate, along with other combinations.
Let’s look at the Atlantic Coast Retirement Plus Multiplier Fixed Indexed Annuity rate chart to better understand earnings crediting strategies. Note that these rates are updated as of August 2024. These rates tend to change from time to time. You may check the latest rates.
From the above rate sheet, we know that there are seven interest-crediting strategies: three S&P 500 Index strategies, three Goldman Sachs Aging of America Dynamic Balance Index strategies, and one fixed rate strategy. You will notice Cap rates and participation rates in place, limiting your maximum interest-earning potential. Also note that these rates vary for the “No Rider,” “Growth Rider,” and “Income Multiplier.” While Growth Rider is simply the additional paid rider that gives us the option to have higher participation and cap rates, the income multiplier has to do with accelerated lifetime income. I will discuss riders more in the later section of this article.
Based on the index constituents, past performance, and volatility, I believe that the S&P 500 1-year point-to-point with Cap strategy or Goldman 3-year point-to-point with participation rate has the highest return potential. I would not recommend you go with the S&P 500 strategies with participation rates because the company offers a very mediocre participation rate on the S&P 500 index.
Surrender/Early Withdrawal Charge
Should your needs change unexpectedly, and you need to take an excess withdrawal (a withdrawal that is above the free withdrawal amount available in a given contract year), you may be entitled to access additional monies, although certain charges and penalties may apply. Any amount withdrawn in excess of the remaining free withdrawal amount is subject to a Surrender Charge. Below is the Surrender Charge schedule for Atlantic Coast Retirement Plus Multiplier Fixed Indexed Annuity.
| Completed Contract Years | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11+ |
|---|---|---|---|---|---|---|---|---|---|---|---|
5 Years | 10% | 9% | 8% | 7% | 6% | 0% | |||||
7 Years | 10% | 9% | 8% | 7% | 6% | 5% | 4% | 0% | |||
10 Years | 10% | 9% | 8% | 7% | 6% | 5% | 4% | 3% | 2% | 1% | 0% |
The surrender charge schedule is different for the different tenures of annuities and also changes for some states. For a quick comparison of surrender charges across different Atlantic Coast products, you may visit their fixed indexed annuities product page.
Market Value Adjustments - In case you need to surrender your policy, a Market Value Adjustment (MVA) will be applied to the portion of the withdrawal or surrender that exceeds the free withdrawal amount during the withdrawal charge period.
Contract/Administrative Charge
The Atlantic Coast Retirement Plus Multiplier Fixed Indexed Annuity levies no annual contract or administrative fees; however, rider charges apply based on the selected rider.
Riders
In an insurance policy, riders are additional provisions that can be added to enhance the benefits of the base policy. The Atlantic Coast Retirement Plus Multiplier Fixed Indexed Annuity offers optional paid riders, including a growth rider and an income multiplier rider, from which the annuitant can choose one.
Growth Rider: When an annuitant purchases this rider, participation and cap rates are enhanced, allowing the annuity to benefit more from positive market performance. The growth rider also includes a 0% floor, protecting the accumulation value from market losses. The accumulation value will be the greater of the account value or 100% of the initial premium, less withdrawals, guaranteed after the first 10 years. Currently, the growth benefit rider costs 1.25% annually, deducted from the annuity’s accumulated value each year. If strong market performance is anticipated, this rider can be advantageous; however, the cost may not be worthwhile if the market underperforms. Note that rider costs may change over time; you can check the latest rates.
Income Multiplier Rider: This rider provides a stream of income payments to the annuity owner that cannot be outlived, even after the accumulation value has been fully withdrawn. The rider is only available if the annuitant is the owner, unless the owner is not a natural person. Joint ownership is allowed if both owners are spouses. The rider also offers the option to enhance up to 100% of your initial investment with an income bonus. Currently, the income multiplier rider costs 0.95% annually, deducted from the annuity’s accumulated value each year. Rider costs may change over time; you can check the latest rate here.
Calculating Income Withdrawal Amounts
The Benefit Base for the Income Multiplier Guaranteed Lifetime Withdrawal Benefit (GLWB) is a calculated amount that serves as the foundation for determining guaranteed lifetime income payments. It is not a cash or account value but rather a reference amount used to calculate withdrawals. Here’s a breakdown of how it works:
Benefit Base Calculation: The benefit base is the greater of:
- The contract value (the actual value of the annuity contract), or
- The initial premium (the amount originally invested), less any withdrawals, plus the GLWB Bonus (a bonus added for income purposes) multiplied by the GLWB Payout Factor (a factor that determines the rate at which lifetime withdrawals are calculated).
The GLWB Bonus percentage is communicated at the time the annuitant purchases the annuity.
Your lifetime income payments will be calculated based on this equation:
The income withdrawal percentage is determined by your age when you first elect to receive income withdrawals. It increases by 0.10% for each year between the ages listed below. Once income withdrawals begin, the percentage remains fixed. Here’s how it works for single life and joint life income withdrawals:
Example:
Let’s say you elect to start your income withdrawals at age 66 on a single life basis. According to the GLWB Single Life Payout Factors table, the withdrawal factor at age 66 is 4.80%. If your Benefit Base is $200,000 at the time of election, your annual lifetime income withdrawal would be:
This means you will receive $9,600 per year for life.
Now, on your contract anniversary, the lifetime income amount will be recalculated based on the greater of:
- The previous year's income withdrawal amount (in this case, $9,600), or
- The original income withdrawal percentage (4.80%) is multiplied by the current Benefit Base value.
For instance, if your Benefit Base grows to $210,000 the following year, the new calculation would be:
Since $10,080 is higher than the previous year's $9,600, your income withdrawal will increase to $10,080 per year.
Joint Life Example:
For joint life withdrawals, the percentages are lower because the benefit covers two lives. Let’s assume you start withdrawals at age 65 for both you and your spouse. The GLWB Joint Life Payout Factor for age 66 is 4.20%. Assuming a Benefit Base of $250,000, your annual income withdrawal would be:
This amount would be paid as long as either you or your spouse is alive. Like the single life example, the withdrawal amount could increase if the Benefit Base grows, but it will never decrease once withdrawals start.
This rider is ideal for individuals looking to secure a reliable income stream during retirement while benefiting from the growth potential of their annuity. The combination of a GLWB bonus and guaranteed growth provides the annuitant with peace of mind, knowing they have a steady income source that lasts a lifetime.
It's advisable to consult a trusted financial advisor to determine if this rider will be beneficial for your needs.
The Atlantic Coast Retirement Plus Multiplier also comes with a Nursing Home and Terminal Illness Waiver. This no-fee benefit is automatically included for owners, providing them with Extended care and Terminal Illness benefits.
Nursing Home Waiver: After the first contract year, an annuitant can withdraw up to 100% of the contract’s accumulated value if he is confined to a Qualified nursing home for at least 90 consecutive days. No withdrawal charge or MVA applies if the owner qualifies for this benefit. Diagnosis must occur after the contract is issued, and written proof with supporting documentation is required from a qualified physician.
Terminal Illness Waiver: After the first contract year, an annuitant can withdraw up to 100% of the contract’s accumulated value if he is diagnosed with a terminal illness with a prognosis of 12 months or less. No withdrawal charge or MVA applies if the owner qualifies for this benefit. Diagnosis must occur after the contract is issued, and written proof with supporting documentation is required from a qualified physician.
What makes this product stand out?
The Atlantic Coast Retirement Plus Multiplier Annuity offers some features that not many fixed-indexed annuities offer. The ones that I like the most are:
- The plan offers good, straightforward strategies on the S&P 500 Index
- Optional GLWB rider to have enhanced lifetime income that you cannot outlive
- No annual contract, mortality & expense, or administrative fees
- Free enhanced extended care and terminal illness waiver
- Higher Caps and Participation Rates
- Low Initial Premium Requirement: $5,000 is the minimum initial premium, while most other competitors demand between $10,000 - $25,000
- Multiple Payout Options: Life Only, Life with Period Certain, Joint and Survivor Life, Period Certain.
What I don't like
Some of the features that I don’t like about the policy are:
- A limited number of indexes to choose from
- I find the growth rider charge to be on the higher side when compared to competitors offering similar features.
- The AM Best rating of Atlantic Coast is B++, which is not bad but not the best. Other players that offer similar features have better AM Best ratings.
Company Details
You must always keep in mind that, unlike CDs, annuities are not guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other federal insurance agency. An annuity's "guarantee" is only as strong as the insurance company that issues the annuity, so it is always important to assess the issuing company before buying an annuity.
Atlantic Coast Life Insurance Company
Atlantic Coast Life Insurance Company has been in the business since 1925. It is one of the oldest providers of fixed and fixed-indexed annuities in the US.
It is rated as follows by the rating agencies:
| Rating Agency | Rating |
|---|---|
AM Best | B++ |
Although the rating is not the best, it is not even that bad. The company is privately managed by Advantage Capital post its sale in 2015. It is considered to be strong and stable financially. As of year-end 2022, some of the other financial highlights for Atlantic Coast Life Insurance Company include its:
- $903 million in total sales / direct written premium
- $91.6 million of capital and surplus
- $16.14 million in net operating income
- $693 million in total assets
Conclusion
With advancements in healthcare and technology, the average American now lives longer than ever. Therefore, it’s essential to have a steady income stream that grows safely and can provide guaranteed income during retirement years. This approach not only helps mitigate the risk of outliving your income but also ensures you can maintain a comfortable lifestyle throughout retirement.
The Atlantic Coast Retirement Plus Multiplier Annuity supports savings growth with reduced risk. Through its higher cap and participation rates, along with optional riders, it offers principal protection and the opportunity to participate in market index growth without downside risk. The income multiplier rider provides a guaranteed income stream that the annuitant cannot outlive. However, a notable drawback is the relatively high cost of the optional growth rider compared to similar riders offered by other annuities.
If you are considering a Fixed Indexed Annuity for growth, accumulation, lifetime income, and market protection, the Atlantic Coast Retirement Plus Multiplier FIA could be a worthwhile option. However, it may be beneficial to compare this policy with those of larger providers (with stronger credit ratings) who might offer similar features at comparable or even lower costs.
We understand that choosing the right annuity can be a complex decision, influenced by a myriad of factors such as market conditions, individual financial goals, and evolving life circumstances. To better serve you in this critical decision-making process, we regularly conduct in-depth reviews of various annuity products, examining features, costs, and potential benefits. Dive deeper into our extensive reviews.