Exploring retirement investments? Our honest review of the Brighthouse SecureAdvantage Fixed Index Annuity dives into its guarantee against market slumps and growth potential. Is it the safe harbor for your nest egg? Read on for insights that could help steer your decision.
Key Takeaways
- The Brighthouse SecureAdvantage Fixed Index Annuity offers potential for growth linked to market indexes without the risk of losses during downturns, tax advantages of deferred interest compounding, and high industry ratings for financial strength.
- The SecureAdvantage annuity requires a 6-year commitment with limited immediate liquidity due to surrender charges but promises 100% protection against loss in market value and can provide a steady income with the option for guaranteed lifetime withdrawal benefits.
- Despite the potential for strong annual returns the product’s growth is subject to caps, spreads, and participation rates, which may limit earnings. It’s also RMD friendly, which can be beneficial for retirees, and is targeted towards conservative investors seeking long-term financial security.
Product Details
| Attribute | Details for Brighthouse SecureAdvantage 6-Year Fixed Index Annuity |
|---|---|
Product Name | Brighthouse SecureAdvantage 6-Year Fixed Index Annuity |
Issuing Company | |
AM Best Rating | A (Excellent) - 3rd of 13 ratings |
Moody’s Rating | A3 (Good) - 7th of 21 ratings |
Fitch Rating | A (Strong) - 6th of 21 ratings |
S&P Rating | A+ (Strong) - 5th of 21 ratings |
Withdrawal Charge Period(s) | 6 years |
Maximum Issue Age | 80 years old |
Minimum Initial Purchase Amount | $50,000 (for both qualified and non-qualified plans) |
Maximum Purchase Amount | Up to $1 million without prior Brighthouse Financial approval |
Surrender Charge Schedule | 6-year decreasing: 8%, 8%, 7%, 6%, 5%, 4%, 0% |
Crediting Period and Strategies | 6-Year Term with options: Annual Sum with Cap Rate, Annual Sum with Participation Rate, and Point-to-Point with Participation Rate |
Plan Types | Personal, Traditional IRA, Roth IRA, SEP-IRA, SIMPLE-IRA, 403(b) |
Indexes | S&P 500® Index, Russell 2000® Index, UBS truVol® US Target Sectors Index |
Free Withdrawals | Up to 10% of the purchase payment every contract year, including the first contract year; withdrawals to satisfy RMDs also permitted |
MD Friendly | Yes |
Death Benefit | Beneficiaries receive the greater of the contract value or the Guaranteed Minimum Surrender Value upon the annuitant's death |
Surrender Value | Greater of Accumulated Value (less any applicable withdrawal charges and Market Value Adjustment) or the Guaranteed Minimum Contract Value |
Special Waivers of Charges | Nursing Home Waiver (not available in CA or SD) after 1 year if confined for 90+ days; Terminal Illness Waiver (not available in CA) after 1 year if expected to live less than 12 months |
Market Value Adjustment | Applies if withdrawals exceed the free amount, can be positive or negative based on current vs. issue interest rates, never below Guaranteed Minimum Surrender Value (not applicable in CA) |
Guaranteed Minimum Surrender Value | Minimum value received upon full surrender, death benefit payment, or annuitization, adjusted for withdrawals and taxes |
Index Accounts Available at Issue | Annual Sum with Cap Rate, Annual Sum with Participation Rate, Point-to-Point with Participation Rate for a 6-Year Index Term |
Fixed Account | Pays a fixed rate of interest, if available |
Renewals | Options after the initial 6-Year Index Term include 1-Year Index Terms with Cap Rate, Step Rate, and Fixed Account |
Additional Features | Performance Lock available with the 6-Year Point-to-Point with Participation Rate Index Account; Daily Performance Value reflects potential index-linked interest; Various payout options for retirement income |
Brighthouse Life Insurance Company, known for its financial strength, is no stranger to the annuity market. Their SecureAdvantage Fixed Index Annuity boasts:
- Protection against losses during market downturns
- Linking gains to a positive change in market index
- A chance for interest to compound on a tri-fold basis due to the deferral of taxes on earnings
This product offers a tempting prospect for conservative investors looking for an alternative to traditional fixed-income investments. But can it be trusted to deliver on these promises, or is it just a well-crafted fiction, a mere story crafted by skilled writers? We set out to find out.
The Brighthouse SecureAdvantage Fixed Index Annuity offers the following benefits:
- Safeguards your current funds
- Facilitates future growth
- Rated A (Excellent) by AM Best
- Rated A+ (Strong) by Standard & Poor’s
With these credentials, Brighthouse strives to connect and earn your trust through its history. Let’s dive into the details and explore their request process.
First Steps to Financial Assurance
Investing in Brighthouse’s SecureAdvantage 6-Year Fixed Index Annuity entails a 6-year commitment. Now, this might sound like a long time, but it’s crucial to remember that this is a product designed for long-term financial security. One thing that investors should consider is the immediate access to funds is limited due to the product’s surrender charge schedule.
However, Brighthouse goes all out in ensuring that your investment is secure. The SecureAdvantage product offers 100% protection for the purchase payment against market downturns. These features combined provide a level of financial assurance for retirees’ investment, creating a sense of safety and stability for your finances in your retirement years.
Crafting Confidence: The Annuity's Blueprint
The Brighthouse SecureAdvantage is more than just a financial product; it is a carefully designed tool to support individuals in their retirement. The annuity promises a reliable stream of income with the option to receive guaranteed lifetime withdrawal benefits, ensuring a steady payout during your golden years.
Structural Soundness
The SecureAdvantage annuity is designed to offer a blend of stability and growth potential, with features including:
- A combination of fixed interest and index-linked interest, aiming to balance the security of fixed returns with the growth potential of equity markets.
- The potential to provide a steady income stream for retirees, making it a consideration for those seeking long-term financial security in retirement.
- Access to a variety of index account options, including innovative Annual Sum Index Accounts, which provide diverse strategies for growth based on the performance of well-known market indices.
SecureAdvantage Annuity in Action
Let's understand the SecureAdvantage Annuity with the company's rate card at the time of writing this article.
Cap Rates: It means the rate at which your interest-earning capacity is capped. For example, if an index returned 12% but the contract’s cap rate is 6%. In this situation, the annuitant will be eligible for an interest credit of 6% only. It doesn’t matter how much the index goes above the cap rate; the maximum interest that can be earned is the cap rate. Each year, the higher the index rate and the cap rate get credited to your account value. Suppose your account value is $100,000 at the beginning of the contract and the cap rate is 6%, and after a year, if the index grows 8%, your contact value will increase by 6% of $100,000, i.e., by $6000. So, at the end of the first contract year, your contract value will become $106,000.
Participation Rate: The participation rate describes the annuitant’s participation percentage in a return of an index. For example, suppose the participation rate is 150%, and the index returned 4% over the agreed time. In that case, the annuitant will be eligible for 150% of the return, i.e., 6%.
Fixed Account Rate: If you opt for a fixed account 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 low/at par as 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 3.75%.
Ease of Navigation
The SecureAdvantage annuity is not just structurally sound, but also user-friendly. Its simplified product structure, along with clear terms and conditions, makes it easy for consumers to understand their investment.
Brighthouse offers easily understood resources and literature, helping consumers get to grips with the annuity’s features and benefits. The company goes the extra mile providing educational materials, offering guidance and helping consumers make informed decisions about their retirement investments with the SecureAdvantage annuity.
Features in Focus
The SecureAdvantage annuity’s growth potential is tied to the performance of selected indexes like the Russell and S&P 500. However, it is subject to certain limitations imposed by factors like spreads, caps, or participation rates that manage the trade-off between return potential and market loss protection.
The annuity includes:
- Relatively higher Cap and Participation rates on popular indexes like the S&P 500 and Russell 2000 Index
- Enhanced benefits from favorable market trends
- The Performance Lock feature allows for the locking in of positive index performance during the term, securing gains amidst market volatility
- A lump sum death benefit to beneficiaries without any penalties
These features distinguish it among fixed indexed annuities.
The Proof Is in the Performance
But can the SecureAdvantage annuity live up to its promises? We undertook a test to find out.
Real-Life Returns
SecureAdvantage employs a fixed index strategy, linking potential growth to the performance of market indices, which aims to blend growth opportunities with principal protection. Unlike direct investments in the equity markets, this approach provides a level of protection against market downturns, making it a more conservative option compared to traditional market investments.
The actual growth potential of the SecureAdvantage annuity is influenced by a range of factors including the chosen index, cap rates, and participation rates, as outlined in the product's terms. It's important to note that returns are not guaranteed and are subject to the performance of the underlying indices and the annuity's specific contractual features and limitations.
Weathering the Market Storms
The SecureAdvantage Fixed Index Annuity’s key feature is its ability to balance growth potential and protection against market downturns through adjustment. The annuity mitigates risk during market downturns by allowing investors to partake in some index gains without directly incurring the losses.
Longevity and Limits
Investing in the SecureAdvantage annuity means committing to a 6-year term and potential charges for early withdrawals, which can be considered a penalty. While this might seem like a long time, it’s crucial to remember that this is a product designed for long-term financial security and requires careful planning, including understanding the implications of the contract in writing.
However, Brighthouse Life does have the ability to alter annuity terms during its tenure, which may have implications for the annuity’s long-term returns. This product is primarily aimed at conservative investors seeking safety and security for their own life funds.
Securing Your Sunset Years: Worth the Investment?
The SecureAdvantage offers a unique benefit of being RMD friendly, which can be a crucial advantage for retirees over 72 who are mandated to take required minimum distributions. Considering its RMD-friendly feature, the SecureAdvantage annuity may be particularly suitable for retirees seeking a retirement product that fits into their broader financial strategy involving various retirement accounts subjected to RMDs.
So, would investing in the Brighthouse SecureAdvantage 6-Year Fixed Index Annuity be worthwhile? That would depend on your financial goals and individual circumstances. If you’re a conservative investor looking for a balanced growth potential and risk management solution, this product might be a good fit for you.
Company Details
When considering an annuity, it's important to understand that these financial instruments are not covered by the Federal Deposit Insurance Corporation (FDIC) or any other federal agency. Instead, the security an annuity offers is fundamentally tied to the financial strength and credibility of the issuing insurance company. This makes the insurer's background and financial stability paramount considerations before proceeding with an annuity purchase.
Brighthouse Financial, established as an independent company following its separation from MetLife in 2017, is headquartered in Charlotte, North Carolina. It has quickly cemented its reputation in the insurance and financial services sector, focusing primarily on life insurance and annuities.
As a specialist in these areas, Brighthouse Financial offers a range of products designed to help clients achieve financial security, including various types of annuities and life insurance policies. The company serves customers across the United States through multiple distribution channels.
The financial robustness of Brighthouse Financial is highlighted by its ratings from major credit rating agencies:
| Rating Agency | Rating |
|---|---|
AM Best | A (Excellent) |
Moody’s | A3 (Good) |
Fitch | A (Strong) |
S&P | A+ (Strong) |
These ratings indicate Brighthouse Financial's solid ability to fulfill its ongoing insurance and annuity obligations, underpinned by a stable financial foundation. The company's commitment to financial health is evident in its substantial financial metrics:
- Total assets amounting to $236 billion
- Managing $203 billion in assets under management, comprising total investments and separate account assets
- Holding a strong financial position with total shareholders equity at $5 billion
With its focused expertise in life insurance and annuities, strong financial ratings, and a commitment to providing financial security to its clients, Brighthouse Financial stands as a dependable choice for individuals looking to secure their financial future through annuities.
For further details on Brighthouse Financial's financial performance and product offerings, reviewing their official financial statements and annual reports is recommended.
Summary
In conclusion, the Brighthouse SecureAdvantage Fixed Index Annuity offers a compelling mix of growth potential, protection against market downturns, and a unique RMD-friendly feature. However, like any financial product, it’s important to thoroughly understand its terms and conditions and to consider your financial goals and circumstances before investing.
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. Delve deeper into our extensive reviews.