Introduction
Fixed Indexed 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 mis-sell 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 discusses an in-depth review of the Clear Spring Highlander 7 Fixed Indexed Annuity. Clear Spring Highlander 7 is a deferred, fixed-indexed annuity that may be a suitable option for those seeking a fixed-indexed annuity that offers tax-deferred growth and downside protection, with a primary focus on income growth. This annuity offers some good indexing options, which have the ability to provide reasonably expected returns in the market. After extensive research and due diligence, I have provided an in-depth and unbiased analysis of this plan.
The review of the Clear Spring Highlander 7 Fixed Indexed Annuity will be broken into multiple subcategories:
- Product Description
- Product Policy
- Rates and Costs
- Accessing your Money
- What Makes This Product Stand Out?
- What I Don't Like
- Company Details
- Conclusion
Product Description
The Clear Spring Highlander 7 is a Fixed Indexed Annuity (FIA) plan that offers the annuitant (annuity investor) the opportunity to earn a portion of market index-linked return without incurring the risk of market downside. This is a suitable plan for individuals seeking a straightforward fixed-indexed annuity that provides tax-deferred growth and downside protection, with a primary focus on income generation.
Let’s have a look at the high-level fine print of the Clear Spring Highlander 7 Fixed Indexed Annuity, and then we will discuss each point in detail.
| Product Name | Highlander 7 |
|---|---|
Issuing Company | |
AM Best Rating | A- (4th of 13 ratings) |
Withdrawal Charge Period(s) | 7 years |
Maximum Issue Age | 80 Years |
Minimum Initial Purchase Amount | $5,000 |
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 will get greater of (i) Account Value or (ii) Surrender Value |
Free Benefits |
|
Surrender Value | Account Value less any withdrawal charges/MVA |
RMD Friendly | Yes |
Product Policy
How does the Clear Spring Highlander 7 Fixed Indexed Annuity policy work?
Any annuitant (maximum age at the time of policy issue: 80) can purchase the Clear Spring Highlander 7 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, various events may trigger earnings credit, including free withdrawals, long-term care events, terminal illness or injury events, or when a death benefit is payable.
The Clear Spring Highlander 7 Fixed Indexed Annuity allows the annuitant to choose crediting strategies tied to three indexes (S&P 500 Index, S&P MARC 5% Excess Return Index, and S&P 500 Dynamic TCA Index) to determine their earnings crediting formula. The S&P 500 index has 2 crediting strategies, and the other two indexes have one strategy each. The plan also offers a fixed-rate guaranteed interest strategy to choose from, making a total of 5 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, similar to most other annuities, the Clear Spring Highlander 7 Fixed Indexed Annuity offers the S&P 500 index with cap rates, participation rates, and performance-trigger rates in place, meaning that your actual interest credited will be lower compared to the actual index return. These rates change frequently; I will discuss the rates in detail shortly.
2. S&P MARC 5% Excess Return Index
The S&P MARC 5% Excess Return Index is a multi-asset index designed to provide diversification within a risk-weighted framework. It tracks three underlying component indices representing equities (S&P 500), commodities (S&P GSCI Gold), and fixed income (S&P 10-Year U.S. Treasury Note futures). The index dynamically rebalances between these asset classes and cash to target a 5% level of volatility. This approach aims to protect against market downturns but also limits the index upside.
3. S&P 500 Dynamic Intraday TCA Index
The S&P 500 Dynamic Intraday TCA Index is a financial index designed to provide exposure to the S&P 500 through the use of E-mini S&P 500 futures. This index employs a dynamic approach, utilizing 13 observation windows throughout the trading day to adapt to changing market conditions. By doing so, it aims to offer a more stable volatility experience for investors. This approach aims to protect against market downturns, but it also limits the index's upside.
It is very important to note that, like other Fixed Indexed Annuities, the Clear Spring Highlander 7 Fixed Indexed Annuity comes with cap rates, participation rates, etc., for these indexes, meaning that you will be credited only a part of the index return to your annuity. These rates change frequently; I will discuss them more shortly.
Note: In addition to allocating funds in the following indexes, the annuitant also has the option to allocate funds at a fixed interest rate. These Fixed Rates change from time to time. The Fixed Value Rate for the 7-year withdrawal charge period at the time of writing this article was 4.50%.
Rates and Costs
The earnings crediting formula
The earnings crediting formula is the most important part of this annuity discussion. It is essential to note that we don’t simply receive the index return credited to our annuity. The company has a few rate-limiting mechanisms (in the form of cap rates and participation rates) that affect our earnings. These rates are subject to change over time, and you can check the updated rates with the assistance of your financial advisor or on the company’s website.
Let’s have a look at the Clear Spring Highlander 7 Fixed Indexed Annuity rate sheet (as of January 2026) to understand how the earnings are determined.
From the above rate chart, you will notice four interest crediting options (one fixed and three indexed) along with an initial premium bonus. Let’s take a closer look at the various terms the company uses in the Highlander FIA rate chart:
- Cap Rates: This refers to the rate at which your interest-earning capacity is capped. For example, if an index returns 12% but the contract’s cap rate is 6%, 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.
- Participation Rate (PR): The participation rate describes the annuitant’s participation percentage in the 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 Rate: If you opt for a fixed account rate, you simply earn the fixed rate for a particular period specified by the company before your policy begins. These rates are usually 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 4.50%.
Among these indexes, I prefer the S&P 500 Index with a cap option and the S&P MARC 5% Excess Return Index with a Par rate option. I avoid any S&P 500 strategy with a participation rate because the company offers a very low participation rate for the S&P 500 Index. You can also consider allocating a portion of your premium to the fixed account option, as the company is currently offering a decent fixed rate to park a part of your premium in a less risky strategy.
Accessing your Money
Each year, you are entitled to a 10% free withdrawal of your contract value without incurring any charges, fees, or penalties.
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 the Clear Spring Highlander 7 Fixed Indexed Annuity.
| Completed Contract Years | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8+ |
|---|---|---|---|---|---|---|---|---|
Surrender Charge % | 9% | 8% | 7% | 6% | 5% | 4% | 3% | 0% |
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. The surrender charge schedule is different for the different tenures of annuities and also changes for some states.
The surrender charge of Clear Spring Highlander 7 Fixed Indexed Annuity is in line with all the other annuity issuers.
Once the surrender charge period ends, you can typically access your full contract value without fees. However, any withdrawal reduces both your contract value and, if applicable, the income base tied to optional riders, which may impact future guaranteed income.
An annuitant can also convert the contract into a stream of guaranteed income, known as annuitization. They can choose from various payout options designed to meet different needs.
Life Only – Provides income for as long as you live.
Joint and Survivor Life – Continues payments over two lifetimes, often used by couples.
Life with Period Certain (up to 30 years) – Pays income for life, but guarantees payments for a minimum period even if death occurs earlier.
Period Certain (up to 30 years) – Provides guaranteed payments for a set number of years, regardless of lifespan.
Single Life or Joint Life with Cash Refund – Ensures that if the annuitant(s) pass away before receiving payments equal to the original premium, the difference is refunded to beneficiaries.
Single Life or Joint Life with Installment Refund – Similar to the cash refund, but any remaining balance is paid out over time in installments.
These options offer flexibility in balancing lifetime income needs with legacy goals, enabling you to tailor how and when funds are accessed during retirement.
Death Benefit
Upon the annuitant’s death, the beneficiary will get the greater of (i) Account Value or (ii) Surrender Value
Contract/Administrative Charge
The Clear Spring Highlander 7 Fixed Indexed Annuity levies no annual contract or administrative fees.
Riders
The Clear Spring Highlander 7 Fixed Indexed Annuity is a plain-vanilla annuity that does not offer any optional paid riders. In my opinion, this actually appeals to many people who don’t understand or do not want to dive deep into the complex methodologies the riders often come up with. However, as with most annuities, the Highlander 7 annuity has free in-built nursing home and terminal illness waivers.
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.
Besides the Nursing Home Waiver and the Terminal Illness Waiver, the company also offers a Minimum Guaranteed Contract Value (MGCV) provision.
Minimum Guaranteed Contract Value (MGCV) - The Guaranteed Minimum Account Value (MGCV) provision ensures that the account value of your annuity will be no less than 87.5 of the initial premium, adjusted for any withdrawals, upon reaching the 7-year milestone.
Suppose you invest an initial premium of $100,000 in an annuity product that offers a MGCV feature. Over the course of 7 years, you make withdrawals totaling $20,000.
Initial Premium: $100,000
Total Withdrawals: $20,000
Withdrawal (in %): 20%
The MGCV feature guarantees that your account value will be at least 87.5% of the initial premium, less any withdrawals, at the 7th anniversary.
MGCV Calculation:
87.5% of Initial Premium = 0.875 * $100,000 = $87,500
Adjusted for Withdrawals: $87,500 - 20% = $70,000
Therefore, at the end of the 7-year period, the MGCV ensures that your account value will not be less than $70,000, regardless of market conditions or investment performance.
What Makes this Product Stand Out?
The Clear Spring ClearFlex Fixed Indexed Annuity offers several features that make a compelling case for this annuity. The ones that I like the most are
- The plan offers the S&P Index with multiple crediting methodologies.
- Decent Cap and Participation Rates on Indexing Strategies
- Free MGCV Provision
- No annual contract, mortality & expense, or administrative fees
- Free Confinement and Terminal Illness Waiver Benefit: This no-fee rider is automatically included for owners under age 65 and includes both a Qualified Nursing Care and Terminal Illness Benefit
- Multiple Payout Options: Lump sum or Annuitization option with Life Only, Life with Period Certain, Joint and Survivor Life, etc.
What I Don’t Like
This product is suitable for individuals seeking growth and safety; however, there are some features that could add more value for the annuitant. Some of the features that I don’t like about the policy are:
- Although the annuity offers good strategies on the S&P 500 Index, I don’t like the other index that the company offers for the interest crediting strategy. The S&P 500 MARC 5% ER Index that the company offers has a volatility control mechanism that limits the overall return of the index.
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.
Clear Spring Life and Annuity Company
Clear Spring Life and Annuity Company, a subsidiary of Group 1001 (a dynamic network of several insurance businesses), specializes in providing a variety of annuity products tailored for retirement planning. Established in 1985, the company rebranded from Guggenheim Life and Annuity to its current name in 2022. It offers a broad range of annuities, including fixed indexed annuities, multi-year guaranteed annuities (MYGAs), and single premium immediate annuities (SPIAs).
In 2024, Clear Spring sold approximately $750 million in individual annuity premiums across 48 states, reflecting its strong presence in the annuity market. The company is known for providing flexible coverage, but it operates on a smaller scale compared to larger competitors, with assets under management of around $76 billion through its parent company, Group 1001.
Despite its smaller size, Clear Spring holds a solid financial strength rating of A- from A.M. Best, indicating stability and reliability.
Conclusion
With the advancement in healthcare and technology, the average person today is living longer than ever. So, it’s very important to have a stream of income that can grow safely and steadily and have the ability to provide a guaranteed income during retirement years. This not only helps you mitigate the risk of outliving your income but also ensures that you continue to live a decent life even in your retirement.
The Clear Spring Highlander 7 FIA is a decent annuity that helps you grow your retirement account with less risk. Through its higher caps and participation rates, it potentially offers faster growth with principal protection. The product’s plain vanilla nature (with no optional paid riders) might also appeal to people who don’t like to deep-dive into the complex methodologies often associated with the riders. However, if you are seeking enhanced lifetime withdrawal features, this product may not be the best fit for you.
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 here.