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 Lafayette Life Group Marquis Centennial Flexible Premium Fixed Indexed Annuity. Unlike retail fixed indexed annuities, the Group Marquis Centennial is issued exclusively to employer-sponsored qualified retirement plans, such as money purchase plans, profit-sharing plans, or defined benefit pension plans. It is an unallocated, trustee-directed annuity designed for new and existing retirement plans, making it a specialized option for employers seeking a reliable solution for their employees’ retirement savings. This flexible premium, deferred, fixed-indexed annuity focuses on growth and principal protection while offering straightforward indexing options with the potential for competitive returns. After extensive research and due diligence, I have provided an in-depth and unbiased analysis of this plan tailored for group retirement settings.
The review of the Lafayette Life Group Marquis Centennial Flexible Premium 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 Group Marquis Centennial Annuity is a flexible premium, fixed indexed annuity (FIA) plan that offers the annuitant an opportunity to earn a market index-linked return without having to incur the risk of market downside. This is a suitable plan for people who are looking for a plain vanilla fixed indexed annuity (with no optional paid riders such as enhanced lifetime income, enhanced death benefit, etc.) and aim to grow and protect their retirement savings.
Let’s have a look at the high-level fine print of Lafayette Life Group Marquis Centennial Flexible Premium Fixed Indexed Annuity, and then we will discuss each point in detail.
| Product Name | Group Marquis Centennial |
|---|---|
Issuing Company | |
AM Best Rating | A+ (2nd of 13 ratings) |
Withdrawal Charge Period(s) | 10 years |
Minimum Initial Purchase Amount | $1,000 |
Crediting Period and Strategies |
|
Plan Types | Only retirement plans |
Indexes |
|
Free Withdrawals | 10% of the annuity’s Accumulated Value per year |
Death Benefit | Upon the annuitant’s death, the beneficiary will get the Account Value without any surrender charges |
Free Benefits | Benefit Responsive Withdrawals Waiver |
Riders | No optional paid riders |
Surrender Value | Account Value less any withdrawal charges/MVA |
Minimum Guaranteed Surrender Value | 87.5% of premium paid grown at 2.75% minus withdrawals and enhanced benefit fees |
RMD Friendly | Yes |
Product Policy
How does the Lafayette Life Group Marquis Centennial Flexible Premium Fixed Indexed Annuity policy work?
The Lafayette Life Group Marquis Centennial Flexible Premium Fixed Indexed Annuity is specifically designed for use in employer-sponsored qualified retirement plans, such as money purchase plans, profit-sharing plans, and defined benefit pension plans. As an unallocated, trustee-directed annuity, it allows trustees to manage retirement plan contributions flexibly and efficiently. Employers can make ongoing contributions to the annuity to help grow the retirement plan’s value over time, ensuring alignment with the plan’s financial goals and long-term sustainability.
Unlike individual retail annuities, this group annuity does not have an age limit for eligibility, as it is issued to a retirement plan rather than individual policyholders. The annuity provides returns linked to market indexes, calculated using a predefined formula, which we will explore in detail shortly. Apart from the regular crediting period, various events may trigger earnings credit: for plan distributions, a participant’s long-term care event, terminal illness or injury, or when a death benefit becomes payable. All these interest credits accumulate in a central “Account Value,” which serves as the retirement plan’s pooled annuity balance, managed by the plan trustee.
The Lafayette Life Group Marquis Centennial Flexible Premium Fixed Indexed Annuity allows the annuitant to choose from one or more of three indexes, S&P 500 Index, J.P. Morgan Strategic Balanced Index, and GS Momentum Builder Multi-Asset Class Index, to determine their earnings crediting formula. Each of the three indexes offers three strategies, and the plan also includes a fixed-rate guaranteed interest strategy, providing a total of 10 strategy options. We will briefly discuss each available index below.
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 Lafayette Life Group Marquis Centennial Flexible Premium Fixed Indexed Annuity offers the S&P 500 index with cap rates in place, meaning that your interest-earning capacity is capped. These rates change frequently; I will discuss the rates in detail shortly.
2. J.P. Morgan Strategic Balanced Index
The J.P. Morgan Strategic Balanced Index is a rules-based index designed to provide consistent growth with reduced volatility by dynamically allocating between two core components: high-dividend, low-volatility stocks and dynamically rebalanced bonds. The equity component focuses on generating income through dividend-paying stocks while minimizing market risk, while the fixed-income component uses a momentum-based approach to allocate across various bond sectors for stability and enhanced returns. The index targets a 6% volatility level, rebalancing daily to adapt to changing market conditions and maintain its risk profile.
3. GS Momentum Builder Multi-Asset Class Index
The GS Momentum Builder Multi-Asset Class Index is a rules-based index developed by Goldman Sachs that seeks to provide diversified exposure across multiple asset classes, including U.S. equities, international equities, U.S. bonds, international bonds, and commodities. The index employs a momentum-driven strategy, aiming to capture positive trends by analyzing historical data over predefined periods of three, six, and nine months. It rebalances monthly to adjust asset weights based on recent performance, with the goal of enhancing returns while managing risk. To maintain stability, the index incorporates a volatility control mechanism, targeting an annualized volatility of 4.5% and capping it at 5%. This approach seeks to deliver consistent performance across varying market conditions.
While the volatility control mechanisms of the J.P. Morgan Strategic Balanced Index and the GS Momentum Builder Multi-Asset Class Index help reduce market fluctuations, they also limit the potential for upside growth. As a fixed indexed annuity investor, your principal is already protected against downside risk, meaning you are essentially sacrificing upside potential by choosing these indexes. However, the company compensates for this trade-off by offering high participation rates on these volatility-controlled indexes. If you decide to include a volatility-controlled index in your allocation, prioritize the one with the highest participation rate. That said, my personal favorite remains the S&P 500 Index for its overall growth potential.
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 change from time to time. The 1st year Fixed Value Rate for the 10-year withdrawal charge period at the time of writing this article was 3.20%.
It is very important to note that the Lafayette Life Group Marquis Centennial Flexible Premium Fixed Indexed Annuity comes with a cap, participation, and other rates 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 more on these rates more shortly.
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, caps, and other rates that the company has in place that affect your earnings. These rates tend to change over time, and the updated rates can always be checked through your trusted financial advisor.
Let’s have a look at the Lafayette Life Group Marquis Centennial Flexible Premium Fixed Indexed Annuity (10-year surrender charge) rate sheet (as of December 2024) to understand how the earnings are determined.
| Types of Rates | Rates |
|---|---|
1st Year Fixed Rate | 3.20% |
S&P 500 Index | |
Annual Point-to-point with Cap | 5.00% |
Monthly Average with Cap | 5.75% |
Monthly Sum with Cap | 1.80% |
GS Momentum Builder Multi-Asset Class Index | |
3-year Point-to-point with Participation Rate | 200% |
2-year Point-to-point with Participation Rate | 155% |
1-year Point-to-point with Participation Rate | 95% |
J.P. Morgan Strategic Balanced Index | |
3-year Point-to-point with Participation Rate | 157% |
2-year Point-to-point with Participation Rate | 125% |
1-year Point-to-point with Participation Rate | 85% |
From the above rate chart, you will notice that there are 10 interest crediting options (1 fixed and 9 indexed). Let’s have a look at different terms that are used by the company in the Lafayette Life Group Marquis Centennial Flexible Premium Fixed Indexed Annuity rate sheet:
- Point-to-point with Participation Rate (PR): 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%.
- Point-to-point with 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.
- Monthly Average with Cap Rate: The Monthly Average Strategy calculates interest by averaging the index values at the end of each month during the crediting period and comparing it to the starting index value. If the average index value exceeds the starting value, interest is credited based on this growth, subject to a cap rate. This strategy smooths out market volatility, as the averaging process minimizes the impact of extreme monthly fluctuations. It is ideal for investors seeking steady growth in moderately trending markets, offering a balanced approach to capturing gains while reducing sensitivity to market swings.
- Monthly Sum with Cap: The Monthly Sum with Cap Strategy determines interest by summing the monthly percentage changes in the index over the crediting period, with each positive monthly gain capped at a predetermined rate (e.g., 1.80% in this case). While monthly gains are capped, any negative changes are fully accounted for without a cap. At the end of the period, the total of all monthly gains and losses determines the credited interest. This strategy is suited for upward-trending markets with consistent gains, as it resets monthly and can capture frequent small increases.
When allocating premiums in a fixed-indexed annuity, individuals can distribute their money across these different indexing strategies. This means you can decide how much of your premium goes into each strategy, allowing for a tailored approach to potential growth and risk based on your financial goals and comfort level.
My Allocation Recommendation: As per the rate chart referenced in this article, I recommend dividing your allocation among the following strategies for a balanced approach:
- Goldman Sachs 3-Year Point-to-Point: This option offers a high participation rate, making it ideal for capturing substantial growth in trending markets.
- S&P 500 Point-to-Point with Participation: A solid overall choice, leveraging the S&P 500's performance to provide reliable growth potential with the benefit of participation in market gains.
- S&P 500 Monthly Sum with Cap: This strategy is best for consistent monthly gains, allowing you to capture regular, incremental growth during stable or upward-trending markets.
Free Withdrawal and Surrender/Early Withdrawal Charges
Each year, you are allowed a 10% free withdrawal of your contract value without incurring 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 Lafayette Life Group Marquis Centennial Flexible Premium Fixed Indexed Annuity:
| Contract Year | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11+ |
|---|---|---|---|---|---|---|---|---|---|---|---|
10-Year Plan | 10% | 9% | 8% | 7% | 6% | 5% | 4% | 3% | 2% | 1% | 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 the Lafayette Life Group Marquis Centennial Flexible Premium Fixed Indexed Annuity is in line with all the other annuity issuers.
One notable feature is the Benefit Responsive Withdrawals, which ensures that withdrawal charges are waived when account values are withdrawn to pay plan benefits under specific circumstances, including:
- Death of a participant
- Disability of a participant
- Termination of employment
- Retirement of a participant
This benefit makes the Group Marquis Centennial Annuity a highly adaptable option for employer-sponsored retirement plans, allowing seamless access to funds when plan benefits are triggered, without incurring withdrawal charges.
Contract/Administrative Charge
The Lafayette Life Group Marquis Centennial Flexible Premium Fixed Indexed Annuity does not impose any annual contract or administrative fees.
Riders
The Lafayette Life Group Marquis Centennial Flexible Premium 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.
What Makes This Product Stand Out?
The Lafayette Life Group Marquis Centennial Flexible Premium Fixed Indexed Annuity is a standout product for several reasons, offering flexibility, growth potential, and value. Here’s what makes it unique:
- Low Initial Premium and Flexible Contributions: This annuity is accessible with a low minimum initial premium of $1,000. Additionally, it offers a flexible premium option, allowing employers to make additional contributions at any time, enabling consistent growth over time.
- Strong Indexing Options: Annuitants can choose from three reputable indexes, each offering multiple strategies to cater to various financial goals and risk preferences.
- No annual contract, mortality & expense, or administrative fees
- 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 About This Product
While the Lafayette Life Group Marquis Centennial Flexible Premium Fixed Indexed Annuity offers several strong features, there are a few limitations to consider:
- Low Rates on Some Strategies: Although the product provides a range of indexing options, some strategies, particularly the fixed rate strategy and certain index-linked options, offer relatively low rates compared to other fixed indexed annuities in the market. This may limit growth potential for policyholders prioritizing higher returns.
- No Optional Riders for Enhanced Benefits: The annuity does not offer optional riders for enhanced benefits, such as guaranteed lifetime income or additional care benefits. This lack of customization may make it less appealing for individuals seeking more robust features tailored to their retirement and long-term care needs.
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.
The Lafayette Life Insurance Company
The Lafayette Life Insurance Company is a well-established insurance provider with a rich history spanning over a century. Founded in 1905, the company has maintained a strong presence in the insurance industry, offering a wide range of life insurance and annuity products to individuals and small businesses.
Lafayette Life is headquartered in Cincinnati, Ohio, and is licensed to sell individual life insurance in the District of Columbia and all states except New York. The company is a member of Western & Southern Financial Group (W&SFG), a Cincinnati-based diversified family of financial services companies and a Fortune 500 company.
Lafayette Life offers a comprehensive portfolio of insurance and financial products, including:
- Life Insurance: Whole life, term life, and universal life policies
- Annuities: Various annuity products for retirement planning
- Retirement Services: Qualified plan products and administrative services for small to medium-sized businesses
It is rated as follows by the rating agencies:
| Rating Agency | Rating |
|---|---|
AM Best | A+ |
Fitch | AA |
S&P Global | AA- |
Lafayette Life Insurance Company has managed to maintain decent ratings for many years. It is considered to be strong and stable financially. Thus, going by the operating history and financial numbers, we can safely gauge that you can trust your savings with Lafayette Life Insurance Company.
Conclusion
With the advancements in healthcare and technology, the average American today lives longer than ever. So, it’s very important to have a retirement corpus that can grow safely and steadily and have the ability to provide a fixed stream of income during the 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 Lafayette Life Group Marquis Centennial Flexible Premium Fixed Indexed Annuity is a versatile product designed specifically for employer-sponsored qualified retirement plans, combining flexibility and growth potential. As an unallocated, trustee-directed annuity, it enables plan trustees to manage contributions efficiently and provides a range of indexing strategies to support market-linked growth with principal protection. While it lacks optional riders for enhanced individual benefits, this simplicity makes it a practical choice for trustees and plan administrators seeking a straightforward solution for their retirement plans.
Additionally, features like Benefit Responsive Withdrawals, which waive withdrawal charges for plan benefits triggered by participant death, disability, termination of employment, or retirement, further enhance its appeal for group retirement settings. If you are an employer or trustee looking for a Fixed Indexed Annuity tailored to retirement plan needs with a core focus on growth and flexibility, the Lafayette Life Group Marquis Centennial Flexible Premium Fixed Indexed Annuity is worth considering.
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.