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 discusses an in-depth review of the Oceanview Harbourview Fixed Indexed Annuity. The Oceanview Harbourview FIA is a deferred, fixed-indexed annuity that may be a good option if you are looking for a fixed-indexed annuity that offers tax-deferred growth and downside protection with a core focus on accumulation. 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 Oceanview Harbourview 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 Oceanview Harbourview is a Fixed Indexed Annuity (FIA) plan that offers the annuitant (annuity investor) 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 simple fixed-indexed annuity that offers tax-deferred growth and downside protection with a core focus on growth and accumulation. This plan is also suitable for people who are looking for a plain vanilla annuity plan without going into the hassle of understanding the loads of optional riders that some annuities come with.
Let’s have a look at the high-level fine print of the Oceanview Harbourview Fixed Indexed Annuity, and then we will discuss each point in detail.
| Product Name | Oceanview Harbourview |
|---|---|
Issuing Company | Oceanview Life and Annuity Company |
AM Best Rating | A (3rd of 13 ratings) |
Withdrawal Charge Period(s) | 3, 5, 7, and 10 years |
Maximum Issue Age | 90 Years |
Minimum Initial Purchase Amount | $20,000 |
Crediting Period and Strategies |
|
Plan Types |
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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) Contract Value or (ii) Surrender Value |
Free Benefits |
|
Surrender Value | Account Value less any withdrawal charges/MVA |
RMD Friendly | Yes |
The Oceanview Harbourview Fixed Indexed Annuity is almost identical for all four policy tenures, except for the crediting strategies and surrender charge schedule. For ease of discussion and better clarity, we will discuss the Oceanview Harbourview 5 Fixed Indexed Annuity for the rest of the article.
Product Policy
How does the Oceanview Harbourview Fixed Indexed Annuity policy work?
Any annuitant (maximum age at the time of policy issue: 90) can purchase the Oceanview Harbourview Fixed Indexed Annuity with a minimum initial purchase amount of $20,000, 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 Oceanview Harbourview Fixed Indexed Annuity allows the annuitant to choose from one or more of the five indexes (S&P 500 Index, S&P 500 Daily Risk Control 5% ER Index, S&P 500 Daily Risk Control 10% ER Index, Russell 2000 Index, and Nasdaq-100 Index) to determine their earnings crediting formula. The S&P 500 index has 4 crediting strategies; the S&P 500 Daily Risk Control ER Indexes have 2, and the other two indexes have 1 strategy each. The plan also offers a fixed-rate guaranteed interest strategy to choose from, making a total of 9 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 Oceanview Harbourview Fixed Indexed Annuity offers the S&P 500 index with cap rates, participation rates, and other 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. Nasdaq 100 Index
The Nasdaq 100 Index is a benchmark stock market index that comprises 100 of the largest non-financial companies listed on the Nasdaq Stock Market. It is heavily weighted towards technology companies, making it a key barometer for the tech industry’s performance. The index includes some of the most influential and innovative companies globally, such as Apple, Microsoft, and Alphabet, and is often used as a proxy for the broader tech sector. Due to its composition, the Nasdaq 100 is known for its volatility but also for strong growth potential, reflecting the rapid pace of innovation and market dynamics in the technology and consumer sectors.
3. Russell 2000 Index
The Russell 2000 Index is one of the world’s most popular indices, tracking 2,000 smaller companies included in the Russell 3000 Index. As of the end of 2024, it has a total market capitalization of $3.5 trillion. The Russell 2000 has a well-established history of growth, impact, and performance. Created in January 1984, it serves as a comprehensive and unbiased barometer for small-cap companies, with an annual reconstitution process that ensures larger stocks do not distort the performance and characteristics of the true small-cap opportunity set.
4. S&P 500 Daily Risk Control 10% Excess Return Index
The S&P 500 Daily Risk Control 10% Excess Return Index is designed to maintain target volatility of 10% by dynamically adjusting its exposure to the S&P 500 Total Return Index. This risk control mechanism aims to provide more stable returns by reducing exposure during periods of high volatility and increasing it when volatility is low. The index can employ leverage of up to 150% during low-volatility periods to achieve its target. Although this approach helps protect against downside volatility, it also limits the true upside potential.
5. S&P 500 Daily Risk Control 5% Excess Return Index
The S&P 500 Daily Risk Control 5% Excess Return Index is designed to maintain target volatility of 10% by dynamically adjusting its exposure to the S&P 500 Total Return Index. This risk control mechanism aims to provide more stable returns by reducing exposure during periods of high volatility and increasing it when volatility is low. The index can employ leverage of up to 150% during low-volatility periods to achieve its target. Although this approach helps protect against downside volatility, it also limits the true upside potential.
It is very important to note that like other Fixed Indexed Annuities, the Oceanview Harbourview 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 more on these rates 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, which may change periodically. At the time of writing, the 1st-year fixed interest rate for the 5-year withdrawal charge period was 3.75%. Notably, this annuity was offering one of the highest rates available among indexed annuities. However, these rates change frequently, so it is essential to check with your trusted financial advisor for the latest rates.
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. The company has a few rates, caps, and other rates in place that affect our earnings. These rates tend to change over time, and the updated rates can always be checked on the company’s website.
Let’s have a look at the Oceanview Harbourview Fixed Indexed Annuity rate sheet (as of October 2024) to understand how the earnings are determined.
From the above rate chart, you will notice 9 interest crediting options (one fixed and eight indexed). Let’s take a closer look at the various terms the company uses in the Oceanview Harbourview Fixed Indexed Annuity rate chart:
- 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.
- 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%.
- One-Year Monthly Index Average with Cap Rate: This strategy begins by recording the initial value of a selected index at the onset of the contract term. Subsequently, the index's value is captured monthly. After a one-year duration, these monthly index values are aggregated and then averaged by dividing the total by 12. This average, capped by a cap rate, helps decide the interest added to the annuity.
- 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 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 1st year fixed rate on the 5-year withdrawal charge period plan at the time of writing this article was 3.75%.
Among these strategies, I prefer the S&P 500 Index with the 1-year point-to-point cap option, the Russell 2000 annual point-to-point with cap rate, and the Nasdaq-100 annual point-to-point with cap rate due to the higher cap rates offered by the company. I avoid any S&P 500 strategy with a participation rate because the company provides a very low participation rate for the S&P 500 Index.
You’ll notice very generous rates for the 7-year and 10-year withdrawal charge periods; however, at the time of writing, these rates reflect a special introductory effective rate that applies only to the first contract year. Effective rates for subsequent contract years will align with comparable annual market rates, which are likely to be much lower.
Surrender 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 Oceanview Harbourview Fixed Index Annuity.
| Term | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10+ |
|---|---|---|---|---|---|---|---|---|---|---|---|
10-Yr | 9% | 9% | 8% | 7% | 6% | 5% | 4% | 3% | 2% | 1% | 0% |
7-Yr | 9% | 8% | 7% | 6% | 5% | 4% | 3% | ||||
5-Yr | 9% | 8% | 7% | 6% | 5% | ||||||
3-Yr | 9% | 8% | 7% |
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 of Oceanview Harbourview Fixed Index Annuity is in line with all the other annuity issuers.
Contract/Administrative Charge
The Oceanview Harbourview Fixed Indexed Annuity levies no annual contract or administrative fees.
Riders
The Oceanview Harbourview 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 Oceanview Harbourview 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. 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 Crediting Rate of 1%.
What Makes This Product Stand Out?
The Oceanview Harbourview Fixed Indexed Annuity offers a few features that make a favorable case for this annuity. The ones that I like the most are:
- The plan offers the S&P Index with decent indexing options
- Higher Cap and Participation rates on many strategies
- No annual contract, mortality & expense, or administrative fees
- Free Confinement and Terminal Illness Waiver Benefit: This no-fee rider is automatically included and provides both a Qualified Nursing Care Benefit and a Terminal Illness Benefit.
- Free Minimum Guaranteed Crediting Rate of 1%
- Multiple Payout Options: Lumpsum or Annuitization option with Life Only, Life with Period Certain, Joint and Survivor Life, etc.
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.
Oceanview Life and Annuity Company
Headquartered in Denver, Colorado, Oceanview Life and Annuity Company is a reputable provider of retirement savings and income products, with a focus on high-quality annuity solutions. Founded in 1965, the company has established itself as a trusted partner in the financial industry, offering a range of products, including multi-year guaranteed annuities (MYGAs) and fixed-indexed annuities (FIAs).
Oceanview is affiliated with Oceanview Asset Management, a subsidiary of Bayview Asset Management, which oversees approximately $19 billion in assets under management as of mid-2024. The company’s financial strength is reflected in the following figures as of June 2024:
- Invested assets: $8.06 billion
- Cash: $839 million
- Total assets: $9.98 billion
- Surplus: $639 million
- Risk-based capital: 388%
Oceanview Life and Annuity’s strong financial standing is underscored by its 'A' (Excellent) rating from A.M. Best, reflecting the company’s ability to meet ongoing insurance and annuity obligations. Oceanview's business model emphasizes transparency and accessibility, with products distributed across the United States through a network of financial professionals, including agents, banks, and broker-dealers.
Going by the operating history, financial numbers, and ratings, we can safely gauge that you can trust your savings with Oceanview Harbourview Fixed Indexed Annuity.
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 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 Oceanview Harbourview is an annuity designed to safely grow your savings. It offers faster growth with principal protection through its decent caps and participation rates. The product's straightforward nature, devoid of optional paid riders, might actually appeal to those who prefer simplicity over complex rider methodologies. If you're considering a Fixed Indexed Annuity focused on accumulation, the Oceanview Harbourview FIA could be a worthy option.
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.