Introduction
A Multi-Year Guaranteed Annuity (MYGA) is a type of fixed annuity that provides a guaranteed interest rate for a specified number of years, typically ranging from 3 to 10. Unlike variable annuities, where returns are linked to market performance, MYGAs offer a steady, predetermined return over the selected term. This feature makes them popular among conservative investors who seek predictable, low-risk growth of their assets, particularly in a retirement context.
MYGAs work similarly to Certificates of Deposit (CDs) in terms of fixed interest rates and defined maturity periods, but they offer additional benefits that make them attractive as retirement planning tools. MYGA funds grow on a tax-deferred basis, meaning that investors do not pay taxes on their gains until they begin making withdrawals. This allows the investment to compound more effectively over time, providing a distinct advantage over taxable investments with similar yields. Additionally, MYGAs offer the benefit of principal protection, ensuring that the initial investment is safe from market fluctuations.
This review will dive into the Oceanview Harbourview Multi-Year Guaranteed Annuity (MYGA), exploring its key features, benefits, and considerations.
The review of the Oceanview Harbourview MYGA 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 Multi-Year Guaranteed Annuity (MYGA) is a financial product designed to meet the needs of conservative investors seeking a stable, guaranteed return over a specific period.
Let’s have a look at the high-level fine print of the Multi-Year Guaranteed Annuity (MYGA) , and then we will discuss each point in detail.
| Product Name | Harbourview MYGA |
|---|---|
Issuing Company | |
AM Best Rating | A (3rd of 13 ratings) |
Withdrawal Charge Period(s) | 2, 3, 4, 5, 6, 7, and 10 year |
Surrender Charge Schedule | Varies as per withdrawal charge period |
Maximum Issue Age | 89 Years |
Minimum Initial Purchase Amount | $20,000 |
Plan Types |
|
Free Withdrawals | 10% of the annuity’s Accumulated Value per year |
Death Benefit | Upon the annuitant’s death, the beneficiary will get full Account Value without any surrender charges |
Free Benefits | Free Minimum Guaranteed Crediting Rate of 1% |
Riders | No riders available |
Surrender Value | Account Value less any withdrawal charges/MVA |
RMD Friendly | Yes |
The features of the Oceanview Harbourview Multi-Year Guaranteed Annuity (MYGA) remain consistent across all term durations, with the only variations being the interest rates and the withdrawal charge schedule associated with each term.
Product Policy
How does the Oceanview Harbourview MYGA policy work?
The Oceanview Harbourview MYGA is structured to provide fixed, predictable growth over a chosen period, making it a suitable option for investors looking for security and stability. This annuity offers term options ranging from 2 to 10 years, with a unique interest rate assigned to each term. These rates ensure that the policyholder knows exactly how much their investment will grow over the selected period.
Let’s have a look at the Oceanview Harbourview MYGA Annuity rate sheet (as of October 2024) to understand how the earnings are determined.
- 2-Year Term: 4.65%
- 3-Year Term: 4.65%
- 4-Year Term: 4.75%
- 5-Year Term: 4.55%
- 6-Year Term: 4.85%
- 7-Year Term: 4.60%
- 10-Year Term: 4.85%
Please note that these rates apply to the Standard Band (minimum $20,000). For the Select Band ($80,000+) and Premier Band ($100,000+), the rate chart is as follows. The more you invest, the higher band you qualify for, which in turn offers a higher interest rate.
The MYGA’s interest rate is locked in at the start of the contract and remains fixed for the entire term, ensuring a steady accumulation of funds. At the end of the selected period, the policyholder has several options: they may withdraw the accumulated funds, renew for another term (with rates based on prevailing conditions), or roll the funds into another financial vehicle.
Key Mechanics of the Oceanview Harbourview MYGA Policy
- Interest Rate Lock: Once the policyholder selects a term, the corresponding interest rate is guaranteed for the duration of that term, providing clear expectations for growth.
- Principal Protection: As a fixed annuity, the Oceanview Harbourview MYGA guarantees the protection of the principal, meaning that the initial investment is secure and unaffected by market volatility.
- Withdrawal Charge Schedule: The policy includes a withdrawal charge schedule, which varies according to the selected term. If the policyholder needs to access their funds before the term ends, they may incur a penalty. However, many MYGAs, including Oceanview MYGAs, often allow a penalty-free withdrawal of a certain percentage of the account value each year, typically up to 10%.
To understand how the Oceanview Harbourview MYGA works, let’s look at a hypothetical example:
Suppose an investor, Jane, is 60 years old and is planning to retire soon. She wants a low-risk investment to grow her funds predictably over time. After researching her options, Jane decides to invest $100,000 in the Oceanview Harbourview MYGA with a 7-year term, which offers a fixed interest rate of 4.95% for that period.
1. Interest Accumulation
With her $100,000 initial investment, Jane can calculate her future value at the end of the 5-year term using the 4.95% annual interest rate:
- Year 1: $100,000 * (1 + 4.95%) = $104,950
- Year 2: $104,950 * (1 + 4.95%) ≈ $110,145
- Year 3: $110,145 * (1 + 4.95%) ≈ $115,597
- Year 4: $115,597 * (1 + 4.95%) ≈ $121,319
- Year 5: $121,319 * (1 + 4.95%) ≈ $127,325
- Year 6: $127,325 * (1 + 4.95%) ≈ $133,627
- Year 7: $133,627 * (1 + 4.95%) ≈ $140,242
After seven years, her investment would grow to approximately $140,242, thanks to the fixed annual interest rate of 4.95%.
2. Principal Protection
Because the Oceanview Harbourview MYGA is a fixed annuity, Jane’s initial $100,000 is fully protected from market losses. Regardless of what happens in the stock or bond markets, her principal remains secure, and she continues to earn the 4.95% fixed rate annually.
3. Withdrawal Options at the End of the Term
At the end of the 7-year term, Jane has several choices:
- Withdraw the Full Amount: Jane can withdraw the full $140,242 without any surrender charges, giving her access to her accumulated funds.
- Renew for Another Term: Jane can choose to renew her MYGA for another term with Oceanview, though the new interest rate will depend on the prevailing rates at that time.
- Roll Over to Another Financial Product: Jane can transfer her funds into another investment or retirement product, if she desires.
Riders
The Oceanview Harbourview MYGA is a plain-vanilla MYGA and does not offer any optional or free riders. While this simplicity might appeal to investors who prefer a straightforward product without the complexities of riders, including a free nursing home and terminal illness rider would have been a valuable addition. Many other companies offer these riders at no additional cost, providing added flexibility and peace of mind to policyholders in times of need.
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 the Oceanview Harbourview MYGA.
| Completed Contract Years | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11+ |
|---|---|---|---|---|---|---|---|---|---|---|---|
10-yr | 9% | 9% | 8% | 7% | 6% | 5% | 4% | 3% | 2% | 1% | 0% |
7-yr | 9% | 8% | 7% | 6% | 5% | 4% | 3% | 0% | |||
6-yr | 9% | 8% | 7% | 6% | 5% | 4% | 0% | ||||
5-yr | 9% | 8% | 7% | 6% | 5% | 0% | |||||
4-yr | 9% | 8% | 7% | 6% | 0% | ||||||
3-yr | 9% | 8% | 7% | 6% | 0% | ||||||
2-yr | 9% | 8% | 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.
Contract/Administrative Charge
The Oceanview Harbourview MYGA levies no annual contract or administrative fees.
Benefits vs. Disadvantages of MYGA Compared to a Traditional Fixed Annuity
MYGAs and traditional fixed annuities both cater to conservative investors but with slightly different structures. MYGAs are ideal for those who want a predictable rate over a fixed term and are comfortable with the limited liquidity during that period. In contrast, traditional fixed annuities may offer a bit more flexibility in terms of rate adjustments or income options but typically lack the defined multi-year guarantee MYGAs provide. Here’s a breakdown:
Benefits of MYGA
Guaranteed Interest Rates for Specific Terms
- MYGA: MYGAs provide a guaranteed interest rate over a fixed term, such as 3, 5, or 7 years, allowing investors to lock in predictable returns for a specified period.
- Traditional Fixed Annuity: Traditional fixed annuities also offer guaranteed interest, but these rates are often set for a shorter duration (e.g., one year) and may reset annually based on prevailing rates.
- Benefit: MYGAs offer more stability over a multi-year horizon, protecting against interest rate fluctuations, which is particularly beneficial in a low or falling interest rate environment.
Flexibility with Term Lengths
- MYGA: MYGAs provide the flexibility to choose from different terms (e.g., 3, 5, 7, 10 years), depending on the investor's needs and market outlook.
- Traditional Fixed Annuity: Traditional fixed annuities do not typically offer fixed terms with guaranteed rates over multi-year periods.
- Benefit: MYGAs allow investors to align their investments with specific time horizons, such as short-term goals or bridge periods before retirement.
Disadvantages of MYGA
Interest Rate Risk Over the Long Term
- MYGA: While MYGAs lock in rates for a specific term, they may be less advantageous if interest rates rise significantly during the term, as policyholders are bound to the initial rate until maturity.
- Traditional Fixed Annuity: Traditional fixed annuities may offer rate adjustments periodically, which could benefit policyholders in a rising interest rate environment.
- Disadvantage: MYGAs might not benefit from increasing rates mid-term, whereas traditional fixed annuities may adjust rates periodically, providing some adaptability to market changes.
Lower Growth Potential Compared to Market-Linked Annuities
- MYGA: MYGAs have a fixed interest rate and are not linked to market performance, limiting the growth potential.
- Traditional Fixed Annuity: Similarly, traditional fixed annuities are also fixed, but they may sometimes offer interest rate adjustments that allow for slightly higher yields over time.
- Disadvantage: Both MYGAs and traditional fixed annuities limit growth potential compared to market-linked annuities or other investment options, which may not be ideal for younger investors with higher risk tolerance.
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 MYGA.
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 Multi-Year Guaranteed Annuity (MYGA) is a straightforward, reliable option for conservative investors seeking stable, predictable returns. With competitive interest rates and a strong financial backing, Oceanview offers a product that appeals to those looking to grow their retirement savings without exposure to market volatility. However, its lack of additional features, such as optional or free riders for nursing home or terminal illness benefits, may limit its appeal for investors seeking more flexibility or built-in protection for unexpected life events. Overall, the Harbourview MYGA is well-suited for individuals who value simplicity and security in their retirement planning, while those seeking added benefits may wish to consider options with more robust rider offerings.
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.