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 Oxford Life Silver Select Fixed Indexed Annuity. Oxford Life Silver Select Annuity 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 premium bonus and lifetime income withdrawals. This annuity offers some good indexing options, which have the ability to provide reasonably expected (good but not the best) 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 Oxford Life Silver Select 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 Oxford Life Silver Select 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 a premium bonus and an optional lifetime income rider.
Let’s have a look at the high-level fine print of the Oxford Life Silver Select Fixed Indexed Annuity, and then we will discuss each point in detail.
| Product Name | Silver Select Fixed Indexed Annuity |
|---|---|
Issuing Company | Oxford Life Insurance Company |
AM Best Rating | A (3rd of 13 ratings) |
Withdrawal Charge Period(s) | 10 years |
Maximum Issue Age | 80 Years |
Minimum Initial Purchase Amount | $10,000 |
Premium Bonus | 4% premium bonus on the initial premium |
Crediting Period and Strategies |
|
Plan Types |
|
Indexes | S&P 500 Index |
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 |
|
Riders | Optional, paid guaranteed lifetime withdrawal benefit (GLWB) |
Surrender Value | Account Value less any withdrawal charges/MVA |
RMD Friendly | Yes |
Product Policy
How does the Oxford Life Silver Select Fixed Indexed Annuity policy work?
Any annuitant (maximum age at the time of policy issue: 80) can purchase the Oxford Life Silver Select Fixed Indexed Annuity with a minimum initial purchase amount of $10,000, 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 annuity offers a premium boost and an optional paid rider that helps the annuitant secure lifetime withdrawals they cannot outlive. We will discuss this further in the latter section of this annuity review.
The Oxford Life Silver Select Fixed Indexed Annuity allows the annuitant to choose from two indexing strategies based on the S&P 500 index. The plan also offers a fixed-rate guaranteed interest strategy to choose from, making a total of three 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 Oxford Life Silver Select Fixed Indexed Annuity offers the S&P 500 index with cap 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.
In addition to allocating the funds to the S&P 500 index, the annuitant also has the option to allocate funds at a fixed interest. These Fixed Rates change from time to time. The 1-year Fixed Value Rate for the 10-year withdrawal charge period at the time of writing this article was 3.85%.
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 performance triggers 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 Oxford Life Silver Select Fixed Indexed Annuity rate sheet (as of October 2024) to understand how the earnings are determined.
| Index | Strategy | Rate |
|---|---|---|
1-Yr Fixed Interest | Fixed Rate | 3.85% |
S&P 500 | 1-Yr Pt-to-Pt Cap | 7.85% |
1-Yr Monthly Average Cap | 7.85% |
From the above rate chart, you will notice three interest crediting options (one fixed and two indexed) along with an initial premium bonus. Let’s take a closer look at the various terms the company uses in the Oxford Life Silver Select 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.
- 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 1-year fixed rate on this policy at the time of writing this article was 3.85%.
Initial Premium Bonus
In a fixed indexed annuity (FIA), the initial premium bonus is a percentage of the amount you invest, added to your account value at the time of purchase. This bonus is designed to provide a head start on growth, enhancing the initial value of your annuity. The bonus is typically offered as an incentive to choose a particular annuity product and can boost the long-term accumulation potential of your annuity.
For example, if you purchase a fixed indexed annuity with a 4% initial bonus and invest $100,000, the insurance company will add an extra $4,000 to your account. As a result, your account value will immediately be $104,000. This bonus will continue to grow along with your account value based on the performance of the chosen crediting strategies (fixed or indexed), potentially enhancing your future income or withdrawal benefits.
The bonus vests over a 10-year period. Each year, you become vested in an additional 10% of the total bonus until you are 100% vested at the beginning of the 11th policy year. The vested amounts of the bonus are the portions you do not forfeit due to an early partial withdrawal or surrender. The bonus is fully vested in the death benefit and the optional guaranteed lifetime withdrawal benefit payment. However, it's important to note that withdrawals may reduce the vested bonus amount.
If you take a partial withdrawal or surrender, you will receive the vested portion of your bonus according to the schedule below. Any partial withdrawals or surrenders exceeding the penalty-free amount during the first ten policy years will result in the forfeiture of some non-vested bonus amounts.
Bonus Vesting Schedule
| Policy Year | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11+ |
|---|---|---|---|---|---|---|---|---|---|---|---|
Vested & | 0% | 10% | 20% | 30% | 40% | 50% | 60% | 70% | 80% | 90% | 100% |
It’s important to review any conditions or restrictions related to the bonus, as there might be limitations on accessing it early or specific withdrawal provisions that could reduce its impact.
However, as with most financial products, there are no free lunches. This bonus is compensated by slightly lower cap and participation rates compared to similar products that don’t offer a premium bonus. The trade-off here is between getting an immediate boost in your account value through the bonus or potentially achieving higher long-term growth with better crediting rates. The decision ultimately depends on your financial goals and whether you prioritize short-term gains or long-term growth potential.
Among these strategies, I would suggest a 40:40:20 allocation to the 1-year point-to-point with caps, 1-year monthly average cap, and 1-year fixed with interest rate guaranteed strategies, respectively.
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 Oxford Life Silver Select Fixed Indexed Annuity.
| Completed Contract Years | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11+ |
|---|---|---|---|---|---|---|---|---|---|---|---|
Surrender Charge % | 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 Oxford Life Silver Select Fixed Indexed Annuity is slightly higher than that of other annuity issuers.
Contract/Administrative Charge
The Oxford Life Silver Select Fixed Indexed Annuity levies no annual contract or administrative fees. However, if you opt for the lifetime income withdrawal rider, an annual charge of 0.95% applies, which is calculated and deducted from the account value. We will discuss this rider in more detail in the next section.
Riders
The Oxford Life Silver Select FIA offers annuitants the option to choose an additional paid Guaranteed Lifetime Withdrawal Benefit (GLWB) rider. The Guaranteed Lifetime Withdrawal Benefit Rider in the Oxford Life Silver Select Fixed Indexed Annuity is designed to provide annuitants with a secure stream of income that they cannot outlive. This rider ensures long-term financial stability, particularly during retirement, by offering guaranteed lifetime withdrawals. Below are the key features of this rider.
Key Features:
- Issue Limit: The issue age for this rider is 50-80 years, based on the age of the covered person. This ensures that individuals nearing or at retirement age can take advantage of the lifetime income benefits.
- Waiting Period: Income withdrawals under this rider can begin anytime after the first contract year, provided the owner has reached age 50. This allows the annuitant to start receiving lifetime income as soon as they meet these requirements.
- Income Account Value (Benefit Base): The Income Account Value grows for 10 years based on a 4% premium bonus, plus a guaranteed 7.15% growth applied on each anniversary. This compounding growth ensures that the income account value increases over time, which, in turn, increases the potential lifetime income available. Note that the Income Account Value is only used to calculate the income withdrawal amount — it’s not available at surrender, death, or annuitization.
- Annual Rider Charge Rate: A 0.95% annual charge applies to the rider. This charge is calculated based on the account value and is deducted each year. While this fee may reduce the account balance, the rider's guaranteed income benefits can offset this impact over time.
Rider Termination: The rider may be terminated at any time after the first contract year at the owner's request. However, once terminated, the rider cannot be reinstated. Additionally, the rider will automatically terminate under the following conditions:
- Surrender of the contract
- Election of a settlement option under the annuity provision of the contract
- Death of the owner prior to lifetime withdrawal election (unless continued by the surviving spouse)
- Upon the death of the last covered person after lifetime withdrawals have begun
- Change in ownership or annuitants, unless continued by the surviving spouse
- Reaching the maturity date if lifetime withdrawals have not commenced
Calculating Income Withdrawal Amounts
Your payments will be calculated based on this equation:
On your contract anniversary, your lifetime income withdrawal amount will be recalculated as the greater of the previous year's income withdrawal amount or the original income withdrawal percentage multiplied by the current Benefit Base (Income Account Value).
The income withdrawal percentage is determined by your age when you first elect to receive income withdrawals. It increases by 0.10% for each year between the ages listed below. Once income withdrawals begin, the percentage remains fixed. Here’s how it works for single life and joint life income withdrawals:
Example:
Let’s say you elect to start your income withdrawals at age 66 on a single life basis. According to the GLWB Single Life Payout Factors table, the withdrawal factor at age 66 is 4.80%. If your Income Account Value (Benefit Base) is $200,000 at the time of election, your annual lifetime income withdrawal would be:
This means you will receive $9,600 per year for life.
Now, on your contract anniversary, the lifetime income amount will be recalculated based on the greater of:
- The previous year's income withdrawal amount (in this case, $9,600), or
- The original income withdrawal percentage (4.80%) is multiplied by the current Income Account Value.
For instance, if your Income Account Value grows to $210,000 the following year, the new calculation would be:
Since $10,080 is higher than the previous year's $9,600, your income withdrawal will increase to $10,080 per year.
Joint Life Example:
For joint life withdrawals, the percentages are lower because the benefit covers two lives. Let’s assume you start withdrawals at age 66 for both you and your spouse. The GLWB Joint Life Payout Factor for age 66 is 4.20%. With the same Income Account Value of $200,000, your annual income withdrawal would be:
This amount would be paid as long as either you or your spouse is alive. Like the single life example, the withdrawal amount could increase if the Income Account Value grows, but it will never decrease once withdrawals start.
This rider is ideal for individuals looking to secure a reliable income stream during retirement while benefiting from the growth potential of their annuity. The combination of a income account value bonus and guaranteed growth provides the annuitant with peace of mind, knowing they have a steady income source that lasts a lifetime.
As with most annuities, the Oxford Life Silver Select Fixed Indexed Annuity includes built-in nursing home and terminal illness waivers. Unique to Oxford Life, it also offers a Home Health Care benefit, providing additional flexibility for policyholders.
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.
Home Health Care Benefit: If the policyholder is first diagnosed as chronically ill more than one year after the policy date and has been receiving home health care for the previous 90 days, they may request surrenders or withdrawals from the policy without incurring any surrender or withdrawal charges.
What Makes This Product Stand Out?
The Oxford Life Silver Select 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 limited but decent indexing options
- Free 4% premium bonus for initial premium payment
- No annual contract, mortality & expense, or administrative fees
- Free Home Health Care benefit that only a handful of annuities provides
- Free Nursing Home and Terminal Illness Waiver Benefit
- Multiple Payout Options: Lump-sum or Annuitization option with Life Only, Life with Period Certain, Joint and Survivor Life, etc.
- Optional lifetime withdrawal rider
What I don't like
This product is decent for those seeking growth and safety, but there are a few aspects that could provide more value to the annuitant. Some of the features I don't like about the policy are:
- I couldn’t find a provision for the Minimum Guaranteed Surrender Value, which is typically between 87.5% and 115%, as offered by other annuity providers.
How is the Oxford Life Silver Select Different from the Oxford Life Royal Select Fixed Annuity?
Although both the Oxford Life Silver Select and Oxford Life Royal Select Fixed Indexed Annuities are bonus annuities—meaning they offer a bonus on your initial premium—the key differences lie in the bonus percentage and the Guaranteed Lifetime Withdrawal Benefit (GLWB) rider growth rates.
- Royal Select FIA: This annuity offers an 8% premium bonus, which is applied to both the accumulation account and the initial income account value. Additionally, the income account value grows at 6.75% annually for 10 years, making it an attractive choice for those seeking more immediate growth on their initial investment.
- Silver Select FIA: In contrast, the Silver Select offers a 4% premium bonus, applied to both the accumulation account and the income account value. However, the income account value growth rate is slightly higher at 7.15% annually for 10 years. To compensate for the lower bonus, the Silver Select provides slightly higher rates and caps on its indexing strategies and a higher income account value growth rate, offering more potential for growth based on market performance.
Ultimately, the choice between the two annuities comes down to the annuitant's priorities. If an individual is looking for a larger upfront bonus and steady income growth, the Royal Select may be a better fit. However, for those who prioritize higher indexing strategy rates and caps, the Silver Select could offer more long-term growth potential.
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.
Oxford Life Insurance Company
Oxford Life Insurance Company, founded in 1965, specializes in offering life insurance and annuity products primarily tailored to the senior market. As a subsidiary of U-Haul Holding Company, Oxford Life focuses on helping individuals achieve their financial goals through products that provide stability and support for retirement planning.
The company offers a range of annuities, including Multi-Year Guaranteed Annuities (MYGA) and Indexed Annuities. Some notable products include the Multi-Select MYGA, which provides guaranteed interest rates for periods ranging from 3 to 10 years, and allows penalty-free withdrawals of up to 10% of the contract's value after the first year. Additionally, indexed annuity offerings like Silver Select and Silver Select come with premium bonuses to enhance initial account values, making them competitive choices for those seeking long-term growth with a guaranteed income stream during retirement.
Oxford Life operates in 48 states and the District of Columbia, offering broad availability of its products. One of Oxford Life's standout features is its home health care benefit, which waives surrender charges if the policyholder requires home health care, adding an additional layer of flexibility to its annuities.
Oxford Life has built a strong reputation for customer service and financial stability, earning an A (Excellent) rating from AM Best, reflecting its solid financial performance and its ability to meet policyholder obligations.
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 Oxford Life Silver Select Fixed Indexed Annuity offers a good combination of growth potential and income security, making it an attractive choice for individuals planning for retirement. Its standout feature is the 4% premium bonus, which immediately boosts the account value, providing a head start on accumulation. With access to indexed strategies that allow for participation in market growth while protecting against market downturns, this annuity is ideal for conservative investors seeking growth with principal protection. Additionally, the Guaranteed Lifetime Withdrawal Benefit (GLWB) ensures a stable income stream for life, which can be crucial in retirement planning. However, it’s important to consider the annuity's fees, including the cost of the GLWB rider, and its long surrender charge period, which may limit liquidity for those needing early access to funds.
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.