Introduction
The Accumulation Protector Plus Annuity is a fixed-indexed annuity that can help you accumulate wealth while also protecting your capital from any market downturns. The Accumulation Protector Plus is a tax-deferred, relatively safe financial product that offers protection and growth potential no matter the economic conditions. This stability and reliability of its return make the Accumulation Protector Plus Annuity a sound investment for those with a low tolerance for risk. For example, if you are looking to retire soon and need a long-term strategy to grow your principal without putting your capital at risk then this annuity could be a good choice for you.
Before reading this review, remember that fixed indexed 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 will take an in-depth review of the Sentinel Security Life Accumulation Protector Plus Annuity and offer an unbiased opinion of whether or not this annuity is right for you. I’ve broken the article into the following 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 Sentinel Security Life Accumulation Protector Plus Annuity is a safe and reliable fixed-income annuity that offers growth potential whether the market goes up, down, or stays the same. As a fixed-income asset, this annuity competes with the likes of CDs, Savings Bonds, Money Market Funds, and Treasury Bills. If you use any of these products as part of your retirement strategy then you’ll likely want to consider the Sentinel Security Life Accumulation Protector Plus Annuity. First, I’ll take a high-level look at the Sentinel Security Life Accumulation Protector Plus Annuity. Then, I will discuss each point in detail:
| Product Name | Accumulation Protector Plus Annuity |
|---|---|
Issuing Company | |
AM Best Rating | B++ |
Withdrawal Charge Period(s) | You can withdraw up to 5% of your Account Value from the second contract year onwards. |
Maximum Issue Age | 85 |
Minimum Initial Purchase Amount | $5,000 |
Surrender Charge Schedule | 10%, 9%, 8%, 7%, 6%, 5%, 4%, 3%, 2%, 1% |
Crediting Period and Strategies | This plan offers ten crediting strategies linked to three indexes and one fixed rate strategy |
Plan Types |
|
Indexes |
|
Fee Withdrawals | In the second contract year, 5% of your account value or your Required Minimum Distribution, whichever is greater. With the Rate Enhancement Rider, this 5% increases to 10%. |
RMD Friendly | Yes |
Death Benefit | In non-California states, upon the annuitant’s death, the beneficiary will receive an amount equal to the greater of the Account Value less any Non-Vested Premium Bonus or the Minimum Guaranteed Surrender Value determined as of the date of death. |
In California, upon the annuitant’s death, the beneficiary will receive an amount equal to the greater of the Account Value or the Minimum Guaranteed Surrender Value determined as of the date of death. | |
Riders | Paid Rate Enhancement Rider with 0.95% fee |
Free Benefits | Free Nursing Home Waiver and Terminal Illness Waiver that allows you to make penalty-free waivers if certain conditions are met |
Premium Bonus | One-time premium bonus of 10% vested over 10 years |
Pricing Guarantee | 110% Return of Premium Guarantee if Rate Enhancement Rider is purchased |
Product Policy
How does the Sentinel Security Life Accumulation Protector Plus Annuity policy work?
The Sentinel Security Life Accumulation Protector Plus Annuity can help you accumulate wealth in both bull and bear markets. When you sign up for this annuity, you’ll have the ability to choose how your premium is allocated across ten different crediting strategies. These strategies are linked to three indices: the CS Momentum Index, CS ESG Macro 5 Index, and the S&P 500 Index.
The eleven strategies that you can choose from include:
- Fixed Rate account: An interest rate that is fixed at the beginning of the contract, valid for 1 year.
- Trigger Rate account: A flat or positive index return triggers the declared interest rate to be credited to the contract value. If the index return is negative, no interest is credited, but there will be no loss, and the contract value will remain the same. However, if the change in the value of the index during a particular year is zero or positive, the declared index gain interest rate is multiplied by the option’s account value to determine the index interest credits. The declared interest rate is set at contract issue and applies for the entire withdrawal charge period. In this case, the Trigger rate on gain for the Momentum Index is 9%. It means that if the Momentum Index doesn’t go negative for a given 1-year period (even if the growth is 0% and not negative), the interest credited to the annuity will be 9% irrespective of the Momentum Index actual return. This option is advantageous if you anticipate that the index will experience minimal growth but will not decline.
- 8 Point-to-Point with Participation Rate Strategies: The participation rate describes the annuitant’s participation percentage in a return of an index. For example, suppose the participation rate is 60%, and the index returned 10% over the agreed time (generally one-year point-to-point). In that case, the annuitant will be eligible for only 60% of the return, i.e., 6%. The formula for the same is (Participation Rate % X Index Return).
- 1 Point-to-point with Cap rate strategy: Cap rate means the rate at which your interest-earning capacity is capped. For example, if an index returned 13% but your contract’s cap rate is 7%. In this situation, You will be eligible for an interest credit of 7% only. It doesn’t matter how much the index goes above the cap rate; the maximum interest you can earn is the cap rate.
In simple terms, if the market goes up during any given year then you can expect to earn a return that’s contingent on the crediting strategy that you selected. But, the Sentinel Security Life Accumulation Protector Plus Annuity will also protect your principal in the event of a market downturn. During a market downturn, you will not lose money, including interest. This is because your money is allocated to the annuity itself as opposed to an index.
However, please note that while the Accumulation Protector Plus Annuity is tied to market indices that does not mean that you will earn a market-like return. You will still earn only a part of the index return (through rate limiting mechanisms like the cap rate and the participation rate as mentioned above), even if the market has an exemplary year.
In the fixed rate strategy, the Accumulation Protector Plus Annuity offers a 1st year fixed rate of 4.25% (5.20% with the rate enhancement rider). This rate is guaranteed for one year with future returns dependent on the performance of the underlying indices.
Rates and Costs
The earnings crediting formula
There are no unexpected rates or costs associated with the Sentinel Security Life Accumulation Protector Plus Annuity. But, the earnings crediting formula is the most important part of this annuity discussion. It is important to know that you will not simply get the index return credited to your return. There are a few participation rates, caps, and spreads that the company has in place that affect your earnings. The company has the right to change these rates at any time.
As of August 2024, the rate sheet for the Sentinel Security Life Accumulation Protector Plus Annuity is as follows.
Besides the regular interest crediting options, the annuitant is also eligible for a 10% one-time premium bonus, which vests over a period of 10 years. This acts as an "initial boost" to the annuity.
Riders
The Sentinel Security Life Accumulation Protector Plus Annuity offers a paid Rate Enhancement Rider. This feature increases the amount available for free withdrawal from 5% to 10% of your annuity’s Account Value. Additionally, this rider opens the opportunity to let you earn more interest as it increases the Fixed, Participation, and Cap Rates across your annuity’s crediting strategy. This creates the potential to increase the index’s upside because your premium has access to a larger percentage of the index’s growth.
The Accumulation Protector Plus Annuity offers a 110% Return of Premium (ROP) Guarantee if the Rate Enhancement Rider is purchased and the contract persists to year 10. The premium is adjusted for withdrawals.
However, keep in mind that the Rate Enhancement Rider requires an additional fee which can hurt your returns over time and increase the amount that you will have to pay out of pocket. As of August 2024, the cost for the Rate Enhancement Rider is 0.95% of the account value, annually. I’d recommend speaking with your trusted financial advisor to determine whether or not this rider is a good fit for your investment needs.
What Makes This Product Stand Out
The Sentinel Security Life Accumulation Protector Plus Annuity is unique among other annuities because it offers investors access to the CS Momentum Index. It also offers a 10-year guarantee of participation rates through the index. If you select the One-year point-to-point or Two-year point-to-point crediting strategies then the Participation Rates for the CS Momentum Index are guaranteed for 10 years.
Indexes Offered
The CS Momentum Index offers investors exposure to a diversified range of assets across the globe. This index offers four main benefits to investors:
Diversification: This index tracks assets across four regions and three asset classes in an effort to generate consistent returns over time, while also diversifying your capital.
Momentum: The main goal of this index is to gain exposure to components that exhibit the strongest trends while reducing exposure to components with weaker trends. This strategy is designed to help track areas that have stronger momentum and capitalize on their growth.
Risk-Adjusted Weights: Index components are weighted inversely to their risk in an attempt to build a risk-balanced allocation.
Risk Control: The Index targets an annualized volatility of 5% or less to help stabilize returns.
Exposure to the CS Momentum Index can be valuable for investors who are looking to diversify their holdings outside of just U.S. markets and indices. For example, most financial products in the U.S. are tied to the S&P 500, Dow Jones Industrial Average, and NASDAQ. If you want to increase your diversification even further then the Accumulation Protector Plus Annuity can help you gain access to international assets. This can help protect your capital if you feel that there is an inherent risk in the U.S. markets over the coming decade (or if you just want to get exposure to a global range of assets).
The CS ESG Macro 5 Index is a fully rules-based index that offers innovative exposure to multiple asset classes with a focus on environment, social and governance (ESG) standards. In an attempt to generate consistent returns over time, the Index implements a strategy that combines an ESG equity component and a macro component (comprised of sub-strategies across fixed income, commodities, and currencies components), complemented by a daily risk control mechanism. This daily adjustment is done to target index volatility at 5%, and generate consistent returns over time. Note that while this volatility control mechanism limits the downside, it also limits the upside.
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.
Another benefit of the Accumulation Protector Plus Annuity is that it is Minimum Distribution friendly and requires a relatively low commitment of $5,000. This low capital commitment can be beneficial if you are looking to allocate your capital to a number of different financial products and do not want too much capital tied up in one investment. $5,000 is a fairly modest minimum investment, especially compared to other financial products on the market.
What I Don’t Like
The downside to investing in the Sentinel Security Life Accumulation Protector Plus Annuity is that it has a 10-year surrender charge. So, if you choose to invest in this annuity then make sure that you will not need to access this capital for at least 10 years. Also, this annuity offers free withdrawals of just 5% per year, as compared to the 10% that most fixed-indexed annuities offer. To access a rate of 10%, you'll need to opt for an additional rate enhancement rider that costs 0.95% of your account value, annually; although offers some additional benefits like higher participation and cap rates across strategies.
With that said, remember that this annuity has a fairly low commitment of just $5,000. This low minimum investment allows you to invest however much of your portfolio you’d like in this annuity.
Another potential issue with this annuity is that it charges market value adjustment. These are essentially additional charges for taking out early from an annuity if you withdraw funds early. Again, make sure that you are comfortable keeping your investment tied up for ten years before proceeding with this product.
Company Details
Sentinel Security Life
Sentinel Security Life is a financial services company that has been in business since 1948 and is based in Salt Lake City, Utah. This company offers a wide range of financial products including:
Sentinel Security Life got its start when a group of Utah funeral directors saw that there was a need for an insurance product that could help families pay for funeral costs. This initial product was designed to help families pay for the final expenses of a loved one. Over the past seventy years, Sentinel Security Life has expanded to offer a more comprehensive suite of financial products and has also experienced many name changes throughout the years.
According to its 2023 financial statements, Sentinel Group has sold over $1.7 billion in annuity contracts., and is rated B++ by AM Best.
Conclusion
Today’s retirees have to plan for longer retirements than previous generations. They also have a wide range of financial products to choose from when it comes to financing their golden years. Although these are both good problems to have, they can both make the retirement planning process seem incredibly daunting.
With advancements in technology and medicine, the average American is living longer than ever. This means that it’s crucial to have a source of income that you can rely on during your retirement to help keep money coming in the door. Implementing the use of a fixed-income asset, such as the Accumulation Protector Plus Annuity, can help mitigate the risk of outliving your savings.
The Sentinel Life Accumulation Protector Plus Annuity offers a solid start for investors, particularly with its 10% bonus, which provides an immediate boost to the account value. However, the product's low accumulation and participation rates on the non-enhanced version limit its long-term growth potential compared to more competitive options. Additionally, the B++ rating by AM Best signals financial stability but falls short of the higher ratings, which may be a concern for those prioritizing top-tier financial strength. Investors should weigh these factors when considering this annuity.
But, at the same time, this doesn’t necessarily mean that the Accumulation Protector Plus Annuity is the right one for you. Choosing the right annuity is a complicated, life-changing decision that depends on dozens of factors such as the current economic conditions, your personal financial goals, and life’s never-ending stream of curveballs. To help make this decision-making process easier for you, we regularly conduct in-depth reviews of various annuity products, examining features, costs, and potential benefits.
To learn more about the world of annuities and learn which products might be a good fit for you, be sure to check out our extensive reviews of annuities.