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 Symetra Income Edge Fixed Indexed Annuity. The Income Edge FIA is a deferred, fixed-indexed annuity that may be a suitable option for individuals seeking tax-deferred growth and downside protection, with a primary focus on lifetime income withdrawals. This feature offers a guaranteed income for life through regular withdrawals from the contract, providing predictable and reliable income that continues even if the contract value is depleted to $0. After conducting extensive research and due diligence, I have provided a comprehensive and unbiased analysis of this plan.
The review of the Symetra Income Edge 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 Symetra Income Edge 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 fixed-indexed annuity that offers tax-deferred growth and downside protection with a core focus on lifetime income withdrawals.
Let’s have a look at the high-level fine print of the Symetra Income Edge Fixed Indexed Annuity, and then we will discuss each point in detail.
| Product Name | Symetra Income Edge |
|---|---|
Issuing Company | Symetra Life Insurance Company |
AM Best Rating | A (3rd of 13 ratings) |
Withdrawal Charge Period(s) | 7 years |
Maximum Issue Age | 85 Years |
Minimum Initial Purchase Amount | $10,000 |
Surrender Charge Schedule | 8%, 8%, 7%, 7%, 6%, 5%, 4%, 0% |
Crediting Period and Strategies |
|
Plan Types |
|
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
|
Free Benefits |
|
Surrender Value | Account Value less any withdrawal charges/MVA |
Riders | Paid Guaranteed Lifetime Withdrawal Benefit (GLWB) rider |
RMD Friendly | Yes |
Guaranteed Minimum Value | The guaranteed minimum value is 87.5% of the purchase payment accumulated at 2.80% each year, less prior withdrawals and partial annuitization accumulated at 2.80% |
Product Policy
How does the Symetra Income Edge Fixed Indexed Annuity policy work?
Any annuitant, up to a maximum age of 85 at the time of policy issuance, can purchase the Symetra Income Edge Fixed Indexed Annuity with a minimum initial investment of $10,000. In return, they will earn market index returns, calculated using a specific formula that will be discussed later, and credited according to the chosen crediting period. In addition to the regular crediting period, earnings credits may also be triggered by certain events, such as free withdrawals, a long-term care event, a terminal illness or injury, or when a death benefit becomes payable. Beyond this contract growth mechanism, the annuity also includes a Guaranteed Lifetime Withdrawal Benefit (GLWB), which will be explored in detail later in this review.
The Symetra Income Edge Fixed Indexed Annuity allows the annuitant to choose from one or more of the two available indexes—S&P 500 Index and JP Morgan ETF Efficiente 5 Index—to determine their earnings crediting formula. Both indexes provide one strategy each. Additionally, the plan features a fixed-rate guaranteed interest strategy, bringing the total number of strategy options to 3. Below, we will briefly discuss each available index.
1. S&P 500® Index
This widely recognized index comprises 500 leading U.S. companies across diverse industries, serving as a barometer for the overall U.S. equity market. Within the Edge Elite annuity, the S&P 500® Index offers four crediting strategies, allowing annuitants to benefit from the growth potential of the U.S. stock market while safeguarding against downside risk.
2. JPMorgan ETF Efficiente® 5 Index
This index employs a diversified, multi-asset strategy, allocating across various asset classes, including equities, fixed income, and commodities, through exchange-traded funds (ETFs). It aims to achieve consistent returns with controlled volatility. The Edge Elite annuity offers five crediting strategies associated with this index, catering to investors seeking balanced growth with a focus on risk management.
Note: The JPMorgan ETF Efficiente® 5 Index is a volatility-controlled index, meaning it aims to manage market fluctuations by adjusting asset allocations to maintain a target volatility level. While this approach helps control downside risk, it also limits potential upside gains. As a fixed indexed annuity investor, you already benefit from built-in downside protection, making the added volatility control less advantageous. In fact, the upside limitations imposed by these strategies may hinder your ability to achieve higher returns, which could be a drawback when compared to other index options with greater growth potential.
Fixed Rate: 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 Fixed Value Rate for the 7-year withdrawal charge period for the low band ($10,000 - $99,999) at the time of writing this article was 3.65%. You can view the latest rates of this annuity on the company’s website.
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 and caps that the company has 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 Symetra Income Edge Fixed Indexed Annuity rate sheet (as of January 2025) to understand how the earnings are determined.
The first thing to note is that the annuity offers the option to choose from two indexes, each with a cap rate strategy. Besides the two cap-based strategies, the company also offers a fixed-rate strategy. In total, this provides the flexibility to allocate the contract across three strategies, including two index-based options and one fixed-rate option. Additionally, you will notice that there are two funding bands: $10,000–$99,999 and $100,000 or more. A higher purchase payment places you in the higher band, which qualifies for better interest rates. Below, we discuss the types of crediting strategies offered by the company:
- Cap Rates: This refers to the maximum limit on the interest that can be credited to your annuity. For example, if an index returns 12% but the contract’s cap rate is 6%, the annuitant will receive an interest credit of only 6%. No matter how much the index exceeds the cap rate, the maximum interest that can be credited to the contract will always be limited to the cap rate.
- Fixed Interest Rate: If you opt for a declared strategy / 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 3.65%, which is higher than what most fixed-indexed annuities offer.
You will notice that the Symetra Income Edge annuity offers lower cap rates compared to a growth-focused annuity like the Symetra Edge Elite. This is because the Income Edge annuity is designed primarily to provide guaranteed lifetime withdrawal benefits (GLWB), rather than emphasizing growth or accumulation. Its primary objective is to deliver predictable income throughout retirement rather than maximizing market-linked returns. We will explore this aspect further in the Riders section of this annuity review.
Riders
The primary USP of this annuity is the Guaranteed Lifetime Withdrawal Benefit (GLWB) rider it offers. The Guaranteed Lifetime Withdrawal Benefit (GLWB) rider in the Symetra Income Edge Fixed Indexed Annuity provides policyholders with a reliable source of income for life, regardless of market performance or contract value depletion. This rider ensures that annuitants can withdraw a guaranteed amount annually, offering financial security and predictability in retirement.
A key advantage of the GLWB rider is its increasing withdrawal percentages if income withdrawals are delayed. For the first 10 years of the contract, the withdrawal percentage increases annually, allowing policyholders to optimize their retirement income by deferring withdrawals.
How Withdrawals Are Calculated
The amount that an annuitant can withdraw each year under the GLWB rider is determined by the following formula:
Lifetime Withdrawal Percentage × Account Value = Annual Lifetime Withdrawal Amount
- The lifetime withdrawal percentage is based on the annuitant’s age at the time withdrawals begin and the number of years since the contract was issued.
- The account value refers to the current balance of the annuity contract, which may fluctuate based on index performance and any prior withdrawals.
- Even if the account value reaches zero, the annuitant will continue to receive the guaranteed withdrawal amount for life, given no excess withdrawals take place.
Withdrawal Options
Symetra offers two primary withdrawal options under the GLWB rider:
Level Withdrawal Option
- Provides a fixed, guaranteed withdrawal amount for life.
- The withdrawal percentage increases annually for the first 10 years if no withdrawals are taken, allowing for higher lifetime income.
- Ensures consistent, predictable income regardless of market conditions.
Index-Linked Withdrawal Option
- Offers guaranteed lifetime withdrawals with potential annual increases based on index performance.
- If the chosen index performs positively, the withdrawal amount can increase, providing an opportunity for growth and inflation protection.
- Like the level option, the withdrawal percentage increases annually if withdrawals are deferred.
Note that for joint life policies, the withdrawal percentages are reduced by 50 basis points (0.50%) for each withdrawal percentage, reflecting the extended coverage provided for both individuals.
Rider Charges
The GLWB rider carries an annual fee of 1.2% of the contract value, which is deducted each year. This charge remains fixed throughout the contract duration and is assessed based on the account value at the time of calculation. While this fee ensures the annuitant receives lifetime income, it is important to consider its impact on the overall contract value and potential growth.
Key Considerations
- Flexibility: Annuitants can terminate the GLWB rider after the fifth annual interest term, though termination means lifetime withdrawals will no longer be available.
- Impact of Excess Withdrawals: Taking withdrawals beyond the guaranteed amount may reduce future benefits and is subject to surrender charges.
- Income Certainty vs. Growth Potential: While the level option provides predictability, the index-linked option offers the potential for increasing income, aligning with varying financial goals.
Also, as with most annuities, the Symetra Income Edge Fixed Indexed Annuity also 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 30 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 with a prognosis of 12 months or less. 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.
Surrender/Early Withdrawal Charge
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 Symetra Income Edge Fixed Indexed Annuity:
| Contract Year | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8+ |
|---|---|---|---|---|---|---|---|---|
7-Year Plan | 8% | 8% | 7% | 7% | 6% | 5% | 4% | 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 Symetra Income Edge Fixed Indexed Annuity is in line with all the other annuity issuers.
Contract/Administrative Charge
The Symetra Edge Elite Fixed Indexed Annuity levies no annual contract or administrative fees
What Makes This Product Stand Out?
The Symetra Income Edge Fixed Indexed Annuity offers a few features that make a favorable case for this annuity. The ones that I like the most are
- GLWB Rider with Growth Potential: The GLWB rider provides lifetime income withdrawals that have the potential to grow both before and after withdrawals begin, offering increased income over time to help keep pace with financial needs.
- The annuity guarantees a minimum value of 87.5% of the purchase payment, accumulated at an interest rate of 2.80% per year, ensuring a baseline level of growth regardless of market performance.
- No annual contract, mortality & expense, or administrative fees
- Free Confinement and Terminal Illness Waiver Benefit
- Multiple Payout Options: Lumpsum or Annuitization option with Life Only, Life with Period Certain, Joint and Survivor Life, etc.
What I Don’t Like
There are certain aspects of the product that could offer more value to annuitants. Some of the features that I find less favorable include:
- Relatively Lower Cap Rates: Compared to other fixed indexed annuities designed for growth, the cap rates offered by this annuity are lower, which may limit the potential for higher interest credits.
- Limited Indexing Options: The product offers fewer index choices compared to similar annuities in the market, which may restrict diversification opportunities and limit growth potential.
- Higher GLWB Rider Cost: The cost of the Guaranteed Lifetime Withdrawal Benefit (GLWB) rider is relatively higher compared to other similar annuities. Many competing products offer a separate income base that grows at a predetermined and often higher rate than the account value, which enhances future income potential. In contrast, the Symetra Income Edge annuity calculates lifetime income payments based on the account value, which may result in lower withdrawal amounts over time.
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.
Symetra Life Insurance Company
Symetra Life Insurance Company, established in 1957, is a U.S.-based provider of retirement plans, employee benefits, annuities, and life insurance. Headquartered in Bellevue, Washington, Symetra operates through a network of independent distributors nationwide. In 2016, Symetra was acquired by Sumitomo Life Insurance Company, one of Japan's leading life insurers, for $3.8 billion. This acquisition has strengthened Symetra's financial foundation, enabling strategic growth and product development.
Symetra offers a diverse range of products tailored to individuals and businesses:
- Life Insurance: Term life, indexed universal life, and variable universal life policies designed to provide financial protection and flexibility.
- Annuities: Fixed, fixed indexed, and immediate annuities aimed at delivering stable income streams for retirement planning.
- Employee Benefits: Group life, disability, and medical stop-loss insurance solutions catering to employers seeking comprehensive benefits packages.
It is rated as follows by the rating agencies:
| Rating Agency | Rating |
|---|---|
AM Best | A |
Moody's | A1 |
S&P Global | A |
Symetra Life Insurance Company’s financial strength is reflected in the following figures as of FY2023:
- Total Assets: $63.7 billion
- Investment Portfolio: $51.3 billion
- Investment Grade Portfolio: 96.9%
- Stockholder’s Equity: $2 billion
- Employees: 2500+
Going by the operating history, financial numbers, and ratings, we can safely gauge that you can trust your savings with the Symetra Life Insurance Company.
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 Symetra Income Edge Fixed Indexed Annuity presents a decent option for individuals seeking a reliable and predictable source of lifetime income with downside protection. Its standout features, such as the Guaranteed Lifetime Withdrawal Benefit (GLWB) rider with growth potential, no annual contract fees, and flexible payout options, make it an attractive choice for those prioritizing income security in retirement. Additionally, the inclusion of benefits like the Guaranteed Minimum Value and free waiver provisions for confinement and terminal illness add further value. However, the annuity comes with certain trade-offs that potential buyers should consider. Its relatively lower cap rates, limited indexing options, and the higher cost of the GLWB rider may make it less competitive compared to other annuities with stronger growth potential.
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.