TruStage MEMBERS Future Income Annuity Review

The features of the MEMBERS Future Income Annuity remain consistent across all deferral durations, with the only variations being the interest rates and the withdrawal charge schedule associated with each term.

Product Policy

How Does the MEMBERS Future Income Annuity Policy Work?

The MEMBERS Future Income Annuity is a deferred income annuity designed to provide predictable and guaranteed income for life, making it an ideal choice for retirement planning. Here’s how it works:

Initial Contribution
The annuity requires a minimum initial payment of $10,000 to get started, with the option to make additional contributions of at least $5,000 each. The maximum purchase payment without prior approval is capped at $999,999.
Once your funds are allocated, they begin to accrue income, which will be payable starting on the selected future date.
Deferral Period and Growth
Payments begin at a deferred date, no sooner than 13 months after the policy is issued. During this deferral period, the funds grow, allowing for a higher guaranteed income once payouts start.
The deferral can be extended or modified within the policy’s terms, providing flexibility based on life circumstances
Payment Options
The MEMBERS Future Income Annuity offers multiple payout options, including:
Life Only: Provides the highest initial income, with payments guaranteed for your lifetime.
Life with Cost of Living Adjustment (COLA): Annual increases of 1%, 2%, or 3% help payments keep pace with inflation.
Joint Life with 100% Survivor Benefits: Ensures payments continue for the lifetime of both you and a designated loved one.
Life with Cash Refund or Guarantee Period: Protects your beneficiaries by ensuring they receive any remaining principal or payments if you pass away prematurely.
Additional Features
Acceleration of Benefits: You may opt to receive up to six months of payments in a lump sum twice during the life of the annuity, resuming regular monthly payments afterward.
Rate Lock: The annuity rate is locked for 15 days upon application, extending to 45 days if funds are delayed, ensuring you benefit from favorable rates.
Tax Advantages
As a tax-deferred product, growth within the annuity is not taxed until payouts begin. For non-qualified contracts, a portion of the income may even be tax-exempt.

Example

Imagine you purchase the MEMBERS Future Income Annuity at age 60 with an initial contribution of $100,000. You decide to defer income for 10 years, planning to start payments at age 70. Depending on your chosen payment option, your annual payout will be calculated based on the initial investment, deferral duration, and whether additional features like COLA are included.

If you select Life Only, your payments will be the highest, providing maximum income for as long as you live.
If you opt for, suppose, Life with COLA at 2%, your initial payment will be slightly lower, but it will increase each year to help combat inflation.

By deferring income, you allow the annuity to accrue more value, which translates into higher lifetime payments compared to starting income immediately.

In the above chart, you can see the rates for various payment options under the MEMBERS Future Income Annuity. Let’s take an example to understand how these rates translate into guaranteed income:

Assumptions:

Age at Issue: 60
Deferral Period: 10 years (Payments begin at age 70)
Initial Premium: $100,000
Selected Rates:
Cash Refund Rate: 13.07%
Life with 10 Years Guarantee Rate: 12.86%

Payment Options:

Cash Refund Option: With the Cash Refund option, payments are guaranteed for the annuitant's lifetime. If the annuitant passes away before the total payments equal the initial premium, the remaining balance (the difference between the premium and payments already received) is refunded to the beneficiary.
Annual Payout: $100,000 × 13.07% = $13,070/year
Payments will continue for life, with a refund of any unused principal to beneficiaries.
Life with 10 Years Guarantee Option: Under this option, payments are guaranteed for the annuitant's lifetime with a minimum guarantee of 10 years. If the annuitant passes away within the first 10 years, the remaining payments for the guaranteed period are made to the beneficiary. After the guarantee period, payments continue for life but with no additional guarantees for beneficiaries.
Annual Payout: $100,000 × 12.86% = $12,860/year
For example, if the annuitant passes away 5 years into the payout period (at age 75), the remaining 5 years of payments ($12,860 × 5 = $64,300) will be provided to the beneficiary. If the annuitant lives beyond the 10-year guarantee period, payments continue for life.

Choosing Between Options: When selecting between these options, it’s important to evaluate your priorities—whether you value higher lifetime income or the assurance of leaving a financial legacy for your loved ones. Understanding how each option aligns with your retirement goals will help you make an informed decision:

Cash Refund prioritizes ensuring the principal amount is either received by the annuitant or refunded to beneficiaries.
Life with 10 Years Guarantee provides slightly lower annual payouts but ensures a minimum income duration, offering added security for beneficiaries during the early years of the payout phase.

Important Note: The rates shown here are indicative and depend on multiple factors, such as:

Current economic conditions
Whether the annuity is for a male, female, or joint policy
Inclusion of additional features, such as Cost of Living Adjustment (COLA) riders

Rates may vary significantly based on these factors, so it’s essential to consult your trusted financial advisor or annuity specialist for the latest and most accurate rates tailored to your specific needs and circumstances.

Suitability of the MEMBERS Future Income Annuity

The MEMBERS Future Income Annuity is designed for individuals who prioritize financial stability and guaranteed income in retirement. It is particularly well-suited for:

Pre-retirees or retirees looking for future income: Individuals who are planning their retirement and want to lock in a guaranteed income stream starting at a later date.
Conservative investors: Those who prefer predictable, stable income over market-linked returns and are willing to trade liquidity for long-term financial security.
Legacy-conscious individuals: With payout options such as cash refund or guaranteed period benefits, it provides opportunities to leave a financial legacy for beneficiaries.
Tax-deferred growth seekers: For individuals who want to defer taxes on their investment growth until payouts begin, this product offers a tax-advantaged option.

This annuity is less suitable for individuals who:

Require immediate income (as the payouts begin after a deferral period).
Value flexibility or liquidity in accessing their funds.
May need riders like long-term care or nursing home waivers.

Riders

The MEMBERS Future Income Annuity is a plain vanilla annuity that does not include optional riders, making it a straightforward choice for individuals seeking simplicity and guaranteed income without added complexities. This simplicity appeals to those who prioritize predictable retirement income over additional features.

However, it's worth noting that many annuities in the market include features such as free nursing home waivers or confinement waivers, which allow penalty-free withdrawals in the event of long-term care needs or hospitalization. These features are absent in this annuity, which may be a consideration for annuitants who are concerned about potential healthcare or confinement costs during retirement.

Contract/Administrative Charge

The MEMBERS Future Income Annuity levies no annual contract or administrative fees.

Advantages of the MEMBERS Future Income Annuity

Guaranteed Lifetime Income: The annuity ensures a steady, predictable income stream for life, providing financial peace of mind during retirement.
Flexible Payout Options: Multiple payout structures, including cash refund and guaranteed period options, allow customization to align with individual needs and legacy goals.
Cost of Living Adjustments (COLA): Optional COLA ensures that payouts can increase annually (by 1%, 2%, or 3%) to keep pace with inflation, maintaining purchasing power over time.
Tax-Deferred Growth: Funds grow on a tax-deferred basis, delaying tax liabilities until the income phase.
Payment Acceleration Feature: The ability to accelerate up to six months of payments twice during the annuity’s lifetime provides limited flexibility for emergencies.
Rate Lock Guarantee: Protects investors from rate fluctuations during the application process, ensuring they benefit from favorable terms.

Disadvantages of the MEMBERS Future Income Annuity

Lack of Riders: Unlike some competing products, this annuity does not offer free riders such as nursing home waivers or confinement waivers, which could provide financial relief during unexpected medical events.
Limited Liquidity: Once funds are committed, they are inaccessible beyond the scheduled payments, except through the limited acceleration feature. This restricts the ability to adapt to changing financial needs.
No Immediate Income: For those who need income right away, this annuity is not suitable as payments begin only after the deferral period.
Inflation Protection Trade-Off: While COLA provides inflation protection, choosing it reduces the initial payment amount, potentially making it less attractive for those requiring higher upfront income.
Complexity of Taxation: While tax deferral is an advantage, the taxation of payouts, especially for non-qualified contracts, can be complex and require professional advice.

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.

CMFG Life Insurance Company

CMFG Life Insurance Company, operating under the brand name TruStage Financial Group (formerly known as CUNA Mutual Group), is a mutual insurance company that provides financial services to cooperatives, credit unions, their members, and other customers worldwide. Founded in 1935 as the CUNA Mutual Insurance Society, the company has grown to serve over 30 million consumers through its lending, retirement, and wealth management products. TruStage Financial Group offers a broad range of insurance and investment products, including commercial and personal insurance, lending services, wealth management, and retirement solutions. Its insurance arm, TruStage, provides various products such as whole and term life insurance, accidental death and dismemberment insurance, auto insurance, property insurance, and annuities. Headquartered in Madison, Wisconsin, the company employs nearly 3,700 people across multiple locations in the United States and internationally.

It is rated as follows by the rating agencies:

Going by the ratings, it is considered to be strong and stable financially. As of December 2023, some of the financial highlights for CMFG Life Insurance Company include its:

$45 billion in Assets
$2.9 billion in policyholder surplus
$42.1 billion in liabilities
$5.43 billion in total sales
$140 million in net income

Going by the operating history, financial numbers, and ratings, we can safely gauge that you can trust your savings with the CMFG Life Insurance Company.

Conclusion

With the advancements in healthcare and technology, the average American today lives longer than ever. So, it’s very important to have a retirement corpus that can grow safely and steadily and have the ability to provide a fixed stream of 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 MEMBERS Future Income Annuity is a straightforward and reliable retirement solution for individuals seeking guaranteed, predictable income in their later years. Its simplicity and flexibility in payout options, including inflation-adjusted payments and beneficiary protection, make it a decent choice for conservative investors who prioritize stability and financial peace of mind. However, the absence of benefits, such as nursing home or confinement waivers, and its limited liquidity may not appeal to those requiring added flexibility or contingency support. Overall, this annuity is well-suited for pre-retirees and retirees with a long-term outlook, who value the security of a lifetime income and are comfortable with the trade-offs of a fixed, deferred annuity structure. As with any financial product, potential buyers should evaluate their unique circumstances and consult a financial professional to ensure the MEMBERS Future Income Annuity aligns with their retirement goals and needs.

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.