How it works
EquiTrust MarketSeven Fixed Indexed Annuity: product description and policy
The EquiTrust MarketSeven is a Fixed Indexed Annuity (FIA) plan that offers the annuitant (annuity investor) the opportunity to earn a portion of market-indexed return without incurring the risk of market downside. This is a suitable plan for individuals looking for a simple, fixed-indexed annuity that offers tax-deferred growth and downside protection, with a core focus on accumulation.
Let’s have a look at the high-level fine print of the EquiTrust MarketSeven Fixed Indexed Annuity, and then we will discuss each point in detail.
| Product Name | EquiTrust MarketSeven |
|---|---|
| Issuing Company | [EquiTrust Life Insurance Company](https://annuityrateshq.com/reviews/equitrust-life-insurance-co-annuity-reviews) |
| AM Best Rating | B++ (5th of 13 ratings) |
| Withdrawal Charge Period(s) | 7 years |
| Maximum Issue Age | 85 Years |
| Minimum Initial Purchase Amount | $10,000 |
| Crediting Period and Strategies | - 1-year point-to-point with participation rate - 1-year point-to-point with cap rate - 1-year performance trigger - 1-year monthly cap - 1-year monthly average participation - 2-year point-to-point with participation - 1-year fixed with interest rate guaranteed |
| Plan Types | - IRA - Roth IRA - Nonqualified Account - SEP IRA - SIMPLE IRA - 401(a) |
| Indexes | - S&P 500 Index - S&P 500 Dynamic Intraday TCA Index - Barclays Focus50 Index - S&P MARC 5% Excess Return Index |
| Free Withdrawals | 10% of the annuity’s Accumulated Value per year |
| Death Benefit | Upon the annuitant’s death, the beneficiary will get greater of (i) Account Value or (ii) Surrender Value |
| Free Benefits | - Guaranteed Accumulation Value Benefit - Nursing Home and Terminal Illness Waivers |
| Riders | No optional paid riders |
| Surrender Value | Full Account Value less any withdrawal charges/MVA |
| Surrender Charge Schedule | 9%, 8%, 7%, 6.5%, 5.5%, 4.5%, 3.5%, 0% |
| RMD Friendly | Yes |
How does the EquiTrust MarketSeven Fixed Indexed Annuity policy work?
Any annuitant (maximum age at the time of policy issue: 85) can purchase the EquiTrust MarketSeven 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, various events may trigger earnings credit: free withdrawals, long-term care events, terminal illness or injury events, or when a death benefit is payable.
The EquiTrust MarketSeven Fixed Indexed Annuity allows the annuitant to choose from one or more of the four indexes (S&P 500 Index, S&P 500 Dynamic Intraday TCA Index, Barclays Focus50 Index, and S&P MARC 5% Excess Return Index) to determine their earnings crediting formula. The S&P 500 index has 6 crediting strategies; S&P 500 Dynamic Intraday TCA has 2, and the other two indexes have 1 strategy each. The plan also offers a fixed-rate guaranteed interest strategy, bringing the total to 11. We will discuss each available index briefly:
1. S&P 500 IndexThe 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 EquiTrust MarketSeven Fixed Indexed Annuity offers the S&P 500 index with cap rates, participation rates, and performance-trigger 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.2. S&P 500 Dynamic Intraday TCA IndexThe S&P 500 Dynamic Intraday TCA Index is a financial index designed to provide exposure to the S&P 500 through the use of E-mini S&P 500 futures. This index employs a dynamic approach, utilizing 13 observation windows throughout the trading day to adapt to changing market conditions. By doing so, it aims to offer a more stable volatility experience for investors. The index combines a trend-following mechanism with the capability to rebalance multiple times during the day, allowing it to respond swiftly to market movements and optimize performance.3. Barclays Focus50 IndexThe Barclays Focus50 Index is a rules-based equity index that selects and tracks a portfolio of 50 large-cap U.S. companies from the S&P 500. It is designed to focus on factors such as growth, quality, and stability, which are believed to contribute to long-term outperformance. The index's strategy combines these equities with U.S. Treasury bonds, creating a dynamic mix that seeks to balance growth opportunities with risk management. By employing this approach, the Barclays Focus50 Index aims to offer investors a potentially more stable investment option in the U.S. stock market. However, it is important to note that although this approach aims to protect against market downturns, it also limits the index upside.4. S&P MARC 5% Excess Return IndexThe S&P MARC 5% Excess Return Index is a multi-asset index designed to provide diversification within a risk-weighted framework. It tracks three underlying component indices representing equities (S&P 500), commodities (S&P GSCI Gold), and fixed income (S&P 10-Year U.S. Treasury Note futures). The index dynamically rebalances between these asset classes and cash to target a 5% level of volatility. This approach aims to protect against market downturns but also limits the index upside.
Note: 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 1-year Fixed Value Rate for the 10-year withdrawal charge period at the time of writing this article was 4.50%. Notably, at the time of writing, this was among the highest fixed-rate strategies offered by an indexed annuity. However, these rates change frequently, and you must check with your trusted financial advisor to know the latest rates.
At the time of this review (Oct 2024), this was the published figure. For current rates, see Current Rates ↓.
Riders and waivers
Riders and waivers
The EquiTrust MarketSeven Annuity doesn't offer any optional paid riders; however, as with most annuities, the EquiTrust MarketSeven Annuity has free in-built nursing homes 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 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 75% 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.
Besides the Nursing Home Waiver and the Terminal Illness Waiver, the company also offers a Guaranteed Accumulation Value Benefit and Minimum Guaranteed Contract Rate (MGCR) provision.
Guaranteed Accumulation Value Benefit - At the end of year seven, your Accumulation Value is guaranteed to be at least 107% of your total premiums, minus any partial withdrawals.
Minimum Guaranteed Contract Rate (MGCR) - The Minimum Guaranteed Contract Rate (MGCR) provision ensures that the account value of your annuity will be no less than 87.5% of the initial premium, adjusted for any withdrawals, upon reaching the 10-year milestone.
Suppose you invest an initial premium of $100,000 in an annuity product that offers an MGCR feature. Over the course of 10 years, you make withdrawals totaling $20,000.
Initial Premium: $100,000
Total Withdrawals: $20,000
Withdrawals (in %): 20%
The MGCR feature guarantees that your account value will be at least 87.5% of the initial premium, less any withdrawals, at the 10th anniversary.
MGCR Calculation:
87.5% of Initial Premium = 0.875 * $100,000 = $87,500
Adjusted for Withdrawals: $87,500 - 20% = $70,000
Therefore, at the end of the 10-year period, the MGCR ensures that your account value will not be less than $70,000, regardless of market conditions or investment performance.
Contract/Administrative Charge
The EquiTrust MarketSeven Fixed Indexed Annuity levies no annual contract or administrative fees.
Carrier
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.
EquiTrust Life Insurance Company
EquiTrust Life Insurance Company, established in 1996, is a national provider of annuity and life insurance products. Known for its niche offerings, EquiTrust specializes in fixed-indexed annuities and single-premium life insurance products. The company has developed a strong reputation, particularly among retirees, due to its focus on wealth transfer solutions and income annuities.
The company was acquired by Guggenheim Partners in 2011, which further strengthened its investment management capabilities. Despite its relatively small size in the industry, EquiTrust has consistently been recognized for its financial stability, having been listed in the Ward’s Top 50 life and health insurance companies for several years.
EquiTrust serves customers nationwide through independent agents and independent marketing organizations (IMOs), focusing primarily on providing income solutions and helping individuals secure their financial future through tax-deferred growth options.
It is rated as follows by the rating agencies:
| Rating Agency | Rating |
|---|---|
| AM Best | B++ |
| S&P | A- |
| Fitch Ratings | A- |
Although the ratings are not the best when we compare them with bigger players, they are good enough for you to consider buying an annuity. As of year-end 2024, some of the financial highlights for EquiTrust Life Insurance Company include its:
- $2.4 billion of capital and surplus
- $33.6 billion in total assets
- 96% of assets invested in Investment-Grade portfolio
Going by the operating history, financial numbers, and ratings, we can safely gauge that you can trust your savings with EquiTrust Life Insurance Company.
Pros
The plan offers the S&P Index with decent indexing options
Higher Cap, Participation, and Performance-triggered rates
Free Guaranteed Accumulation Value Benefit and MGCR Provision
Free Confinement and Terminal Illness Waiver Benefit
This no-fee rider is automatically included for owners under age 60 and includes both a Qualified Nursing Care and Terminal Illness Benefit.
Multiple Payout Options
Lump sum or Annuitization option with Life Only, Life with Period Certain, Joint and Survivor Life, etc.
Cons
Surrender charges are somewhat higher when compared to similar annuities
Conclusion
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 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 EquiTrust MarketSeven FIA is a decent annuity that helps you grow your retirement account with less risk. With relatively higher caps, participation rates, and performance-triggered crediting options, it has the potential to deliver stronger growth compared to many other fixed indexed annuities. Its straightforward structure, without additional paid riders, will appeal to investors who prefer simplicity and do not wish to deal with the complexity often associated with optional riders. However, the company’s B++ AM Best rating may be a consideration for those who prioritize insurers with higher financial strength ratings. As such, this product may be better suited for investors who place greater emphasis on crediting potential and product simplicity than on insurer ratings alone.