Ameritas Advisor Services offers a variety of annuities. These products can turn your retirement savings into a lifetime stream of income. Ameritas has been around for more than 125 years. It’s owned by Ameritas Mutual Holding Company, headquartered in Lincoln, Nebraska. Today, Ameritas provides various retirement plans, investment options and annuities. We’ll explain how their annuities work and what you can expect. But because annuities can be immensely complex products, you should discuss Ameritas annuities with a financial advisor to figure out which one may be right for you.
| Annuity | Fees | Annuity Type | Minimum Initial Premium | More Information |
|---|---|---|---|---|
| Ameritas Compass Index Annuity Find an Advisor |
|
Index annuity | $0 |
Annuity TypeIndex annuityMinimum Initial Premium$0 |
| Ameritas Accumulation 7 Find an Advisor |
|
fixed | $0 |
Annuity TypefixedMinimum Initial Premium$0 |
As with any annuity, its guarantees depend on the claims-paying capabilities of the insurance company. But so far, Ameritas has received notable ratings from industry analysts. It received A+ from Standard & Poor’s and an A from A.M. Best.
Ameritas Compass Index Annuity
The Compass Index Annuity from Ameritas is a flexible premium indexed annuity. The means you can make additional or “flexible” premiums in order to grow your account even more. Plus, Ameritas credits you with an interest rate tied to the performance of one or more of the following stock market indexes.
- Capped S&P 500 Index
- Capped Russell 2000 Index
- Capped MSCI EAFE Index
These indexes reflect the performance of stocks from large companies from various industries. So your earnings can be higher than they would be with a fixed annuity in years when the stock market performs well. And your money grows tax-deferred. So you won’t owe taxes on the earnings until you make qualified withdrawals after you turn age 59.5.
And when you retire, you have the following payout options:
Point-to-Point: Your interest is credited based on the difference in the index’s value on the first day of the month and the last day of the month a year later. It’s subject to a cap, however. So if the difference is 7% and the cap is 5%, you get credited 5%. But Ameritas annuities come with a base value of 0%. This means you would never get interest below 0% even if the difference is negative.
Monthly Average: You get credited an interest based on the change between the index’s starting value of the index and the average of the 12-monthly ending index values over the index period.
But keep in mind that you can allocate your premiums to multiple indexes and even a fixed interest option. You may want to consider allocating some of your money to the fixed option as the company would pay a minimum interest rate on it every year regardless of market performance.
And for additional costs, you can also upgrade your indexed annuity with optional riders. Among them is the Guaranteed Lifetime Withdrawal Benefit (GLWB), which provides you with a guaranteed lifetime income stream even if your accounts’s accumulation value reaches zero.
Fees
As with most indexed annuities, the Ameritas Compass Indexed annuity doesn't require any annual contract fees. However, the GLIB can range from 0.75% to 1% for a single life contract or from 1.50% to 2% for a joint life contract.
After your first year, you have access to 10% of your account value each year. But you’d owe surrender charges if you exceed that amount based on the following schedule.
| Policy Year | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10+ |
| Fee | 8% | 8% | 7% | 6% | 5% | 4% | 3% | 2% | 0 | 0 |
Realistic Return Expectations
Your return would depend on the performance of an index or indexes. Below, we provide the average annualized returns for your index options
- S&P 500: 9.8% for the past 90 years
- Russell 2000 index: 196.2% for the past 10 years
- MSCI EAFE Index: 9.45% each year for the past 10 years
But keep in mind that this index annuities has interest rate caps and a floor of 0%. So you may want to consider allocating some of your premium to a fixed interest option.
Ameritas Accumulation 7
The Ameritas Accumulation 7 is another flexible premium annuity by Ameritas. So you can make additional premium and take more advantage of tax-deferred growth. As a result, you won’t pay taxes on the earnings.
You have the same index options as you would with the Compass Indexed annuity in addition to the uncapped S&P 500® Sector Rotator Daily RC2 5% Index. This is a new index strategy launched in October 2018. It racks the performance of S&P 500 sectors that have had attractive valuations and higher price appreciation compared to other S&P 500 sectors.
And because it’s an uncapped option, your interest rate would reflect the performance of this index entirely. So if it goes up by 7%, you’d be credited with a 7% interest rate. You can also allocate your money toward a fixed-interest account and one or more of the following indexes:
- Capped S&P 500 Index
- Capped Russell 2000 Index
- Capped MSCI EAFE Index
You can open an account with a minimum initial premium of $99,999. But the company credits interest in balance bands. This means you’d get a higher fixed interest rate if you invest more. The maximum is credited to those with investments of $250,000 or more.
At retirement, you have the following payout options:
Point-to-Point: Your interest is credited based on the difference in the index’s value on the first day of the month and the last day of the month a year later. It’s subject to a cap, however. So if the difference is 7% and the cap is 5%, you get credited 5%. But Ameritas annuities come with a base value of 0%. This means you would never get interest below 0% even if the difference is negative.
Monthly Average: You get credited an interest based on the change between the index’s starting value of the index and the average of the 12-monthly ending index values over the index period.
Monthly Sum Cap: Your interest is credited as the sum of each monthly positive change in the index (but not greater than the monthly cap) and the sum of the negative monthly changes in the index.
This annuity also comes with an Enhanced Death Benefit. It generally provides your beneficiary with the entire accumulated value of your account.
It also provides additional interest rate boost to the accumulation value beginning on the 10th anniversary. The additional boost is 10% of the interest credits that have been received since the policy was issued. The additional amount cannot exceed 25% of the surrender value.
Fees
This annuity doesn’t come with an annual contract fees. But you’d face a surrender charge if you access more than 10% of your accumulated account value in a year. We published the firm’s current surrender fee schedule below:
| Policy year | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 |
| Fee | 8% | 8% | 7% | 6 | 5% | 4% | 3% | 2% | 0% |
Also, keep in mind that the IRS levies a 10% early withdrawal penalty if you take your money out before reaching age 59.5. This is an addition to ordinary income taxes you’d owe on the withdrawal.
Reasonable Return Expectations
Your return would greatly depend on the performance of the index or indexes you follow and the payout option. To give you a clue, take a look at performance strategy for each index you can track
- Capped S&P 500 Index
- Capped Russell 2000 Index
- Capped MSCI EAFE Index
- S&P 500 Sector Rotator Daily RC2 5% Index: 10.33 % one-year annual returns
But note that some options come with interest caps. This means your interest rate has a limit regardless of market performance. This is why you may want to put some of your premium in the fixed account option.
Retirement Tips
- If the Ameritas annuities don’t suit you, consider checking out different types of annuities at other insurance companies.
- Be sure to discuss your options with a financial advisor. Our free tool can connect you with up to three local ones based on your preferences and goals.
