Commonwealth Annuity and Life Insurance Company has its headquarters in Brighton, Massachusetts. The company is in the business of life insurance policies and annuities, though its annuity products are offered through Global Atlantic Financial Group.
If you’re trying to figure out which annuity product is best aligned with your financial plan, consider working with a financial advisor to go over this issue in more detail.
| Annuity | Fees | Annuity Type | Minimum Initial Premium | More Information |
|---|---|---|---|---|
| Preferred Plus Find an Advisor |
| Variable annuity | $2,500 | Annuity TypeVariable annuityMinimum Initial Premium$2,500 |
| Advantage IV Find an Advisor |
| Variable annuity | $2,500 | Annuity TypeVariable annuityMinimum Initial Premium$2,500 |
| Horizon Find an Advisor |
| Variable annuity | $5,000 | Annuity TypeVariable annuityMinimum Initial Premium$5,000 |
Commonwealth received solid financial strength grades from three of the largest ratings entities on the market. More specifically, A.M. Best rated it at an “A” (stable), Moody’s rated it at an “A3” (stable) and Standard & Poor’s (S&P) rated it at an “A-” (stable).
Preferred Plus
The Preferred Plus variable annuity from Commonwealth has a maximum issue age of 79 with a fairly low $2,500 minimum initial payment. One of the major benefits of this contract is its 4% bonus that’s applicable to all purchase payments you make. When it comes to payout, your options include guaranteed income for life, guaranteed income for life and joint annuitant’s life and guaranteed income for a 10-year period.
There are a number of investment opportunities that you can invest in through this annuity. You’ll also receive a fixed interest account that ensures a 1.00% guaranteed minimum interest rate. Allocation to this account is limited to $100,000 per year for non-qualified contracts and $1 million per year for qualified contracts.
The standard death benefit on this account offers a payout that’s equal to the greater of your contract value minus withdrawals or 100% of your purchase payments adjusted for withdrawals and debt. For an extra fee, you can upgrade this policy with a benefit rider to provide a payout to beneficiaries that’s equal to the greater of your contract value or your highest contract anniversary value prior to the oldest annuitant’s 81st birthday.
Fees
First and foremost, there’s a $30 annual contract fee with the Preferred Plus annuity, though this is waived if your contract value is $50,000 or more. There are also administration and mortality and expense risk charges that combine to total 1.50%. Additionally, if you add on the Step-Up Death Benefit rider, you’ll pay a 0.20% annual fee.
You can withdraw up to 10% of your contract value annually. Anything over that amount is subject to withdrawal charges.
| Withdrawal Fee Schedule | ||||||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Year 7 | Year 8 | Year 9+ |
| 8% | 8% | 7% | 6% | 5% | 4% | 3% | 2% | 0% |
As is standard with all annuities, annuitants under 59.5 years old who want to take early withdrawals will likely have to pay a 10% income tax penalty. This is in addition to the standard income tax rate.
Realistic Return Expectations
The Preferred Plus variable annuity comes with many different investment options, which allows investors a wide range of choices. However, this makes it difficult to predict how the annuity will perform. However, over the last five years (from Feb. 2021), sub-accounts in this annuity have seen standardized returns of -4.92% to 23.96%.
Advantage IV
If you’re interested in opening an Advantage IV annuity, you must be 79 years old or younger and have at least $2,500 ready to invest. The investment opportunities involved with owning a variable annuity like this are undoubtedly why most annuitants are attracted to them. But you’ll also receive a fixed interest account with this contract that features a 1.00% rate minimum. Note, though, that non-qualified and qualified contract holders cannot have more than $100,000 or $1 million, respectively, allocated to this account at once.
Annuities lock your money up for a long time, and some people may need to withdraw from their account earlier than expected. If this could be a possibility for you, Commonwealth offers the No Withdrawal Charge rider for an extra fee. Only qualified 403(b), 457(b) governmental, 457(b) non-governmental, SEP-IRA, Simple IRA and 401(k) accounts are eligible for this.
The Step-Up Death Benefit rider will also improve your beneficiaries’ inheritances by improving upon the standard benefit’s offer of a payout equal to the greater of your contract value minus withdrawals or 100% of your purchase payments adjusted for withdrawals and debt. If you purchase the rider, your coverage will raise to a payout equal to the greater of your contract value or your highest contract anniversary value prior to the oldest annuitant’s 81st birthday.
Fees
This annuity contract comes with a $30 annual fee, though contracts worth at least $50,000 have the fee waived. Combined administration and mortality and expense risk charges will run you 1.30% annually with this product. A couple of riders are available for purchase, too: the No Withdrawal Charge rider and the Step-Up Death Benefit rider. The former costs 0.35% annually, while the latter is priced at 0.20% annually.
Commonwealth allows annuitants to withdraw as much as 10% of their contract value a year before they incur the following fees:
| Withdrawal Fee Schedule | ||||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Year 7+ |
| 6% | 5% | 4% | 3% | 2% | 1% | 0% |
If you take out money from your annuity before turning 59.5, you run the risk of the IRS levying a 10% income tax penalty on you. That, of course, is on top of any income taxes you’ll pay on the withdrawal.
Realistic Return Expectations
Variable annuities are known for their massive selection of investments. Because these funds and securities represent different investing approaches, and because the market is inherently unpredictable, it's not possible to accurately predict your returns. However, over the last five years (from Feb. 2021), sub-accounts in this annuity have seen standardized returns of anywhere from -4.11% to 24.48%.
Horizon
Unlike the previous two annuity offers, the Horizon variable annuity from Commonwealth boosts the maximum issue age to 90. The minimum initial premium requirement is a bit higher as well, at $5,000 for non-qualified accounts and $50 for qualified accounts. This annuity provides five separate payout options, including:
- Guaranteed income for a specified period of 10 years
- Guaranteed income for life
- Guaranteed income for life with 10-year period certain
- Guaranteed for life and joint annuitant’s life
- Guaranteed income for life and joint annuitant’s life with 10-year period certain
There are a number of investments available to Horizon contract holders from various fund managers. If you want a little help managing your portfolio, you can sign up for automatic rebalancing on a monthly, quarterly, semiannual or annual basis.
The death benefit for this product is equal to the accumulated value of your contract before annuitization.
Fees
If your annuity contract is worth less than $50,000, you’ll have to pay a $30 annual contract fee. Contracts worth more than that will have this fee waived. There’s also a 0.75% combined administrative and mortality and expense risk fee.
Commonwealth has eliminated all withdrawal fees from this annuity contract. That means that aside from taxes, you can take out the entirety of your balance at any time for free. Speaking of taxes, don’t forget that any withdrawals completed before you turn 59.5 will cost you both the standard income tax rate and a 10% income tax penalty.
Realistic Return Expectations
As with any variable annuity, it's not possible to accurately predict the returns you'll see. However, over the last five years (from Feb. 2021), sub-accounts within this annuity have seen standardized returns of anywhere from -3.13% to 25.38%.
Tips for Choosing a Financial Advisor
- Want some help figuring out how an annuity fits into your retirement income plan? Consider working with a financial advisor. Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in 5 minutes. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.
- Financial advisors use all sorts of fee structures. If you want some insight into the types of fees and other charges you’ll encounter at various financial advisory firms, check out our guide to financial advisor fees.
All information is accurate as of the writing of this article.
