Delaware Life Annuity Review

The Retirement Stages 7 annuity by Delware Life are designed to pay interest rates that reflect the performance of stock market indexes that track some of the largest companies in the world. Delaware Life allows you to choose from a few different indexes and a fixed account. You are free to allocate as much to each strategy as you want.

You can sign up for a seven-year annuity contract with a minimum initial premium of $10,000, as long as you’re younger than 80 years old. Your money grows tax-deferred so you won’t owe taxes on your earnings until you take qualified withdrawals in retirement.

This annuity comes with a free Built-in Bailout Endorsement feature that kicks in if at renewal, the 1 Year S&P point-to-point index w/ cap rate falls below the bailout rate, which is subject to vary. But your annuity does not have to be tied to the S&P 500 to receive this benefit. The company offers it to all annuitants in the Retirement Stages 7 Fixed Index Annuity. 

For additional costs, you can also add extra features or riders to your annuity contract. A return on premium option, for example, allows you to discontinue your contract any time prior to its renewal or termination date at the end of the seven-year surrender period. Its guaranteed death benefit provides your designated beneficiary with the full contract value upon your passing.

Fees 

The Retirement Stages 7 Fixed Index Annuity doesn’t involve any annual contract fees. But the Delaware Life Insurance Company would levy a withdrawal-fee if you access more than 10% of the previous contract anniversary’s account value before the end of the seven-year surrender period. We provide more details on the table below. 

If you take your money before reaching age 59.5, you may face a 10% early withdrawal penalty imposed by the IRS. In any case, you should speak with an accountant and qualified financial advisor before taking money from your annuity. 

Optional riders also come with additional fees. For instance, the ROP benefit requires a 0.40% annual fee of your account value. 

When you’re ready to take withdrawals, you have the following benefit options: 

• Lifetime stream of income 
• Lifetime annuity with 10-year period certain
• Joint and last survivor annuity

Realistic Return Expectations 

The return on your Retirement Stages 7 annuity depends on several variables such as the amount of your initial premium, the performance of the index your annuity tracks and whether you opt-in for any riders. But before you sign up for a this annuity, you should understand the following key terms and how they may affect your returns.

• Interest rate cap: This percentage is the highest interest rate you’d get regardless of market performance. So if your annuity contract has an interest rate cap of 5% and the index your annuity is tied to goes up by 8%, the insurance company would credit only a 5% interest rate on your account. 
• Participation Rate: This percentage reflects how closely your annuity follows a particular market index. Insurance companies multiply it by the actual return on the index to calculate the interest rate they’d credit to your account. So say the index that your annuity is tracking goes up by 8% and the participation rate is 70%. That means your annuity earns 5.6% interest (70% of 8%). 
• Spread: A percentage that’s subtracted from the gain in the index that’s tied to your annuity. So if the index goes up by 12% and the spread is 4%, the amount credited is the difference or 8%. 

Insurance companies place certain limits on what they can actually pay their annuity holders. They place these restrictions in order to stay financially sound and fulfill its guarantees. In the case of the Delaware Life Insurance Company, limitations such as spreads and participation rates are applied differently to their fixed indexed annuities depending on the type of annuity and the particular index it is linked to. You can take a closer look at interest rates and the limits of the Retirement Stages 7 Fixed Index Annuity by examining the table below. Note that these can vary by state. 

The Delaware Life Target Income 10 annuity is designed to protect your principal while giving you the opportunity for additional growth based on the performance of broadly diversified market indexes or a fixed interest rate. And the more you initially invest, the more you may gain in the form of interest rates. For instance, you’d get the highest 1.20% fixed interest rate on your contract if you open an account with more than $500,000.

You can sign up for a 10-year contract with a minimum initial premium of $25,000. The maximum issue age is 80. This product is not available in New York.

Regardless of your index allocation choices, this annuity offers downside protection. This means your interest rate would never be less than  0%, even if the index you’re following goes down. You also have fee-free access to up to 10% of your account value each year after the first contract anniversary, after the first contract anniversary.

One of the features that distinguishes this annuity from other Delaware Life Insurance Products is its optional Guaranteed Lifetime Withdrawal Benefit. It adds a 5% bonus to your total premiums paid during the first year. It then adds your benefit base by 7% each year for the first 10 years in addition all interest credited. In addition, the order increases your payout factor throughout time. So the longer you wait to withdraw your funds, the larger your payouts would be. Here's how it works:

If you pass away before you begin receiving income payments, the Delaware Life Insurance Company provides your beneficiary with the full account value. When you retire, you have the following payout options:

• Guaranteed Income for Life with the GLWB Rider
• Regular Annuity Payments
• Systematic Withdrawals
• Withdrawals As You Need Them

Fees 

Although you have free access to 10% of your account value each year after the first contract anniversary, you’d face withdrawal fees or surrender charges if you go above that limit. You can view the company’s current surrender charge schedule for the Target Income 10 annuity on the table below.

Optional riders also come with additional fees. The GLWB rider requires an annual fee of 1.05% of the annuity's account value.

Moreover, the IRS may hit you with a 10% penalty tax if you take your money before the age of 59.5. 

Realistic Return Expectations 

Your payout amounts would largely depend on the performance of the index or indexes your annuity tracks, the premiums you pay and any optional riders you opt in for, among several other factors. Before you open an account, you should be aware of the following key terms and how they may affect the actual interest rate credited to your Delaware Life Target Income 10 annuity. 

• Interest rate cap: This percentage is the highest interest rate you’d get regardless of market performance. So if your annuity contract has an interest rate cap of 5% and the index your annuity is tied to goes up by 8%, the insurance company would credit only a 5% interest rate on your account. 
• Participation Rate: This percentage reflects how closely your annuity follows a particular market index. Insurance companies multiply it by the actual return on the index to calculate the interest rate they’d credit to your account. So say the index your annuity is tracking goes up by 8% and the participation rate is 70%. That means your annuity earns 5.6% interest (70% of 8%). 
• Spread: A percentage that’s subtracted from the gain in the index that’s tied to your annuity. So if the index goes up by 12% and the spread is 4%, the amount credited is the difference or 8%. 

The table below illustrates how these components would apply to your Delaware Life Target Income 10 annuity depending on the index its tied to and the amount of your initial premium. These terms are subject to change. 

The Retirement Chapters 10 Fixed Index Annuity provides annuitants with a lifetime income stream and a “reset” feature that locks in the previous year’s earnings in order to protect you from stock market downturns. The Delaware Life Insurance Company guarantees your premium payments and locks in interest. So even if the index dips, your return will never be less than zero.

As a fixed indexed annuity, you are free to divy up your funds between index-following strategies and a fixed account that features a standard interest rate that's set by Delaware Life. To sign up for this annuity, the minimum initial premium is $25,000 and the maximum issue date is 80.

New annuitants will receive a 5% bonus on any premiums they make within their first contract year. This bonus doesn't apply immediately, though, as it take 10 years to fully vest.

Fees 

This annuity doesn’t require annual contract fees. But you’d be subject to surrender charges if you access more than 10% of your account value during the first ten years of your contract. The company does not publish the current surrender charge fee schedule for this annuity product.

If you withdraw anything before age 59.5, the IRS may impose a 10% tax penalty. This is in addition to your standard income tax rate.

Realistic Return Expectations 

Below, we explain some key terms as they relate to your Chapters 10 annuity. 

• Interest rate cap: This percentage is the highest interest rate you’d get regardless of market performance. So if your annuity contract has an interest rate cap of 5% and the index your annuity is tied to goes up by 8%, the insurance company would credit only a 5% interest rate on your account. 
• Participation Rate: This percentage reflects how closely your annuity follows a particular market index. Insurance companies multiply it by the actual return on the index to calculate the interest rate they’d credit to your account. So say the index your annuity is tracking goes up by 8% and the participation rate is 70%. That means your annuity earns 5.6% interest (70% of 8%). 
• Spread: A percentage that’s subtracted from the gain in the index that’s tied to your annuity. So if the index goes up by 12% and the spread is 4%, the amount credited is the difference or 8%. 

The table below gives you a glimpse into how these components may affect your returns based on your allocation choices. Note that these terms are subject to change.

If you want to protect your nest egg without taking on the risk of relying on the stock market for a steady return, you may be interested in the Pinnacle MYGA. It’s designed to offer a steady stream of income in retirement. It functions as a single-premium deferred annuity that offers a fixed interest rate.

The minimum initial premium for this contract is $10,000, and you can sign it for three, five, seven or ten years. Your interest rate shall remain locked in during that time period, so it won’t change in line with the stock market. Annuitants up to age 85 can open this contract.

At the end of the initial contract, you have 30 days to renew it for another term up until you reach age 95. If you don’t renew within that period, it’ll automatically get renewed under the same guarantee period you had previously selected.  You also can make withdrawals or cash out your annuity during that 30-day period without facing a surrender charge. 

When you're ready to receive income, you can annuitize your contract and convert it to a lifetime stream of income. You can also opt for lifetime income with period certain, meaning if you pass away within that period, your beneficiary gets the lifetime income. Or you can choose lifetime income payments for you and your co-annuitant if you opened a joint account. 

This annuity also comes with a death benefit. This means your beneficiary gets the full account value if you die before you begin receiving payments. If this is your surviving spouse, he or she can continue the contract as its new owner.

Fees 

Surrender charges vary based on the length of your contract. These only apply if you withdraw more than the allotted 10% you're allowed each year.

The IRS also may slap you with a 10% early withdrawal penalty if you take your money before reaching age 59.5. 

Realistic Return Expectations

The returns of a fixed annuity come from the fixed interest rate that the annuity company provides you. Here's what Delaware Life is currently offering annuitants: