Eagle Life Annuities Review

The Eagle Select Focus 5 Annuity is one of the six fixed indexed annuities that Eagle Life offers. The five in its name means that it has a five-year guarantee period. The Eagle Select annuity is also available as 6-, 8- and 10-year contracts.

With fixed indexed annuities, you choose your interest crediting strategy or how your money will earn interest. With the Eagle Select, you have three options. The first is an S&P 500-linked rate that is credited on an annual point-to-point basis. You can choose a cap or a participation rate. If your participation rate is, say, 20%, and the S&P 500 had an 8% return, you would earn 20% of the 8% - or 1.6%.

The second option is a rate linked to the S&P 500 Dividend Aristocrats Daily Risk Control 5% USD Excess Return Index. Using a cash component that accrues interest, this index aims to control for a 5% level of volatility. This rate is also credited on an annual basis and you can choose your participation rate.

The last option is a fixed interest rate. The actual rate will be declared at the time of your contract being issued and is guaranteed to never be less than a set amount stated in your contract. Interest is earned on a daily basis.

The Eagle Select includes a standard death benefit at no additional cost. Should you die before your contract matures and before you’ve annuitized, the surviving joint owner if there is one or beneficiary will receive the greater of the account value or the minimum guaranteed surrender value (which is 90% of all premiums paid, adjusted for any withdrawals and annually compounded interest of 1.75%) with no surrender charges. 

This annuity also comes with a confinement care rider and terminal illness rider at no additional cost. As their names suggest, these riders allow you to withdraw 100% of your money with no surrender charges if, after the first contract anniversary, you meet the definition of needing confinement care or receiving a diagnosis for a terminal illness.

Additionally, the longer contracts provide the option of adding a lifetime income benefit rider, which increases your payouts by 6% for seven years with up to 14 years of growth. The annual fee is either 0.90% or 1.00%, depending on whether you add a wellbeing benefit, which doubles your income payout for five years, should you, after two contract anniversaries, meet the definition of being unable to perform multiple Activities of Daily Living.

The minimum initial premium is $5,000, and you can make additional deposits. The maximum issue age is 85.

Fees

This annuity has no sales or annual administrative fees. But there are surrender charges for early withdrawals. You are allowed to take out 5% every year after the first contract anniversary with a market value adjustment applied to the withdrawal. For an additional cost, you can change that allowed amount to 10% with no market value adjustment. Withdrawals that exceed the allowed amount will be penalized starting at 9% the first year. The fee goes down 1% every year thereafter until the end of the guaranteed period. 

Additionally, withdrawals before age 59.5 may be subject to a 10% IRS penalty plus ordinary income tax.

Realistic Return Expectations

Eagle Life does not publish its interest rates. If you go with the fixed option, you’ll want a rate around 2% to 3% to stay even with inflation. The indexed option will provide a greater potential for growth. But what it actually earns depends on the market, of course.

The Eagle Advisory 8 is a fixed indexed annuity. It’s very similar to the Eagle Select series of annuities in that it offers three interest crediting options: a fixed interest rate, a rate that is linked to the S&P 500 Index and a rate linked to the S&P 500 Dividend Aristocrats Daily Risk Control 5% USD Excess Return Index.

With the S&P 500-linked rate, you choose between a cap or a participation rate. But with the S&P 500 Dividend Aristocrats-linked rate - and this is one of the differences from the Select series - there is only a spread fee rate, which is the percentage subtracted from the return rate to get the rate that will be credited to your account. The spread fee will be declared every contract anniversary and is promised to never be more than 10%.

The biggest difference, though, between this annuity and the Select series is that it is fee based. This means that the insurance agent who sells you your contract will receive an annual fee based on the value of your contract instead of an upfront, one-time commission like the Select series uses.

Otherwise, the Eagle Advisory is like the Select Series. It also comes with a standard death benefit, confinement care rider and terminal illness rider at no additional expense. For an added cost, you can add a lifetime income benefit rider. 

The Eagle Advisory is available as an eight-year contract. The minimum premium is $8,000 and the maximum issue age is 90. 

Fees

Your cost for this annuity will be an annual asset-based fee paid to your advisor. You will also be charged for any optional riders, such as for the lifetime income benefit. Like the Select Series annuity above, the two versions of the lifetime income benefit rider will run you 0.90% or 1% annually.

Additionally, you will incur surrender fees should you withdraw more than the allowed amount, which is 5% every year after the first contract anniversary with a market value adjustment applied to the withdrawal. Withdrawals that exceed the allowed amount will be penalized generally starting at 9% the first year. The fee goes down 1% every year thereafter, until the end of the guaranteed period. 

Plus, withdrawals before age 59.5 may be subject to a 10% IRS penalty plus ordinary income tax.

Realistic Return Expectations

With a fee-based annuity, you may get a more appealing interest-crediting rate (a higher fixed interest rate, higher cap, higher participation rate or smaller spread) than if you'd bought a commission-based annuity. But you’ll also be paying a percentage of your account as your sales agent’s fee every year. This percentage will stay the same, regardless of whether your earnings rate goes up or down. Optional riders will also cut into your return - as will surrender charges if you make early withdrawals.

The “MYGA” in Eagle Platinum MYGA 5 stands for multi-year guaranteed annuity. This means that you’ll earn a fixed interest rate for the duration of a guaranteed period. In this case, it’s five years. This series is also available as a six- and seven-year contract.

Annuities in the Eagle Platinum series are single premium, so you make just one initial payment. At the end of the contract, you can renew for another period of time, transfer to a different annuity, withdraw your money or annuitize.

If you withdraw more than the allowed amount during your term, you’ll be subject to a surrender charge. Depending on the rider you choose, the allowed amount can be either the interest earned after the first anniversary of your contract or 10% of your contract value after the first year. You also have the option of adding a guaranteed return of premium rider, which allows you to withdraw any amount, up to your earned interest, after your contract’s first anniversary or your full premium amount at any time.

Should you die before the end of your guaranteed period and before you’ve annuitized, your beneficiary will receive the full value of your contract without surrender charges. The minimum premium is $10,000.

Fees

The Eagle Platinum series has no front-end or annual charges. You will incur surrender fees, though, if you withdraw more than the allowed amount per your contract. Generally, fees start at 9% and decrease 1% every year until the end of the guaranteed period.

Also, because annuities earn interest on a tax-deferred basis, you may be subject to a 10% IRS penalty if you withdraw money before age 59.5. You'll also owe income tax.

Realistic Return Expectations

Eagle Life does not publish its fixed interest rates. Generally, you would want to earn 2% to 3% just to stay even with inflation. But If there’s any chance you’ll need to tap the money during the guaranteed period, you may be better off with a certificate of deposit (CD). Top CD rates may be slightly lower, but the penalty for early withdrawals is often 90 days of interest - and will not touch your nest egg.