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EquiTrust Annuity Review

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EquiTrust Life Insurance Company has been around since 1996. But in 2015, Magic Johnson Enterprises, which is owned by basketball hall-of-famer Magic Johnson, bought a controlling interest in EquiTrust. The company offers fixed indexed, immediate and fixed annuities, as well as life insurance policies.

If you have questions about which annuity best fits your retirement plan, consider speaking with a financial advisor.

Annuity Fees Annuity Type Minimum Initial Premium More Information
MarketTen Bonus Index® Find an Advisor

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  • No annual contract fees
  • 1.00% annual optional income rider fee
Fixed indexed annuity $10,000

Annuity Type

Fixed indexed annuity

Minimum Initial Premium

$10,000
Certainty Select® Find an Advisor

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  • No annual contract fees
Multi-year guarantee annuity (MYGA) $10,000

Annuity Type

Multi-year guarantee annuity (MYGA)

Minimum Initial Premium

$10,000
ChoiceFour® Find an Advisor

Read Review

  • No annual contract fees
Fixed annuity $10,000

Annuity Type

Fixed annuity

Minimum Initial Premium

$10,000
Confidence Income Annuity® Find an Advisor

Read Review

  • No annual contract fees
Single premium immediate annuity (SPIA) $30,000

Annuity Type

Single premium immediate annuity (SPIA)

Minimum Initial Premium

$30,000

As of Dec. 2018, EquiTrust Life Insurance Company’s financial strength was rated at a B++ by A.M. Best and a BBB+ by Standard & Poor’s (S&P). These grades rank as “Good” on each of these ratings companies’ respective charts.

MarketTen Bonus Index®

The MarketTen Bonus Index® has a maximum issue age of 80 and a minimum initial premium requirement of $10,000. The top feature of this annuity is the 6% bonus you’ll receive on all premiums you make during your first five years of ownership.

As a fixed indexed annuity, you’ll receive both a fixed and an indexed account. The money in the fixed account will grow based on a specific rate, whereas the indexed one earns interest based on the performance of one of five indexes. You are given full freedom to allocate as much to each of these accounts as you want and to choose which index you want your money to follow.

EquiTrust affords annuitants the right to add on an optional income rider to this contract. For a fee, this rider will compound the contract’s benefit base by 6.5% for as many as 10 years.

Fees

The fee schedule for the MarketTen Bonus Index annuity is fairly light, as you won’t pay any annual contract fees. However, should you decide to add on the optional income rider to your contract, you’ll pay a 1.00% annual rider fee.

Provided you have owned your contract for at least one year and are at least 50 years old, EquiTrust will allow you to withdraw up to 10% of your contract value per year. Anything past this mark will come with a withdrawal fee.

Withdrawal Fee Schedule
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11+
10% 10% 10% 10% 8.5% 7% 5.5% 4% 3% 1.5% 0%

In addition to the withdrawal fees charged by EquiTrust, don't forget that the IRS will hit you with a 10% income tax penalty if you withdraw funds from your annuity before you turn 59.5.

Realistic Return Expectations

As of July 2019, EquiTrust is offering a 1.30% one-year guaranteed rate on the fixed account for the MarketTen Bonus Index annuity. This annuity is subject to a 1.00% minimum, but also a 3.00% maximum.

For the indexed account, returns depend on which index you choose to follow, how much you allocate to the account and how that index returns. Given the inherent unpredictability of the market, it’s impossible to accurately predict what types of returns you could see.

Certainty Select®

The Certainty Select® annuity comes in five variations: three-year, five-year, six-year, eight-year and ten-year. Each of these refers to the length of the contract’s guarantee period, which is the time for which your initial interest rate is guaranteed. This allows you to customize your contract to your personal financial situation.

The death benefit associated with this annuity is extremely robust. Should you pass away, your beneficiaries will receive the full accumulation value of your account.

Both qualified and non-qualified account holders can open this annuity with a minimum of $10,000. The maximum issue age is 90 years old.

Fees

Fees are largely held to a minimum with the Certainty Select annuity, and you won’t have to pay any annual fees to hold onto your contract.

As soon as you open your account, you can withdraw up to the amount of interest you’ve cumulatively attained. Should you surpass the allotted withdrawal, look out for a surrender charge.

Withdrawal Fee Schedule
Term Length Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11+
3-Year 10% 10% 9% 0%              
5-Year 10% 10% 9% 9% 8% 0%          
6-Year 10% 10% 9% 9% 8% 8% 0%        
8-Year 10% 10% 9% 9% 8% 8% 7% 7% 0%    
10-Year 10% 10% 9% 9% 8% 8% 7% 7% 6% 5% 0%

If you’re preparing to withdraw funds from your annuity before you turn 59.5 years old, you may want to think twice. Not only will you have to pay standard income taxes, but a 10% tax penalty will be levied against you.

Realistic Return Expectations

With the Certainty Select annuity, the longer the guarantee period term, the better your interest rate will be. EquiTrust’s rates as of July 2019 are as follows:

  • 3-Year Term: 2.00%
  • 5-Year Term: 2.50%
  • 6-Year Term: 2.60%
  • 8-Year Term: 2.70%
  • 10-Year Term: 2.75%

ChoiceFour®

As its name might indicate, the ChoiceFour® fixed annuity has a choice of four versions that each come with different benefits. For reference, the base contract comes with no added features and boasts a nine-year withdrawal fee schedule and free withdrawals up to an amount equal to your last year of interest earnings. Here’s a breakdown of the other three choices:

  • Market Value Adjustment (MVA) option: This gives you a 1.50% bonus to your first premium and MVAs. It maintains a nine-year withdrawal fee schedule and free withdrawals up to an amount equal to your last year of interest earnings.
  • Liquidity option: This shrinks your withdrawal fee schedule to six years and lets you withdraw up to 10% of your contract value after your first year of ownership.
  • Liquidity + MVA option: This combines the two options above, meaning you get a six-year withdrawal fee schedule, a 1.50% premium bonus, MVAs and free withdrawals up to 10% of your contract value as long as you’ve owned your account for one year.

To open this annuity, you must have no less than $10,000 to invest and be 85 years old or younger.

Fees

Annuitants will not need to pay an annual fee with this contract. There are, however, withdrawal charges if you take out more than the amount EquiTrust allows during your contract’s surrender period.

For both the Base and MVA ChoiceFour contracts, you can withdraw as much as the equivalent of your interest earned over the last year. The Liquidity and Liquidity + MVA ChoiceFour contracts operate the exact same way during your first year as owner. But once the second year begins, withdrawals are fee-free for up to 10% of your account’s overall value.

Withdrawal Fee Schedule
Contract Type Year 1 Year 2 Year 3 Year 4 Year 5
Liquidity 12% 11% 10% 9% 8%
Liquidity + MVA 12% 11% 10% 9% 8%
Base 12% 11% 10% 9% 8%
MVA 12% 11% 10% 9% 8%

 

Withdrawal Fee Schedule (cont.)
Year 6 Year 7 Year 8 Year 9 Year 10+
7% 0%      
7% 0%      
7% 6% 4% 2% 0%
7% 6% 4% 2% 0%

If you withdraw from your annuity contract prior to reaching age 59.5, the IRS will levy a 10% income surtax. Be mindful that this in addition to standard income taxes.

Realistic Return Expectations

Like most annuity companies, EquiTrust offers better fixed interest rates to annuitants that have less options to their contract. As a result, Base and MVA ChoiceFour annuitants receive a 3.00% rate, whereas Liquidity and Liquidity + MVA ChoiceFour annuitants earn a slightly lower 2.50% rate. These fixed rates are as of July 2019.

Confidence Income Annuity®

The Confidence Income Annuity® requires new annuitants to be 90 years old or younger and have at least $30,000 to invest in an opening premium. Once your account is open and you’re ready to begin receiving payments, EquiTrust lets you pick from monthly, quarterly, semi-annual and annual payments.

When it comes to payout options, there are three choices:

  • Fixed period: Payments last for 5 to 20 years, regardless of whether the annuitant is alive or not. If not, the beneficiary will take over payments.
  • Single life: Payments will carry on for the entirety of the annuitant’s lifetime. If you want a backup plan, you can also set a fixed period.
  • Joint life: Payments persist until both the annuitant and their spouse have passed away. Again, a fixed period is available to be added on.

Fees

Immediate annuities generally don’t have fees associated with them. The Confidence Income Annuity is no exception, as contract holders will not pay annual contract fees or withdrawal charges.

Be wary of the fact that an annuity withdrawal made before age 59.5 likely means you’ll be charged a 10% income surtax beyond your standard tax rate.

Realistic Return Expectations

The returns of the Confidence Income Annuity are dependent on what guarantee period you choose. To illustrate what you can expect to earn on a $100,000 premium, EquiTrust offers the following projections (June 2019):

  • 5-year guarantee period: $1,718.51
  • 10-year guarantee period: $933.31
  • 15-year guarantee period: $673.39
  • 20-year guarantee period: $551.20

Investing Tips

  • If you’re considering incorporating an annuity into your retirement income plan, a financial advisor can help guide your decision. 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.
  • Don't forget that any investments held outside retirement accounts are subject to capital gains taxes, which can take a bite out of your nest egg. To figure out how much you might owe, stop by our capital gains tax calculator.

Best Places for Small Business Owners

SmartAsset analyzed data to find the best places for small business owners in the country. This interactive map allows you to see the best counties for small business owners in the country and in each state. Zoom between states and the national map to see the top spots in each region. Also, scroll over any county to learn about that region's small business statistics.

Least
Most
Rank County Small Business Returns Small Business Income Income Taxes

Methodology Which places are best for owners of small businesses? To answer this question, we considered three factors: the proportion of people in a county with small business income, how much business income those people reported and the amount of tax a potential resident must pay on their income.

To determine how attractive a region is for small business owners, we compared the number of people reporting small business income compared to the total tax-filing population of the region. Next we compared the total amount of small business income to the total amount of income reported in each region.

Small businesses are typically incorporated as pass-through entities, meaning that the businesses' owners pay income taxes on the company profits rather than the company itself paying income tax. Because of this, income taxes can have a large effect on a small business's success. To determine income tax burdens across counties, we used the national median household income. We then applied relevant deductions and exemptions before calculating federal, state and local income taxes for each location.

These three factors were then indexed and equally weighted to yield our small business index. Places with a higher small business index are better for small business owners.

Sources: Internal Revenue Service (IRS), US Census Bureau 2017 American Community Survey, Government Sources, SmartAsset