Fidelity & Guaranty Life Annuities Review

The fixed indexed Performance Pro® Annuity from Fidelity & Guaranty calls for a $10,000 minimum initial premium. If you can afford to invest this much, the company will provide you with a bonus to your premium. Annuitants 75 years old or younger receive a 9% bonus, whereas anyone above that age gets a 5% bonus. This bonus vests over 10 years, so you won’t physically see the full amount in your account until that point in time.

Like any fixed indexed contract, annuitants receive both a fixed account and an indexed account. The former grows at a prespecified rate, whereas the latter earns interest based on the performance of an index, like the S&P 500 Index, Gold Commodity Index or Barclays Trailblazer Sectors 5 Index. Feel free to choose how much you want to allocate to each account.

Fees

Although Fidelity & Guaranty does not charge an annual contract fee for the Performance Pro® Annuity, its withdrawal charges are quite high in comparison to other annuity companies like New York Life and Jackson. Remember, though, that you can withdraw as much as 10% of your contract each year, penalty-free.

The IRS levies a 10% income surtax on annuitants that make a withdrawal from their annuity contract prior to turning 59.5. This is in addition to your standard income tax rate.

Realistic Return Expectations

Each account of the Performance Pro Annuity earns returns at its own rate. For the fixed account, your rate will be 1.50% (as of Feb. 2021). The indexed account comes with a few different index options, so returns will vary depending on which you pick.

The FG Index-Choice® 10 Annuity from F&G is a barebones, simple fixed indexed annuity. Whereas other similar contracts offer many different indexes to earn interest based on, this annuity only offers S&P 500-based options. While this may not be a dealbreaker for the average investor, it is something to note if you’re looking for more specific or advanced investing options. The contract’s fixed account builds interest at a preset rate.

The Performance Pro® Annuity above comes with as high as a 9% premium bonus, but the FG Index-Choice10 Annuity is limited to just a 3% bonus. However, it appears this bonus vests immediately. For reference, the minimum initial premium for this annuity is $10,000.

Fees

Annuitants who open the FG Index-Choice 10 Annuity won’t have to pay any annual contract fees. But while Fidelity & Guaranty will allow you to withdraw up to 10% of your account value after your second year as contract owner, anything above that amount is subject to the following charges:

The tax rules surrounding retirement accounts like annuities are simple. If you withdraw from your account before you reach age 59.5, you’ll pay a 10% income surtax in addition to standard income taxes.

Realistic Return Expectations

Whatever money you allocate to your fixed account will be subject to at least a 1.00% interest rate. On the other hand, your index-based returns are entirely contingent upon which index you choose to follow, how much you allocate to your indexed account and how that index performs. As with any investment, this could result in either a gain or loss of assets.

The FG Immediate-Income® Annuity is a single lump sum product, meaning your initial premium is all you can invest. The other limitation is that your premium must be at least $10,000 in size. As far as payout options go, F&G lets you pick from the following choices:

• Income for a fixed period
• Life income with a fixed period
• Life income
• Joint and contingent life income
• Joint and survivor life income with a fixed period
• Joint and survivor life income

If you’d like to protect yourself from inflation, you can add a cost of living adjustment (COLA) to your contract. This can be as high as 10% annually. When it comes to the actual calculations of your payments, F&G uses a variety of factors, including the size of your premium, the payout option you choose, any applicable COLAs, your age and your sex.

Fees

As this product is a SPIA contract, there are no annual fees associated with maintaining your ownership of it. This extends to withdrawal fees too, as you’ll begin receiving payments soon after your account’s creation.

The IRS charges a 10% income tax penalty on retirement account withdrawals made before age 59.5. In other words, avoid taking distributions too early or you’ll lose money to the government.

Realistic Return Expectations

This contract is an immediate annuity, so its purpose is to reliably provide regular income payments to annuitants. As such, returns are typically minimal.

The FG Guarantee-Platinum® Series Annuity comes in three variations: three-, five- and seven-year. These terms refer to the length of your interest rate guarantee period. Like a certificate of deposit (CD), the longer the term you select, the better your rate will be.

At the conclusion of your guarantee period, you can renew your contract for the same period length again. If you have something else in mind for your money, though, F&G will afford you a 30-day window to explore outside options and withdraw your money penalty-free.

The death benefit associated with this contract is variable, meaning it depends on who’s alive to claim it. The ownership of your account will transfer upon your death in the following order: your surviving joint owner, your beneficiary, your contingent beneficiary or the estate of the last owner to die.

Fees

If you purchase this annuity, you won’t be required to pay any annual fees.

There are a number of ways that an annuitant can remove funds from this contract without incurring withdrawal fees, including:

• Withdrawal of earnings
• Withdrawals at annuitization or after your initial guarantee period is up
• Nursing home care or terminal illness withdrawals
• Withdrawals after age 91
• Death benefit withdrawals

If none of the above situations apply, be prepared to pay the following surrender fees that are divided up by term length:

The IRS keeps a watchful eye over annuity contract holders that withdraw from their account before turning 59.5 years old. Under these circumstances, you will not only have to pay standard income taxes, but also a 10% income tax penalty for your early withdrawal.

Realistic Return Expectations

The fixed interest rates associated with this MYGA contract differ depending on the term length you select. Generally speaking, the longer the term, the better the rate you’ll get. Here’s a breakdown of Fidelity & Guaranty’s rates from Feb. 2021:

• 3-year term: 2.00%
• 5-year term: 2.65%
• 7-year term: 2.80%