Forethought Annuity Review

The SecureFore Series of annuities come in three-, five- and seven-year variations. Because this is a fixed annuity, these terms refer to how long your initial interest rate is locked in for. So, generally speaking, the longer the term you pick, the better your rate will be.

In order to open this contract, you must be no older than 85 years old. You also must have at least $10,000 ready to invest. Like all fixed annuities, these are tax-deferred, meaning your money grows tax-free and you won’t encounter any federal income taxes until you withdraw income in retirement.

Each of the annuities in this series comes with a death benefit equal to the full contract value. There’s also an optional return of premium rider that, if chosen at contract issue, will guarantee that you’ll get back at least the amount of your original premium payment, minus any withdrawals, at full distribution.

Fees

While there are no annual fees associated with the SecureFore Series of annuities, there are withdrawal fees to consider if you take out more than the 10% you’re allotted annually after your first year of ownership.

Annuitants that withdraw from their account prior to turning 59.5 years old will face a 10% income surtax from the IRS, on top of standard income taxes.

Realistic Return Expectations

The returns of fixed annuities are largely dependent upon the specifics of your financial situation and the rate you receive. Unfortunately, the current fixed rates for this annuity are not publicly released. Other factors are how much money you invest, when you invest it, how much you withdraw annually and which of the three guaranteed rate periods you select.

Forethought’s ForeInvestors Choice variable annuities comes in a few different forms, but we’ve chosen to highlight the B-Share contract. For this contract, there’s a minimum initial premium of $25,000 and a maximum issue age of 85.

Investments are the core of any variable annuity. With the ForeInvestors Choice B-Share contract, you can pick from around 100 different funds to invest. In addition to small-, mid- and multi-cap equity options, there are also funds that focus on commodities, real estate, bonds and more. These funds are managed by some of the largest investment companies in the world, like Goldman Sachs, BlackRock, Invesco, Franklin Templeton and more.

There is one optional rider you can add to your contract: the Earnings Protection Death Benefit. What this does is increase your death benefit payout from your contract value at the time Forethought receives your death certificate to your contract value, plus 35% of your overall contract growth.

Fees

Like most variable contracts, the ForeInvestors Choice B-Share annuity comes with a plethora of fees. The most prominent of these is the combined mortality and expense risk and administrative charge that will run you a total of 1.00% a year. Then there’s a $50 contract fee, though this is waivable for accounts that maintain a balance of at least $50,000.

There are also fees associated with the investment funds you’ll hold in your variable annuity. The funds offered with this contract charge annual operating expenses that range from 0.24% - 2.37%. Some funds also come with a facilitation fee that ranges up to 0.50%.

As of the time of this writing, Forethought charges a 0.25% fee for the upgraded death benefit called the Earnings Protection Death Benefit.

Should you surpass your withdrawal limit, you’ll be subject to the following fees:

As always, if you decide to withdraw money from your annuity before age 59.5, you’ll likely be on the hook for a 10% income tax penalty from the IRS.

Realistic Return Expectations

It’s virtually impossible to gauge how a variable annuity will perform because its value is tied to the performance of specific investment funds. However, Forethought does offer some past performance insights. Depending on what type of fund you invest in, five-year data shows that, as of Feb. 2021, returns for these funds ranged from -1.73% to 23.78%.

You must be between the ages of 45 and 85 to buy into a ForeIncome II fixed indexed annuity, while also having at least $25,000 to invest. The contract comes with either a five-, seven- or ten-year guaranteed fixed-rate period, so pick the one that best aligns with your time horizon.

This annuity comes with a fixed account that earns at a certain fixed rate that’s provided to you by Forethought. You’ll also get an indexed account which will hold funds that follow the performance of whatever index you opt for.

One of the main draws of this annuity is its Guaranteed Lifetime Withdrawal Benefit (GLWB). This allows annuitants to increase the size of their withdrawal base, which will in turn boost their eventual payouts. You have two choices with this benefit:

• Guaranteed Income Builder Benefit: This will grow your withdrawal base by a flat 8%, with no further increases.
• Income Multiplier Benefit: While you defer your payments, Forethought will multiply your interest credits by two. Once you start receiving distributions, your interest credits will then multiply by one for a prespecified period of time.

Fees

Although there are no annual contract fees with this contract, you will pay a 1.00% annual fee for the GLWB. Additionally, Forethought lets annuitants take out as much as 10% of their contract value annually before encountering the following withdrawal fees:

Beware that the IRS charges annuitants a 10% income surtax when they withdraw funds from their contract before age 59.5. You will also have to pay your standard income tax.

Realistic Return Expectations

The returns that fixed indexed annuities offer are largely dependent on how much you invest, when you invest it, how much money you allocate to your fixed and indexed accounts, what index you choose to follow and, of course, the performance of the market. Therefore, returns will vary from contract to contract.

The ForeCertain single premium income annuity calls for a minimum investment of $25,000. Because this is an income annuity, it has a higher maximum age than other contracts on offer - anyone 90 years old or younger can get one. When you open your account, you must pick from one of five income options:

• Guaranteed payments for 5 to 30 years
• Single/Joint life
• Single/Joint life with guaranteed payments for 5 to 30 years
• Single/Joint life with cash refund
• Single/Joint life with installment refund

If you need the money, this contract allows annuitants to request three to six months’ worth of payments in advance. You can only take advantage of this policy twice during the life of your contract. Beyond this, you can add 2%, 3% or 4% increases to your annual payments to help keep up with inflation.

Forethought will also allow you to sign up for a qualifying longevity annuity contract, or QLAC. This lets you delay your required distributions up to the first day of the month after you turn 85.

Fees

This annuity product is completely devoid of all contract and benefit fees. As an income annuity, it also has no withdrawal charges.

As always, withdrawing from an annuity before reaching the age of 59.5 will result in a 10% income tax penalty on top of standard income taxes.

Realistic Return Expectations

Income annuities take your money and split it into multiple payments on a nearly immediate basis. As a result, returns are based on how much you invest in your contract, which option you choose and how long you live.