Lafayette Life Insurance Company Annuity Review

The Marquis Centennial is a deferred fixed indexed annuity. With this kind of annuity, you are trying to grow your nest egg while also protecting it from losses. You can allocate a part or all of your money to a crediting strategy that is linked to the S&P 500 Index, J.P. Morgan Strategic Balanced Index or GS Momentum Builder Multi-Asset Class (GSMAC) Index. Or you can allocate part or all of your money to a crediting strategy that is a fixed interest rate that the company guarantees for one contract year.

Your nest egg is protected from losses because your fixed and indexed crediting strategies can never be negative. If the markets are down, you will simply not have any growth that period. That said, your potential for growth is capped if your crediting strategy is linked to the S&P 500.

If you choose the fixed indexed crediting strategy, you have many options for when any growth is credited to your account. If you choose the S&P 500 Index, you can be credited on an annual point-to-point basis, a monthly average basis or a monthly cap basis that factors in monthly changes of the past 12 months. With the J.P. Morgan Strategic Balanced Index and the GSMAC Index, you can choose to be credited on an annual basis, two-year basis or three-year basis (multi-year bases use an average of the whole period.  

This annuity comes with a death benefit. This means that if you die before your contract matures, your beneficiary will receive the greater of the account value or nonforfeiture value as of the date of death with no withdrawal charges. Once you annuitize (or turn you nest egg into an income stream), you will receive payments for the rest of your life (and your spouse’s if it’s a joint account) and is guaranteed for at least 10 years.

You can buy this annuity as a 7- or 10-year contract. The minimum initial premium is $1,000 or $84 per month. You are allowed to make additional contributions. The maximum issue age is 85 years.

Fees

This annuity has no upfront or annual fees. But there are surrender charges for withdrawals during the guarantee period that exceed the allowed annual amount. After the first year, you can withdraw up to 10% without a penalty. So if you take out money the first year or more than 10% after that, you will be assessed fees that start at 8% for seven-year contracts and 9% for 10-year contracts (except in California, where it starts at 8%, too). The fee generally declines 1% every year of the contract period.

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

Realistic Return Expectations

Money that earns a fixed interest rate may keep pace with inflation. Your earnings from an indexed rate depend on the markets, of course. But generally, your money will grow over the long term. You won’t have as much upside potential as you would if you had invested in the stock market, but you also have less downside potential.

The Marquis Single Premium (SP) is also a deferred fixed indexed annuity. It’s very similar to the Marquis Centennial with the major difference being that you make only one contribution as your premium. As with the Marquis Centennial, you then allocate your money between a fixed interest rate crediting strategy and/or a crediting strategy that is linked to a stock market index.

Another difference from the Marquis Centennial is that the Marquis SP offers only two crediting periods for the strategy linked to the S&P 500. You can choose to be credited on an annual point-to-point basis or on a monthly average basis. With the J.P. Morgan Strategic Balanced Index and the GSMAC Index, you can choose to be credited on an annual basis, two-year basis or three-year basis (multi-year bases use an average of the whole period).  

Also, with this annuity, you have the option of adding the Guaranteed Lifetime Withdrawal Benefit (GLWB) for an additional cost. This rider guarantees withdrawals of the annual lifetime payout amount (LPA) for the life of the covered person or persons if you elect spousal coverage. With the standard death benefit that comes with the policy at no extra charge, your beneficiary is only guaranteed to receive the greater of the account value or nonforfeiture value as of the date of death with no withdrawal charges in the event of your death. 

This annuity is available as a 7- or 10-year contract. The minimum premium is $15,000 and the maximum issue age is 85.

Fees

As with the Marquis Centennial, there are no front-end or annual charges with this annuity. The charge for the GLWB rider is an annualrate of 0.95% of the benefit base for either the individual or the spousal benefit.

If you need to tap your money before the seven or 10 years of the contract have passed, you may have to pay a surrender charge. You are allowed to withdraw up to 10% of the beginning-of-the-year account value every index year without a penalty. But any amount beyond the 10% is subject to the surrender charge, which starts at 9% and generally declines 1% every year of the guarantee period. 

Also, withdrawals before age 59.5 may incur a 10% IRS penalty plus ordinary income tax.

Realistic Return Expectations

Of course, your earnings from an indexed crediting strategy depend on the markets. Generally, your premium will grow over the long term and as long as you don’t make withdrawals before you annuitize. Your potential for growth, though, will be smaller than if you had invested your premium in the stock market. For money that is allocated to a fixed interest rate, the most you can realistically expect is to keep pace with inflation.

The Horizon is a single premium immediate annuity. This means you fund it once and start receiving payments right away. There are three payout options: Single Life Income, Joint and Survivor Life Income and Installment Income. With the first, you are guaranteed regular payments as long as you live. You can add a guaranteed period, so that should you die during the guaranteed period, your beneficiary will continue to receive payments till the end of the period. This period can be 5, 10, 15 or 20 years.

As its name suggests, the Joint and Survivor Life Income option guarantees payments over two lifetimes. You can add a guaranteed period for 5, 10, 15 or 20 years so that in case both of you die during the period, payments will go to your beneficiary until the end of the period. For the second annuitant, you can choose their income to be 100%, 67% or 50% of the original income.

The third payout option, Installment Income, has no lifetime guarantee. It will make payments for a specified amount of time, from 8 years to 20 years (in Oregon, cannot be more than 10 years).

The minimum premium is $10,000 and the maximum issue age is 95.

Fees

This annuity has no front-end or annual charges. There are fees for optional riders, such as for guaranteed benefits.

Realistic Return Expectations

Whether or not you get your premium back - and then some - depends on how long you live. The insurance company, of course, is taking the chance that you won’t cost it more money than it took in.