National Life Group Annuity Review

The Sentinel Advantage Variable Annuity (SAVA), is a variable annuity. This means that your returns will be based on the performance of the funds that you choose for your account. While these investments make a variable annuity riskier than a fixed annuity (which grows based on a prespecified rate), the return upside for variable contract holders is much higher.

National Life offers around 60 investment options, from well-known investment companies like BNY Mellon, Franklin Templeton, Fidelity and JP Morgan. These funds and portfolios focus on a wide range of investment options, with choices available for both the risk-averse and risk-tolerant investor. More specifically, some invest in equities of various market capitalizations, whereas others stick to bonds, fixed-income and index funds.

In order to become an owner of the SAVA contract, you must be 85 years old or younger. Additionally, you need to have at least $5,000 ready to invest in your account.

Should you pass away before your contract is annuitized, your beneficiaries will receive a death benefit. This payout will be equal to the greater of your contract’s value or the premium payments made to the contract, minus withdrawals. Taxes will be applied on top of both payouts.

Fees

The base charge associated with the SAVA contract is a $30 annual contract fee. However, if your contract’s value surpasses $50,000, National Life will waive this fee.

There are a couple of other percentage-based fees you’ll need to pay with this contract. The first is a 1.40% combined administration and mortality and expense risk fee. Then, because this is a variable annuity, there are also annual fees associated with the various funds and portfolios available for investment through National Life.

After you’ve owned the SAVA contract for a year, you can withdraw up to 15% of its value annually for free. However, during the first six years of your account’s life, the following penalty charges will accompany any withdrawals above that allotted amount.

An annuity is a retirement product, so if you withdraw from yours before turning 59.5, you’ll likely have to pay a 10% income tax penalty. That’s on top of your normal income tax rate.

Realistic Return Expectations

Variable annuities rely on the performance of specific investment funds and predetermined portfolios, so there’s really no way to gauge exactly what your returns might look like. National Life may be able to supply you with past performance numbers, though.

The FIT Rewards Growth contract is a fixed indexed annuity that allows you to earn returns either through a fixed interest rate or by following the performance of a specific market index. In the case of this annuity, there are four indexes available beyond the fixed-rate option: three from the S&P 500, one from Barclays and another from Bank of America/Merrill Lynch.

Although your money will follow the performance of whatever index you select, your money isn’t literally invested in it. Because of this, National Life can afford to protect your money from losses, meaning the worst you can do is 0% growth.

Another major perk of this contract is its 5% immediate interest credit. This applies to any premium payments you make during your first eight years as an account holder.

To get your hands on this annuity, you must have at least $5,000 in investable assets. Aside from that requirement, the FIT Rewards Growth annuity has a maximum issue age of 75.

Fees

The FIT Rewards Growth annuity has no annual fees, but there are withdrawal charges to be mindful of. You can withdraw up to 10% of your contract value a year without incurring fees and market value adjustments (MVAs). Any withdrawals beyond that cap will be penalized according to the following fee schedule:

In the event that you withdraw from your contract before age 59.5, the IRS will charge you a 10% income surtax. That’s in addition to any standard income taxes as well.

Realistic Return Expectations

While it’s impossible to gauge how an index will perform over time, National Life does provide either a participation rate or a rate cap for each of its indexes. A rate cap is fairly simple, as it limits your potential returns regardless of how far past that mark your index performs. Participation rates work differently, as they infer what portion of an index’s performance you’ll be entitled to. In other words, if you have a 60% participation rate and your index grows by 10%, your returns will equal 6%. National Life does not release its fixed account rates for this contract.

The FIT Certain Income annuity is another fixed indexed product, meaning your money will garner returns through either a specific fixed interest rate or an index’s performance. National Life sets the aforementioned fixed rate, while index returns are variable.

There’s a quartet of indexes available through National Life, including one from Barclays, one from Bank of America/Merrill Lynch and three from the S&P 500. Your money doesn’t actually get invested in the index you choose. Rather, National Life will credit you based on how the index performs. This also enables the company to provide a 0% growth floor, which covers you from realizing any losses.

The Guaranteed Lifetime Income Rider (GLIR) comes with this contract for an additional fee. As its name states, the GLIR guarantees that you’ll never outlive your annuity payments. The size of these payments is based on a predetermined percentage of your “Benefit Calculation Base,” or BCB.

Your BCB starts accumulating as soon as you complete your initial premium payment. This amount, along with any premiums you make during your first 30 years as an annuitant, will receive a 12% bonus. Then, on every policy anniversary, your BCB will grow by another 5%. This growth rate will occur annually for either your first 30 years as a contract holder or until you elect to begin receiving lifetime income.

The FIT Certain Income annuity is only available to prospective customers who are 80 years old or younger. There’s a $5,000 investment minimum as well.

Fees

Annuitants who purchase the FIT Certain Income contract will not have to pay any annual contract fees. However, the GLIR is required on this contract, and it comes with a 1% annual charge.

You can withdraw up to 10% of your contract a year without incurring any fees from National Life. After that, though, the charges below will take effect, in addition to market value adjustments (MVAs).

In addition to their standard income tax rate, annuitants who withdraw from their account before age 59.5 will incur a 10% income surtax from the IRS.

Realistic Return Expectations

Each index available through National Life comes with either a participation rate or a rate cap. The former refers to the percentage of an index’s overall performance you’ll receive, whereas the latter caps your earnings at a certain amount. National Life does not publicly release its fixed rates for this contract.

As a fixed indexed annuity, the FIT Secure Growth contract provides annuitants with multiple ways to invest their money. Like all fixed indexed annuities, this one lets you choose between a fixed interest rate that it sets or a set of indexes from the S&P 500, PIMCO and Société Générale.

While the performance of the annuity you decide to go with will ultimately determine your returns, your money isn’t literally invested in the index - rather it tracks the performance of this index. All earnings are credited to you by National Life separately, but National Life shields your money from losses, meaning the worst you’ll do is no growth at all.

The oldest an annuitant can be when purchasing the FIT Secure Growth annuity is 85 years old. Beyond this, the contract has a $5,000 minimum initial premium.

Fees

Like most indexed annuities, the FIT Secure Growth contract has no annual fees associated with it. But should you need to withdraw more than 10% of your contract value during the first nine years of your account’s life, be prepared to pay the following fees, as well as market value adjustments (MVAs):

There are special tax rules surrounding retirement accounts, and that includes annuities. Therefore, if you’re younger than 59.5 and you decide to withdraw from your contract, be prepared to pay a 10% income tax penalty on top of your usual income tax rate.

Realistic Return Expectations

Because index-based returns are variable, you returns depend on the market indexes you're tracking. However, National Life makes available rate caps and participation rates for each of its four indexes. A rate cap refers to the highest return percentage you can possibly receive, and a participation rate indicates what percentage of an index’s overall performance you’re entitled to. National Life has not recently released fixed rates for this contract.

National Life Group’s FIT Select Income fixed indexed annuity is essentially a hybrid between a fixed and a variable annuity. This is because the company lets annuitants decide between returns based on how an index performs or a fixed interest rate. Through National Life, two S&P 500 indexes, one PIMCO index and one Société Générale index are available.

Rather than physically invest your contract’s value in the index of your choice, the company simply credits you based on how the index does. In turn, your money is protected from all losses, as National Life has a 0% growth floor on all of its fixed indexed contracts.

One of the major features of the FIT Select Income annuity is the Guaranteed Lifetime Income Rider (GLIR). This is automatically added to every contract, though it is accompanied by an extra annual fee. In the most basic sense, the GLIR is meant to ensure that you cannot live longer than your annuity payments. A preset percentage of your contract’s “Benefit Calculation Base” (BCB) is the main determinant for how large these payments will be.

The process used to figure out your BCB begins immediately upon the deposit of your initial premium. Your BCB will grow is via a 5% annual “roll-up rate.” However, these roll-ups will only last until you officially elect to receive lifetime income or your account’s 30th anniversary arrives.

In addition to the features above, National Life offers an activation bonus for your eventual income payments with this annuity. To take full advantage of this, wait as long as you can before starting your income. For reference, the bonus tops out at 225% after 30 years.

Before you even consider buying a FIT Select Income annuity, make sure you can get together at least $5,000 to invest in it. Also, anyone over 75 years old will not have access to this contract.

Fees

National Life requires anyone who purchases the FIT Select Income contract to buy into the GLIR. For this, there is a 1% annual fee. There's also a rate booster available that comes with an additional 1% annual fee. Other than that, the contract is devoid of fees, besides withdrawal charges and market value adjustments (MVAs). However, these only come into play should you take out more than 10% of your contract value in any of your first nine years as an annuitant.

If you have yet to reach age 59.5, think carefully about withdrawing from your annuity contract. That’s because early withdrawals are subject to a 10% income tax penalty, on top of ordinary income taxes.

Realistic Return Expectations

Indexed returns depend on how the given market index performance - which is, of course, impossible to predict exactly. It may be helpful to consider instead the index’s individual rate cap or participation rate. A participation rate is equal to the percentage of an index’s returns you’ll see yourself. For instance, a 40% participation rate on a 12% return would equal a 4.8% return. Meanwhile, a rate cap limits your returns to a specific number. National Life has not recently released fixed rates for this contract.