Royal Neighbors of America is a life insurance and annuity company that’s been around since 1895. The company boasts that it was one of the first insurance businesses in the U.S. that insured women. Its annuity products include fixed and single premium immediate annuity (SPIA) contracts. If you have questions about what kind of annuity is best for your situation, try speaking with a financial advisor.
Similar to a credit union, Royal Neighbors offers membership to its customers. There are two levels to this program: “Beneficial Membership” and “General Membership.” First, you need to apply to become a General member, which involves paying a $20 annual fee. Once you purchase a financial product from Royal Neighbors, you’ll be upgraded to the Beneficial member status. By becoming a full-fledged member, you’ll have access to a suite of savings offers for medical, legal and retail products and services.
| Annuity | Fees | Annuity Type | Minimum Initial Premium | More Information |
|---|---|---|---|---|
| Royal Neighbors Choice Series 3 Find an Advisor |
|
Fixed annuity | $50,000 |
Annuity TypeFixed annuityMinimum Initial Premium$50,000 |
| Royal Neighbors Choice Series 5 Find an Advisor |
|
Fixed annuity | $10,000 |
Annuity TypeFixed annuityMinimum Initial Premium$10,000 |
| Royal Neighbors Choice Series 6 Find an Advisor |
|
Fixed annuity | $5,000 |
Annuity TypeFixed annuityMinimum Initial Premium$5,000 |
| Royal Neighbors Single Premium Immediate Annuity Find an Advisor |
|
Single premium immediate annuity (SPIA) | $5,000 |
Annuity TypeSingle premium immediate annuity (SPIA)Minimum Initial Premium$5,000 |
As of 2018, A.M. Best, one of the top financial strength ratings companies on the market, gave Royal Neighbors of America a rating of A- (Excellent). On A.M. Best’s overall scale, this grade places as the fourth-highest out of 15.
Royal Neighbors Choice Series 3
The Royal Neighbors Choice Series 3 annuity has a large minimum initial premium of $50,000. The premium for this annuity is capped at $300,000.
This is a fixed contract, so annuitants receive a specific interest rate. As the Choice Series 3’s name indicates, these rates will be guaranteed for three-year periods. At the end of this period, you’re granted a 30-day window to take out money without incurring fees.
Fees
Royal Neighbors does not charge any annual fees to own the Choice Series 3 annuity. There are withdrawal charges, though, if you take out more than the 10% you’re allowed.
| Withdrawal Fee Schedule | |||
| Year 1 | Year 2 | Year 3 | Year 4+ |
| 8% | 7% | 6% | 0% |
If you’re under 59.5 years old and you make a withdrawal from your contract, the IRS will levy a 10% income tax penalty on you. You will be on the hook for standard income taxes as well.
Realistic Return Expectations
As of Feb. 2021, Royal Neighbors offers up to a 2.00% interest rate on the Choice Series 3 annuity. This rate is changed regularly, so this may be different for each of your guaranteed rate periods.
Royal Neighbors Choice Series 5
Royal Neighbors’ Choice Series 5 annuity operates on a five-year interest rate guarantee period. You can choose to renew your contract after five years if you wish, or you can withdraw the money and move it elsewhere.
To become the owner of this annuity, you’ll need at least $10,000 in investable assets. The maximum you can invest in any one contract is $300,000.
Fees
Like each of Royal Neighbors’ Choice Series annuities, this contract is completely devoid of annual fees. But while the company will allow you to withdraw up to 10% of your account value on a fee-free basis each year, withdrawal charges will apply following that limit.
| Withdrawal Fee Schedule | |||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6+ |
| 8.5% | 7.5% | 7% | 6% | 4% | 0% |
Making withdrawals from your annuity before age 59.5 can have major tax implications. Annuitants younger than this will receive a hefty 10% income surtax on withdrawals, along with standard income taxes.
Realistic Return Expectations
As of Feb. 2021, the Royal Neighbors Choice Series 5 annuity comes with up to a 2.50% fixed interest rate. This rate changes over time, so you may not receive the same rate if you renew your contract.
Royal Neighbors Choice Series 6
The Royal Neighbors Choice Series 6 annuity is based around a six-year interest rate guarantee period, during which certain withdrawals are accompanied by fees. A $5,000 minimum initial premium is required for this contract, with a limit of $300,000.
After the six-year term passes, you can either renew your contract or go with a different annuity. Note that interest rates change often, so when you’re looking into new fixed contracts, check to see which has the best rates.
Fees
There are no annual fees associated with this contract. For the first six years of your contract’s life, though, you can only withdraw 10% of your account value annually. Anything above that amount will be subject to the following charges:
| Withdrawal Fee Schedule | ||||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Year 7+ |
| 8.5% | 7.5% | 7% | 6% | 5% | 4.5% | 0% |
The IRS levies a 10% income tax penalty on any annuitants that withdraw from their contract before age 59.5, in addition to the standard income taxes you pay on annuity income.
Realistic Return Expectations
Royal Neighbors is offering up to a 2.60% fixed interest rate with this annuity contract. Rates vary over time, so you should expect to receive a new rate when and if you decide to renew your contract at the conclusion of your six-year guarantee period.
Royal Neighbors Single Premium Immediate Annuity
In order to get your hands on the Royal Neighbors Single Premium Immediate Annuity (SPIA), you must have $5,000 ready to invest. The most you can deposit at once is $300,000. The maximum issue age is rather inclusive at 98 years old. Income for this annuity can be deferred as long as one year.
This contract allows annuitants to select a “period certain” payout option. That means payments will be guaranteed for a specific amount of time, regardless of how long you live. Should you pass away during this term, payments will go to your beneficiary. You can also choose to receive lifetime income, which could mean you earn more, but nothing will be left for your beneficiaries.
Fees
Annuitants will not have to pay any annual fees to own the Royal Neighbors SPIA.
As with all annuities, making withdrawals before age 59.5 will result in a 10% income tax penalty, on top of standard income taxes.
Realistic Return Expectations
As with any immediate annuity, earning interest isn't the main goal for annuitants. Instead, this annuity will provide you with fixed income payments for either a certain number of years or for the rest of your life. However, should you choose lifetime payments and you outlive your deposit, you'll technically receive more than you gave.
Tips for Building an Investment Portfolio
- If you want some help managing your investments or planning your retirement income, a financial advisor might be worth looking into. 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.
- Formulating a precise asset allocation is a great first step to setting yourself up for success in investing. This all-important strategy will help you determine what kinds of investments should occupy specific percentages within your portfolio on a risk-adjusted basis. If you don’t know where to begin, stop by SmartAsset’s asset allocation calculator.
All information is accurate as of the writing of this article.
