Sagicor Life Insurance Annuity Review

The Milestone MYGA (multi-year guaranteed annuity) is a deferred fixed annuity. This means it will pay a guaranteed fixed rate of interest over a set amount of time, either three, four, five, six or seven years. It’s like a certificate of deposit (CD), except your earnings grow tax-deferred.

At the end of the guarantee period, you can renew the annuity for another set amount of time, withdraw it during a 30-day window or annuitize the balance by choosing from an array of payout options. If you die, your beneficiary will receive the accumulation account value of your annuity without having to pay surrender charges or a market value adjustment. 

Milestone MYGA is a single premium annuity, which means you fund it with one payment. The minimum is $15,000. The maximum age allowed for someone to buy an annuity is 90.   

Fees

Like all fixed annuities, this contract has no annual fees.

However, there are surrender charges for any withdrawals made in excess of the 10% allowed annually (after the first year). These start at 9% and decline 1% every year of the guarantee period.

The IRS may collect a 10% penalty if you make withdrawals from your annuity before you are 59.5 years old.

Realistic Return Expectations

According to Blueprint Income, this annuity offers the following fixed interest rates (Feb. 2021):

• 3-year term: 1.95%
• 4-year term: 2.00%
• 5-year term: 2.35%
• 6-year term: 2.40%
• 7-year term: 2.50%

With the Sage Secure Fixed Index Single Premium Deferred Annuity (Sage Secure FIA), you have three ways for your nest egg to grow. You can choose the fixed interest rate that Sagicor declares for a one-year period, a one-year capped interest rate linked to the S&P 500 Index or a more diversified one-year interest rate linked to the S&P 500, Euro Stoxx 50 and Hang Seng Index.

At the end of each one-year term, you can keep or change your interest crediting strategy. With the two index-linked strategies, the lowest the interest rate can be is zero, so your principal is protected from a market downturn. The tradeoff, though, is that your potential for growth is limited.

The Sage Secure FIA is a single premium annuity, which means you fund it with one payment. It’s available for 10-year, 7-year and 5-year terms. The minimum premium is $25,000, while the maximum age limit is 90 years.

Fees

There are no front-end charges or annual fees that come with this annuity. But if you make any withdrawals beyond the 10% allowed annually after the first year, you will have to pay a surrender charge. This charge is 9% the first year and decreases 1% every year of the guarantee period.

Additionally, withdrawals before age 59.5 years may incur a 10% penalty from the IRS, on top of ordinary income tax.

Realistic Return Expectations

This annuity is designed to offer protection from market volatility. As noted earlier, your losses are capped but so are your earnings. Over time, the index-linked strategies will likely keep you apace with inflation - and then some, hopefully - as long you don’t make withdrawals. This kind of annuity may be best suited for money that may be needed in five to 12 years.

The Sage Select Fixed Indexed Single Premium Deferred Annuity (Sage Select FIA) is similar to Sage Secure FIA. You have three interest options: the fixed interest rate that Sagicor declares for a one-year period, a one-year capped interest rate linked to the S&P 500 Index or a more diversified one-year interest rate linked to the S&P 500, Euro Stoxx 50 and Hang Seng Index.

At the end of each one-year term, you can change your interest-crediting strategy, if you want. With the two index-linked strategies, your interest rate cannot go below zero. This protects your principal from a market downturn, though your upside will obviously be limited too.

The difference between the two annuities is that the Sage Select FIA has a lower premium of only $2,000. It also pays an immediate 4% bonus, which is vested 100% on Day 1. Additionally, it carries over what you didn’t withdraw penalty-free from year to year. This amount is 10% every year after the first year. This annuity is available to people up to age 85.

Fees

Again, like the Sage Secure FIA, this annuity comes with no front-end charges or annual fees. If you withdraw money the first year or more than the 10% allowed annually after the first year or the accrued allowed amount, you will have to pay a surrender charge. This charge is 9% the first year, decreasing 1% every year until year nine, after which there is no surrender charge.

Additionally, withdrawals before age 59.5 years may incur a 10% penalty from the IRS, on top of ordinary income tax.

Realistic Return Expectations

With surrender charges starting at 9%, this annuity is not meant for money you may need in the short term. Ideally, you wouldn’t want to touch it for at least 10 years. On the other hand, money that’s socked away for 20 or more years may be better invested directly in index funds, since there would be time to ride out market lows. With this annuity, both earnings and losses are limited. So while you’ll likely not get behind inflation, you may only stay even with it if you go with the declared interest rate option - or maybe get slightly ahead of it over time. This, of course, assumes that you don’t make withdrawals while in the growing phase of the annuity.

Like a certificate of deposit (CD), the Sage Choice Single Premium Deferred Annuity pays a higher interest rate than most savings accounts. In exchange, your money is locked in for the guarantee period of six years. Every year, the interest rate resets according to market conditions, though it will never go below the guaranteed rate of 2% for the first 10 years and 3% thereafter.

After the guarantee period, you can leave the money where it is, transfer it or annuitize it, choosing either to take payments for life or for a set period of time. Should you die at any point, your beneficiary will receive the accumulation value on the date of death with no surrender charges.

With a single premium annuity, you would fund it with your initial payment. The minimum is $2,000, and the maximum age is 90 years. The maturity age, when the contract must either be cashed in or annuitized, is 100 years.

Fees

This annuity does not have an upfront sales charge or annual fees. If you withdraw money within the first year or more than the allowed 10% in the second or third year, the surrender charge is 7%. In the fourth year, the surrender charge is 6%, 5% in the fifth year, 3% in the sixth year and 0% thereafter.

Additionally, withdrawals before age 59.5 years may be docked a 10% penalty from the IRS, plus ordinary income tax.

Realistic Return Expectations

With an interest rate floor of 2% or 3%, this annuity will probably keep you apace with inflation and possibly slightly ahead of it - as long as you don’t make withdrawals. But with its initial high surrender charges, you may be better off putting your money in a CD, especially if there’s a chance you may need it within six years. CDs will likely pay a bit less, but the penalty for early withdrawals is considerably smaller.

Unlike the four other annuities in this review, the Single Premium Immediate Annuity is meant to be turned into an income stream right away. In exchange for your premium, you will receive payments monthly, quarterly, twice a year or once a year. The minimum premium is $5,000, and the maximum age you can be is 85 years.

Payments are generally based on your age and sex. The options are:

• Period Certain: You will receive regular payments over a set period of time. Should you die before the period is over, the remaining payments will go to your beneficiary.
• Lifetime Income: You will receive steady payments for the rest of your life. When you die, the insurance company keeps the remainder in your account.
• Lifetime Income with Period Certain: As the name suggests, you will receive steady payments for the rest of your life. If you die before the set period of time, your beneficiary will receive the remaining payments for that set period of time.
• Joint Life Income: You and another person will receive payments for the rest of your lives. When one of you dies, the survivor will continue to receive payments, which can be a percentage or the full 100% of the payment when both of you were alive. 
• Joint Life with Period Certain: Again, as the name suggests, you and another person will receive payments for the rest of your lives. If one of you dies during the set period of time, the survivor or the survivor and a beneficiary will receive the remaining payments for that set period of time. Afterward, the survivor will continue to receive payments, which can be all or part of the payment when both of you were alive.

This annuity comes with a one-time withdrawal rider at no extra cost. It allows you take out at least $2,500 or up to 30% of the withdrawal base between the first anniversary of the contract and the end of the guaranteed period. A withdrawal, of course, will reduce your future income payments. 

Fees

This annuity has no contract fees or annual charges. However, withdrawals made before age 59.5 will be accompanied by a 10% income surtax from the IRS.

Realistic Return Expectations

The likelihood that you will be paid back your money - or receive more than you put in - depends on how long you live, of course. Or how long you and your partner live, if you get a joint life annuity.