SALES WEEK: To Bonus or Not to Bonus; Rate Buy-Up Index Annuities

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Non-bonus index annuities typically feature higher rates for greater long-term accumulation potential.  A premium bonus index annuity gives buyers an early boost on accumulation values.

Both Types Available with Rate Buy-Up Index Annuities

Impressive cap and participation rates are available in exchange for an annual fee on the allocations to Rate Buy-Up Accounts. One offers an attractive bonus; the other higher rates with no bonus. 

Circumstances That May Support a Premium Bonus

• Penalty-free access in the early years for wealth transfer, annuitization, or 10%-free withdrawals
• 10% penalty-free withdrawals may be higher in early years (bridge to Social Security benefits)
• Recovery from underperforming product
• Low index performance or low interest rates

Circumstances That May Support No Premium Bonus

• Objectives are focused on longer-term accumulation
• Little likelihood of liquidity or withdrawal needs
• Other financial resources are available to cover unexpected liquidity needs
• Anticipation of moderate to higher index performance 

Growth Comparison

See the historical growth of an 8% bonus with a 6% point-to-point cap compared to no bonus and 9% point-to-point cap, for both the best and worst S&P 500 10-year periods for the past 20 years (ending 12/31/21). Results assume the reduction for annual fees on Rate Buy-Up accounts.

Observations

In the Best 10 Years scenario, the no-bonus accumulation value surpasses the bonus value in the third year, and in the fifth year of the Worst 10 Years.

Competitive Bonus and Accumulation-Focused Index Annuities – click here

MarketForce Bonus Index contract issued on Form Series ICC19-ET-MP10-2000(02-19) or ET-MP10-2000(05-18). Riders issued on Form Series ICC18-430- NHW(06-18) or 430-NHW(08-03); ICC16-ET-TI(10-16) or ET-TI(10-16). Index accounts issued on Form Series ICC19-ET-P2P(05-19) or ET-P2P(05-19); ICC19-ET-P2P-F(05-19) or ET-P2P-F(05-19); ICC19- ET-1PP-F(05-19) or ET-1PP-F(05-19); and ICC19-ET-1PP(05-19) or ET-1PP(05-19). MarketMax Index contract issued on Form Series ICC12-ET-EIA-2000(01-12) or ET-EIA-2000(06-04). Riders issued on Form Series ICC17-ETFIXED-MVA(02-17) or ET-IMVA(03-16); ICC18-430-NHW(06-18) or 430-NHW(08-03); ICC16-ET-TI(10-16) or ET-TI(10-16). Index accounts issued on Form Series ICC19-ET-P2P(05-19) or ET-P2P(05-19); ICC19-ET-P2P-F(05-19) or ET-P2P-F(05-19); ICC19-ET-1PP-F(05-19) or ET-1PP-F(05-19); and ICC19-ET-1PP(05-19) or ET-1PP(05-19). Products underwritten and issued by EquiTrust Life Insurance Company, West Des Moines, Iowa. Products distributed by EquiTrust Insurance Marketing Services; in California doing business as EQT Insurance Marketing Services. EquiTrust.com. For Producer Use Only.