Annexus BalancedChoice Annuity (BCA) Review

The Annexus product line is a little different from most Annuity Products. First off, Annexus is not an insurance carrier, but rather an annuity marketing group that creates proprietary products and then finds an insurance carrier to underwrite those products. Currently, Annexus has just a few product lines that are distributed through their exclusive marketing organizations.  All of their products are currently underwritten by Aviva.  The most recent iteration of their annuities is called the Annexus Balancedchoice Annuity (BCA). This is a replacement for the BalancedAllocation Annuity (BAA).  The BAA is still available in some states where the BCA has not been approved.

So what’s so great about the BCA?

The BCA offers a few features that most annuity products do not. The product has a patented crediting method that offers unlimited upside to the client with no cap as well as the ability for the client and advisor to log in daily to see their current account balance.  This is very different from most indexed annuities, as usually the client and advisor must wait until the product’s anniversary to see how their account is doing. The company says this is more convenient and comfortable for the client as the annuity is very similar to a 401k or brokerage account except for without the risk.

How does the crediting method work?

Basically, the clients money is distributed partially in an account indexing on the S&P500 and the rest in the fixed account.  There are a 3 different options.  The higher percent in the equity side, the larger the fee.  The current fee options range from no fee to 1.50%.  What makes this product different is that it does not have annual reset, like many FIAs, but rather has a 2 year reset.  Although annual reset would be preferred, the trade-off for having no cap in a no risk product is worth the extra year, and remember, the client can still see how their account is doing daily.  The historical average return on this product is around 6% with the current allocation options.

There are a few different riders available on the product, but the most popular one is their income rider or BALIR (BalancedAllocation Lifetime Income Rider).  Inside this rider there are a few options, but I am going to concentrate on what they call the SGO-MAX.  “SGO” stands for Stacked Growth Option.  The rider, while in deferral, guarantees the client a 3% compound guarantee. The key is that the indexed growth is stacked on top of the 3% guarantee.  The story gets better because with the “MAX,” the rider account actually gets 175% of the indexed gains stacked on top of the 3% guarantee.  For example, if the indexed return 5%, the rider account would be credited with 11.75%.  Annexus has back tested their product over 4500 different scenarios and the average growth is over 11% for the rider account.  Also, when the client decides to turn on income, he/she has the option of having inflation protection by starting with a slightly lower payment.  Basically, the income would go up by the CPI-U every year.  This makes a huge difference in total payout to the client, especially for clients in their 60s or early 70s.

What I really like about this product is that it is one of the few products that can offer unlimited upside on a fixed product with no risk.  This is something that advisors want and need for their clients. Guarantees are the most expensive features in indexed annuities, by allowing the rider to depend on indexed returns rather than just guarantees, more funds can be used for upside. This is a win-win for everyone.

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