Today’s review is on the Sentinel Personal Choice Annuity offered by Sentinel Security Life Insurance Company.
This review will discuss how the product works, when it works best, and any fees associated with the product.
The Sentinel Personal Choice Annuity is what is known as a Multi-Year Guaranteed Annuity or a MYGA. A MYGA is similar to a fixed annuity, meaning there is a fixed term and you are guaranteed a fixed rate for that defined term. The difference between a fixed annuity and a MYGA is the way the stated interest works. The rate may or may not change from year to year with a fixed annuity, but not with a MYGA.
Ex. Client invests in a 10 year fixed annuity earning 4% the first year, but after the first year the carrier may change interest to 3%.
Ex. Client invests in a 10 year Multi-Year Guaranteed Annuity earning a stated interest rate of 3%. That 3% interest is guaranteed every year for the entire 10 year contract.
Now that we know what a MYGA is and how it works, we can look more closely at the Personal Choice Annuity offered by Sentinel.
The Personal Choice Annuity is offered in three different terms…5 year, 7 year, and 10 year terms. The term is the number of years the product is guaranteed and corresponds with surrender charges on the product.
The longer the term the higher the guaranteed rate of interest, meaning the 10 year MYGA would have a higher guaranteed interest than the 5 year MYGA.
A multi-year guaranteed annuity may be a good option for someone who is either looking for a safe short-term investment, but wants a higher return than a bank CD. It may also be a good option for someone who is between the ages of 86-90 looking to pass their wealth to a beneficiary. If you are between the ages of 86-90 and your money is in a checking or savings account, a MYGA will likely provide a higher guaranteed return of interest.
Sentinel’s Personal Choice Annuity issues all the way to age 90 and provides one of the highest guaranteed interest rates in the industry.
The Personal Choice Annuity also offers the following riders…RMD (required minimum distribution), 10 percent free withdrawals, 72(t) free withdrawals, death benefit feature, and accumulated interest withdrawal. The optional riders allow the client to choose which riders will benefit them and which ones they want to add. These riders eliminate the MVA and surrender charges associated with the product.
However, there are charges attached with each of these riders. The RMD rider is offered at a cost of 0.16% per year. The 10% free withdrawals rider is offered at 0.08% per year. The 72(t) withdrawal is offered at 0.05% per year. The Death Benefit rider is offered at 0.35% per year. The Accumulated Interest Withdrawal is offered at 0.08% per year.
Remember, you choose which riders you want so you only pay the rider fees associated with the riders you attach to the product (clients age 86-90 are required to have the Death Benefit Feature rider).