Two Great Annuities That Are Catching Our Eye This Fall

Two Great Annuities That Are Catching Our Eye This Fall

Atlantic Coast Life, rated B+ by A.M. Best, has a variety of annuities that are catching our eye. We recently explained an exciting new product, which is a fixed annuity with an indexing option called Safe Anchor. This is the perfect way to offer bigger gains to your clients without the risk of investing in the stock market.

Today, we’re going to delve into two other products offered by ACL – Safe Harbor and Safe Anchor. Safe Harbor is a simple interest annuity, while Safe Haven is a compound interest annuity.

The difference between a simple interest annuity and a compound interest annuity is that a simple interest annuity only pays interest on the principal – not the principal + the accumulated interest; a compound interest annuity pays interest on the full account – the principal + the accumulated interest. In other words, a compound interest annuity pays “interest on interest.” A simple interest annuity does not.

Safe Harbor

Safe Harbor is the simple interest annuity, and we really don’t have any other product like this. This annuity is advertised for those that are planning for retirement or are already retired.

Here’s some quick product information:

  • The contract periods are 5, 6, 7, or 10 years.
  • The contribution limits are $5,000-$1 million.
  • Issue ages are 0-90.
  • Most rules about this annuity are different in Florida.
  • There is a 1% interest bonus for the first year, which helps grow the account early on.

As of September 12, the 5-year annuity has an interest rate of 4.25% for the 1st year, and 3.25% for years 2+.

Year 1 Years 2+
4.25% 3.25%

If you do the calculations, you can figure out what the comparable compound level rate would be. This helps you to compare a simple interest annuity to a compound interest annuity. ACL has done this calculation for you in the rate sheet, and it’s 3.23%.

The withdrawal options for this annuity are:

  • Withdrawing the funds in full,
  • Renewing the contract, or
  • Taking payments for a period of 5-20 years.

As of July 1, 2017, the only available rider is:

  • The death benefit feature.

The death benefit feature waves any fees associated with a lump-sum payment in the event of the owner’s death, and it costs 0.25%.

If your client doesn’t add the death benefit feature and the annuitant passes away, these are the withdrawal options:

  • The full account value can be paid over a 5-year period,
  • They can withdraw the Cash Surrender Value in one lump sum, or
  • They can transfer the annuity into their name and continue it.

Safe Haven

Safe Haven is a compound interest plan, which is what we’re all typically familiar with. This product is also advertised for retirement planners or those who recently retired.

The product specs for this product are the same as the Safe Harbor:

  • The contract periods are 5, 6, 7, or 10 years.
  • The contribution limits are $5,000-$1 million.
  • Issue ages are 0-90.
  • Most rules about this annuity are different in Florida.
  • There is a 1% interest bonus for the first year, which helps grow the account early on.

The big difference with this product is that the interest rates are 4.00% for the first year and 3.00% for years 2+.

Year 1 Years 2+
4.00% 3.00%

When you do the averaging for this product, the effective compound level rate is 3.20%.

This annuity has 3 riders:

  • Accumulated interest withdrawal: 0.05%
  • Preferred 10% free withdrawal: 0.15%
  • Death benefit feature: 0.25%

The withdrawal options are the same as the simple interest annuity.

What We Recommend

Both annuities are great options, but we feel that the Safe Haven has a slight edge. It’s what we’re accustomed to as far as being a compound interest product, and it has the riders you can build into it.

It’s simpler for the client to understand, and it has the added benefit of being able to take out the interest it accumulates.

You can check out the rates and brochures here.


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