What’s Covered in this Review?
In this review I’ll be covering the following information on the Security Benefit Total Value Annuity:
- Product type
- Current rates
- Realistic long term investment expectations
- How it is best used
- How it is most poorly used
What you’ll find is that like all annuities, the Total Value Annuity does some things really well. However, there are things some agents might say about its performance that is not entirely true. It’s important you understand the differences, so you can determine if it really is a good fit as part of your financial plan.
For readers who have found my website for the first time and don’t know much about me, I am a fee only financial planner. I don’t get paid to sell annuities nor do I personally sell annuities. Unlike other fee only planners though, I do think annuities can be a smart part of a comprehensive financial plan when used correctly. Since my compensation is not tied to their sale, I really have no incentive for or against them. This makes my view impartial and objective.
Let’s dig in!
Security Benefit Total Value Annuity at a Glance
|Product Name||Total Value Annuity|
|Issuer||Security Benefit Life Insurance Company|
|Type of Product||Fixed Index Annuity|
|Standard & Poor's Rating||"A-" (Strong)|
Opening Thoughts on the Total Value Annuity
Over the past year, the #1 most requested annuity review from site visitors has been for the Total Value Annuity. Thousands of investors are recommended this product every month as a safe way to grow their money, then turn it into a future income stream for retirement. Most of the questions have to do with the 5 Year Annuity Linked TVI Index account – as it is exclusive to this single annuity contract.
For those not familiar, the TVI (Trader Vic Index) is a crediting method that links annuity returns to the 5 year return of the index. The index itself is comprised of 24 different futures contracts based on commodities, US interest rates, and global currencies. In theory, it’s supposed to be non-correlated to the stock market (i.e., they don’t both go up or down at the same time), and in back-testing provide higher overall returns.
I tested this and my findings are in this review.
In a nutshell, it is different, but it’s not necessarily much better than other alternatives. There are still a lot of uncertainties; namely, since the index has actually only been around since March of 2012, nobody knows how the index will actually perform. Unlike other indexes (S&P 500, Dow Jones Industrial Average, etc), the TVI has very limited history. Even the backtested returns only go back to 1990, rather than 60+ years for most other indexes.
Since many people who are considering this annuity are either in retirement, or close to it – the Guaranteed Lifetime Withdraw Benefit is another feature of interest. This is an optional rider, and when selected allows for either a guaranteed income for life to be taken immediately, or deferred to a future date based on a “roll up” value. The way this works is quite a bit different in reality, than the way many agents explain it. To be clear, it’s a nice benefit – but some people suggest it will allow for 5%-7% (or higher) returns – and it most certainly will not. You’ll see why later in this review, most specifically in the 1 hour plus video we created that shows exactly how it really works.
Before we get into the gritty details, here’s some legal disclosures…
This is an independent product review, not a recommendation to buy or sell an annuity. Security Benefit Life has not endorsed this review in any way nor do I receive any compensation for this review. This review is meant to be an independent review at the request of readers so they could see my perspective when breaking down the positives and negatives of this particular model annuity. Before purchasing any investment product be sure to do your own due diligence and consult a properly licensed professional should you have specific questions as they relate to your individual circumstances. All names, marks, and materials used for this review are property of their respective owners.
How Security Benefit Life Describes The Total Value Annuity
Per the Total Value Annuity brochure, here are some key points as to how it’s marketed:
- Accumulation potential with minimal risk
- A unique interest crediting option – the Annuity Linked TVI Index Account and now the Transparent Value Blended Index
- Guaranteed income for life
- Optional death benefit rider to enhance assets passed down to beneficiaries
There’s a few more bells and whistles, but those are the basics. If you’re looking for the full brochure, you can download it here.
How Financial Advisors Might “Pitch” This Annuity
Since this is a “hybrid annuity” – there are a few different ways it might be pitched. My experience, however, is that most sales agents will cling to two main components:
- The safety combined with return potential of the Annuity Linked TVI Index or Transparent Value Blended Index
- The guaranteed income for life rider
After all, that’s what a “hybrid annuity” is – an annuity that gives you a form of growth, access to capital, and guaranteed income – all rolled into one.
While those are true statements, this annuity is not all roses. It works well when used correctly, but has shortcomings just like any other financial strategy. One of the biggest issues I’ve run into, is that many agents misrepresent how this annuity will actually perform. That’s a problem.
From the many people I’ve talked to personally about their experience with agents, most seem to have been told this annuity will perform “better” than other annuities. I’ve even heard from potential buyers this annuity has a minimum return of 4% per year, but would have produced nearly 10% per year the past 20 years.
Is any of that true? Not exactly.
If your agent/advisor explains this annuity correctly, you should never get the impression you’ll earn more than 6%. If that’s part of your agents sales pitch – run, don’t walk, to find a more honest financial advisor.
Complete Video Review of the Security Benefit Total Value Annuity
Warning: We tend to get pretty in-depth and a little geeky with video reviews. This particular video is very thorough and will show you exactly how to determine Total Value Annuity performance. Enjoy, but consider yourself warned ;).
As you can see from the video review there are some major flaws in the sales pitch vs. reality going on here.
Yes, this annuity could produce some nice years. Yes, it really does stack the market linked gains to a fixed return for the two riders. But no, it doesn’t really kick out any better returns than other index annuities I’ve reviewed. In fact, it’s actually lower than some others.
Since there’s very limited history on the brand new ALTVI Index – who knows how it will really perform in the future? That’s problematic in my view.
Since the Total Value Annuity originally came out Security Benefit has added another index crediting method tied to the Transparent Value Blended Index. This is a big improvement over the original product in the Annuity Gator’s opinion. You still need to be careful though, as we’ve gotten a lot of emails and comments from website visitors about agents suggesting this change makes 10%+ returns possible. Before you buy into their sales pitch, be sure to get the facts on the new index by reading our review of the Transparent Value Blended Index (TVBI) here.
The Annuity Gator’s End Take on the Total Value Annuity
Where it works best:
- For producing a reliable, “pension like” guaranteed income stream (so long as GWLB rider is elected, and used shortly after purchase)
- For producing an income for life that cannot be outlived by a surviving spouse
- For investors who have a family history of life longevity
- For producing additional income for home healthcare needs (subject to state approvals and annuity holder qualification)
- For investors that have no need for their money or generating large returns, but want it to grow safely until transferred to their beneficiaries
Where it works worst:
- For those who need to have liquidity and flexibility with their financial assets
- For those seeking maximum long term growth
- For those expecting real returns of greater than 6% per year on average
The Total Value Annuity does best what it’s name implies – provides numerous potential benefits, rolled up into one product. Think of it like a swiss army knife – it can do a whole bunch of things, it just doesn’t do any one thing really well if you try to use all the features simultaneously.
One of the most important things for investors to understand is that the “roll-up rate” is not the actual return, nor is the “lifetime withdraw rate” the actual return. In no way will it produce the 8%+ return numbers a lot of uneducated advisors toss around when trying to sell it.
For someone strictly looking for guaranteed income with no market risk, there are better options available. For someone looking for an investment that cannot go down, and won’t need their money for 10 or more years – this might be a good fit. In fact, it actually does have more “growth” potential than most other annuities on the market today.
I’m still convinced, though, that most agents don’t realize what the real return potential is, and significantly over-promise what’s realistic – so be especially wary of anyone who suggests this annuity will work better than how I illustrated it here. If the agents are being upfront and honest, you’ll notice their explanations match very closely (if not exactly) as described in this review. When that happens, you have an agent you can trust.
As a recap to the video (for those that don’t have 60+ minutes to watch it), the Total Value Annuity will not actually return 8%. Nor will it likely return 6% (thought that is possible with the Transparent Value Blended Index and current participation rate). When financial advisors use those numbers they are referring to percentages used to calculate the income guarantee, and they are entirely hypothetical (i.e., non-guaranteed). But, it does have the potential to grow more than other index annuities thanks to the potential of the Annuity Linked Trader Vic Index. That said, there’s also the potential to make nothing other than your bonus, especially since there’s less than 1 year of actual, real data on this new index.
The only way to know if this annuity is a good fit for you, is to have it tested. We do this free at AnnuityGator.com,so just get in touch with me and I’ll use the calculator from the video to illustrate for you what returns for your situation are likely to be. If your agent was honest with you the numbers will match up – if not, well then you might want to reconsider who your agent is.
Have Questions on the Security Benefit Total Value Annuity? See any Mistakes?
If you have questions please let me know. [You can reach the Annuity Gator via the Free Annuity Help form here]
I know annuities can be confusing and a lot of people are pushing investors very hard to buy them. But you need to know the real facts to make sure if you go that route you don’t end up regretting it later. After all, annuities are long term investments with contracts, surrender penalties, etc. For some people they won’t make sense at all, but for some they might.
If you know anyone who has an annuity or is thinking of buying one, please share this post with them. I know a lot of people are getting very conflicting information and my goal in writing this review and making the video was to educate in an objective way. If you have a Facebook account you can click on the little “Facebook” icon and share this article. That way more people will be able to find it and hopefully more people will benefit.
Thanks for bearing with me on this rather long post, I hope you found it beneficial in your research on the Security Benefit Total Value Annuity.
Lastly, like all humans – I do make mistakes. If you see one on this review please reach out and let me know. I’m always more than happy to make corrections and give credit where it is due. If you’re an investor and this review causes confusion and creates questions feel free to reach out as well. I can’t always get back right away but usually I can clear up those questions within a few days.
The Annuity Gator