Introduction

Fixed Index Annuities are contracts between the annuitant and an insurance company in which the insurance company promises to credit interest based on the performance of a certain stock market index. Fixed Index Annuities have an inbuilt capital protection feature, so your principal will remain safe even if the index goes down.

Annuities are complex products, and many advisors try to missell them without properly understanding the buyer’s needs. Thus, you must educate yourself on these products and not solely depend upon the annuity agent’s high-pressure sales pitch.

This article discusses an in-depth review of the Atlantic Coast Retirement Plus Multiplier Fixed Indexed Annuity. Atlantic Coast Retirement Plus Multiplier Annuity is a deferred, fixed-indexed annuity that may be a good option if you are looking for an all-rounder policy, with growth, the safety of principal, good indexing options, and an accelerated lifetime income rider. After extensive research and due diligence, I have provided an in-depth and unbiased analysis of this plan.

The review of the Atlantic Coast Retirement Plus Fixed Indexed Annuity will be broken into multiple subcategories:

• Product Description
• Rates and Costs Associated with the Atlantic Coast Retirement Plus FIA
• Riders 
• What Makes This Product Stand Out?
• What I Don’t like
• Company Details
• Conclusion

Product Description – Atlantic Coast Retirement Plus Multiplier Fixed Indexed Annuity

The Atlantic Coast Retirement Plus Multiplier is a Fixed Indexed Annuity (FIA) plan that offers the annuitant (annuity investor) an opportunity to earn a market index-linked return without having to incur the risk of market downside. This is a suitable plan for people who are approaching retirement and aim to grow and protect their retirement savings. This plan is also suitable for people who are looking for guaranteed, accelerated lifetime income or plan to leave a legacy for their loved ones, in addition to protecting and growing their retirement savings.

Let’s have a look at the high-level fine print of Atlantic Coast Retirement Plus Multiplier Fixed Indexed Annuity, and then we will discuss each point in detail.

The Atlantic Coast Retirement Plus Multiplier Fixed Indexed Annuity is almost identical for all three policy tenures, except the crediting strategies and surrender charge schedule. For ease of discussion and better clarity, we will discuss the Atlantic Coast Retirement Plus Multiplier 7 Fixed Indexed Annuity for the rest of the article.

How does the Atlantic Coast Retirement Plus Multiplier Fixed Indexed Annuity policy work?

Any annuitant (maximum age at the time of policy issue: 80) can purchase the Atlantic Coast Retirement Plus Multiplier Fixed Indexed Annuity with a minimum initial purchase amount of $5,000, and in return, he will earn market index returns (calculated through a formula that we will discuss shortly), credited as per the chosen crediting period. Apart from the regular crediting period, there are various events that may trigger earnings credit: On free withdrawals, for a long-term care event or terminal illness or injury event, or when a death benefit is payable.

The Atlantic Coast Retirement Plus Multiplier Fixed Indexed Annuity offers the annuitant to choose from one of the two indexes to determine his earnings crediting formula. Both of these indexes have three strategies each and a fixed-rate guaranteed interest strategy to choose from  (making a total of 7 strategy options). We will discuss each available index briefly:

1. S&P 500 Index: The S&P 500 index is one of the most popular and oldest indexes in the world. It tracks 500 large-cap publicly traded stocks listed in the United States. It is a reliable index and has often succeeded in the test of time. 
   
   It is very important to note that the Atlantic Coast Retirement Plus Multiplier Fixed Indexed Annuity offers the S&P 500 index with participation or caps in place, meaning that your interest-earning capacity is capped. These rates tend to change frequently; I will discuss more on the rates shortly. 

2. Goldman Sachs Aging of America Dynamic Balance Index: The index, dynamically allocates to equities, as represented by the Aging of America Index, and U.S. fixed income, as represented by the 10-Year U.S. Treasury Rolling Futures Index. The Aging of America index seeks to provide targeted exposure to companies in the healthcare and real estate sectors that may benefit from the growth in the older population in the United States. Exposure to 10- Year U.S. Treasury Rolling Futures Index, a known fixed income benchmark, is based on a daily observed momentum signal. The Goldman Sachs index includes a 5% volatility cap feature seeking to generate more stable, smooth returns over time, but at the time same, limits the true return earning potential of the index.
   
   It is very important to note that the Retirement Plus Multiplier Fixed Indexed Annuity comes with cap rates, or participation rates for these indexes, meaning that you will be credited only a part of the index return to your annuity. These rates tend to change frequently; I will discuss more on these rates shortly.

Note: In addition to allocating the funds in the following indexes, the annuitant also has the option to allocate funds at a fixed interest. These Fixed Rates tend to change from time to time. The Fixed Value Rate for the 7-year withdrawal charge period at the time of writing this article was 4.50%, which is decent when we compare it with competitors. You can view the latest fixed rates of this annuity here.

Rates and Costs associated with the Atlantic Coast Retirement Plus Multiplier Annuity

The earnings crediting formula

The earnings crediting formula is the most important part of this annuity discussion. It is important to know that we don’t simply get the index return credited to our annuity. There are a few rates and caps that the company has in place that affect our earnings. These rates tend to change over time, and the updated rates can always be checked with the help of your trusted advisor and/or on the company’s website. You can view the latest indexing rates of this annuity here.

The Atlantic Coast Retirement Plus Multiplier Fixed Indexed Annuity uses seven crediting strategies:

1. Point to point with Cap: Cap rate is the most important terminology in an FIA. It means at what rate your interest-earning capacity is capped. For example, if an index returned 13% but your contract’s cap rate is 7%. In this situation, you will be eligible for an interest credit of 7% only. It doesn’t matter how much the index goes above the cap rate; the maximum interest you can earn is the cap rate.

2. Point-to-Point Participation Rate: The amount of interest that the company will credit is based on a declared participation rate on the selected index on a point-to-point basis. Once the index gain is determined (if any), it is multiplied by the participation rate. The remaining amount is what is credited to the contract for that term. Formula to calculate interest credit for strategies with participation rate: (Participation Rate % X Index Return).

3. Fixed Rate: If you opt for a fixed rate, you simply earn the fixed rates for a particular period specified by the company before your policy begins. These rates usually tend to be very low compared to other fixed avenues, such as CDs and MYGAs, so you should avoid fixed rates in a general scenario. The 1-year fixed rate on this policy at the time of writing this article was 4.50%, which is decent compared to other similar annuities.

These strategies can be mixed and matched with different indexes, tenures, and indexing options. For example, you can select the S&P 500 Index with a 1-year annual point-to-point with a cap rate, or the same with a 1-year point-to-point with participation rate, and so on.

Let’s look at the Atlantic Coast Retirement Plus Multiplier Fixed Indexed Annuity rate chart to understand better the earnings crediting strategies. Note that these rates are updated as of November 2022. These rates tend to change from time to time. You may check the latest rates here.

From the above rate sheet, we know that there are seven interest-crediting strategies; three S&P 500 Index strategies, three Goldman Sachs Aging of America Dynamic Balance Index strategies, and one fixed rate strategy. You will notice Cap rates, and participation rates in place, limiting your maximum interest-earning potential. Also note that these rates vary for the “No Rider,” “Growth Rider,” and “Income Multiplier.” While Growth Rider is simply the additional paid rider that gives us an option to have higher participation and cap rates, income multiplier has to do with accelerated lifetime income. I will discuss more on riders in the later section of this article.

Based on the index constituents, past performance, and volatility, I believe that S&P 500 1-year point-to-point with Cap strategy or Goldman 3-year point-to-point with participation rate has the highest return potential (as of January 2023). I would not you to go with the S&P 500 strategies with participation rates, because the company offers a very mediocre participation rate on the S&P 500 index.

Surrender/Early Withdrawal Charge

Should your needs change unexpectedly, and you need to take an excess withdrawal (a withdrawal that is above the free withdrawal amount available in a given contract year), you may be entitled to access additional monies, although certain charges and penalties may apply. Any amount withdrawn in excess of the remaining free withdrawal amount is subject to a Surrender Charge. Below is the Surrender Charge schedule for Atlantic Coast Retirement Plus Multiplier Fixed Indexed Annuity.

The surrender charge schedule is different for the different tenures of annuities and also changes for some states. For a quick comparison of surrender charges across different products of Atlantic Coast, you may visit their fixed indexed annuities product page here.

Market Value Adjustments – In case you need to surrender your policy, a Market Value Adjustment (MVA) will be applied to the portion of the withdrawal or surrender that exceeds the free withdrawal amount during the withdrawal charge period.

Contract/Administrative Charge

The Atlantic Coast Retirement Plus Multiplier Fixed Indexed Annuity levies no annual contract or administrative fees.

Riders

In an insurance policy, riders are an additional provision that can be added to enhance the benefits of the base policy. The Atlantic Coast Retirement Plus Multiplier Fixed Indexed Annuity comes with an optional growth rider and income multiplier rider.

Growth Rider: When you purchase this rider, the participation and cap rates are increased, so your annuity benefits from more of the market’s positive performance. The growth rider also ensures 0% floor protects accumulation value from market loss. Your accumulation value will be Greater of the account value or 100% of the initial premium, less withdrawals, guaranteed after the first 10 years. The growth benefit rider costs 1.25% annually, as of now, which is deducted from your annuity’s accumulated value each year. If you feel that the market may perform well, it makes sense to take this rider; however, this rider cost won’t do justice if the market performs poorly. The riders’ costs may keep changing; you can check the latest rates here.

Income Multiplier Rider: This rider provides a stream of income payments to the owner, which can never be outlived, even after all of the accumulation value has been withdrawn. The Rider is only available if the Annuitant is the Owner, unless the Owner is not a Natural Person. Joint Owners are available if they are spouses. The rider also allows you to complement up to 100% of your initial investment with an income bonus. The growth benefit rider costs 0.95% annually, as of now, which is deducted from your annuity’s accumulated value each year. The riders’ costs may keep changing; you can check the latest rate here.

It is advisable to take advice from your trusted financial advisor to check whether this rider will turn out to be useful for you or not.

The Atlantic Coast Retirement Plus Multiplier also comes with a Nursing Home and Terminal Illness Waiver. This no-fee benefit is automatically included for owners providing them with Extended care and Terminal Illness benefit.

Nursing Home Waiver: After the first contract year, an annuitant can withdraw up to 100% of the contract’s accumulated value if he is confined to a Qualified nursing home for at least 90 consecutive days. No withdrawal charge or MVA applies if the owner qualifies for this benefit. Diagnosis must occur after the contract is issued, and written proof with supporting documentation is required from a qualified physician.

Terminal Illness Waiver: After the first contract year, an annuitant can withdraw up to 100% of the contract’s accumulated value if he is diagnosed with a terminal illness with a prognosis of 12 months or less. No withdrawal charge or MVA applies if the owner qualifies for this benefit. Diagnosis must occur after the contract is issued, and written proof with supporting documentation is required from a qualified physician.

What makes this product stand out?

The Atlantic Coast Retirement Plus Multiplier Annuity offers some features that not many fixed-indexed annuities offer. The ones that I like the most are:

1. The plan offers good, straightforward strategies on the S&P 500 Index
2. No annual contract, mortality & expense, or administrative fees
3. Free enhanced extended care and terminal illness waiver
4. Higher Caps and Participation Rates: Caps on the equity indexing strategies are a bummer! However, the good thing with the Atlantic Coast Retirement Plus Multiplier Fixed Indexed Annuity is that it provides higher caps, even for a popular index like the S&P 500. Similarly, it also provides higher participation rates for the Goldman Sachs Aging of America Dynamic Balance Index.
5. Low Initial Premium Requirement: $5,000 is the minimum initial premium, while most other competitors demand between $10,000 – $25,000
6. Multiple Payout Options: Life Only, Life with Period Certain, Joint and Survivor Life, Period Certain, Single Life or Joint Life with Cash Refund, and Single Life or Joint Life with Installment Refund.

What I don’t like

Some of the features that I don’t like about the policy are:

1. Limited number of indexes to choose from
2. Higher rider charge for growth and enhanced income rider compared to a few competitors.
3. The AM Best rating of Atlantic Coast is B++, which is not bad, but not the best. Other players that offer similar features have better AM Best rating.

Company Details

You must always keep in mind that, unlike CDs, annuities are not guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other federal insurance agency. An annuity’s “guarantee” is only as strong as the insurance company that issues the annuity, so it is always important to assess the issuing company before buying an annuity.

Atlantic Coast Life Insurance Company

Atlantic Coast Life Insurance Company has been in the business since 1925. It is one of the oldest providers of fixed and fixed-indexed annuities in the US.

It is rated as follows by the rating agencies:

Although the rating is not the best, it is not even that bad. The company is privately managed by Advantage Capital post its sale in 2015. It is considered to be strong and stable financially. As of year-end 2021, some of the other financial highlights for Atlantic Coast Life Insurance Company include its:

• $1.19 billion in total sales / direct written premium
• $61.3 million of capital and surplus
• $17.4 million in net operating income
• $1.08 billion in total assets

Conclusion

With the advancement in healthcare and technology, the average American today is living longer than ever. So, it’s very important to have a stream of income that can grow safely and steadily and have the ability to provide a guaranteed income during the retirement years. This not only helps you to mitigate the risk of outliving your income but also ensures that you continue to live a decent life even in your retirement.

The Atlantic Coast Retirement Plus Multiplier annuity helps you grow your savings with much less risk. Through its higher cap and participation rates, and optional riders, it offers principal protection and the opportunity to participate risk-free in the market index, providing a stream of guaranteed income. Although a notable downside is that the optional rider cost is slightly on the higher side when compared to other annuities that offer a similar rider.

If you are considering buying a Fixed Indexed Annuity that works for growth, accumulation, lifetime income, and market protection, the Atlantic Coast Retirement Plus Multiplier FIA might be a decent product to look after. However, you might want to compare the policy with other larger players (with better credit ratings), who might offer similar features at similar/or even lower costs.