Our Professional Opinion on the Delaware Life Accelerator Prime Variable Annuity
The Delaware Life Accelerator Prime Variable Annuity is no longer available for new purchases, so the real question is whether an existing owner should keep it or replace it. We would not automatically surrender this contract. Some older variable annuities contain valuable income guarantees that may be difficult to replace, while others have high fees and payouts that are no longer competitive.
Delaware Life is a just OK annuity company. The company remains rated A- by AM Best, which meets our minimum standard, but the outlook is negative. Delaware Life has also disclosed federal and SEC investigations involving the identification and reporting of certain affiliated investments. We are monitoring the situation and currently prefer other A- or better-rated insurers for new business until there is more clarity.
For existing Accelerator Prime owners, the company news is a reason to review the contract—not a reason to panic and surrender it. A replacement decision should be based on the current contract value, cash surrender value, income benefit base, guaranteed payout, rider fees, investment expenses, tax consequences, and the value of any guarantees already locked into the contract.
Accelerator Prime is a variable annuity, so the account value can rise or fall with the selected investment options. The contract can also include optional lifetime-income, accumulation-protection, principal-protection, and death-benefit riders. Every added guarantee makes the contract more complicated and may add another layer of cost.
One feature we like is that the income riders are not based solely on future market performance. The Income Boost and Income Control benefits can increase the withdrawal benefit base through an annual bonus or a market step-up. The contract generally applies the higher increase rather than adding both together. That is better for deferred income planning than relying entirely on investment performance.
The withdrawal benefit base is not cash and is not the same as the account value. It is an accounting value used to calculate future guaranteed withdrawals. A statement showing a large benefit base does not mean the owner can surrender the contract and receive that amount.
The fee structure is the biggest concern. The lifetime-income rider fee is calculated from the withdrawal benefit base rather than only from the account value. A market step-up can also increase the rider fee, subject to the contract maximum. Depending on the benefits selected, the owner may also be paying for principal protection, an accumulation guarantee, an enhanced death benefit, investment-management expenses, and other contract charges.
That does not mean every fee is wasted. A valuable guarantee can justify a fee when the contract pays more than a replacement and protects the spouse appropriately. The problem is paying several layers of fees for benefits that are no longer needed or for an income guarantee that a newer annuity can beat.
We generally believe it is cheaper and cleaner to separate market investing from guaranteed lifetime income. A managed portfolio can handle market growth, while a fixed indexed annuity with a competitive guaranteed lifetime withdrawal benefit can create the contractual paycheck. That avoids packaging market risk, investment expenses, and several insurance guarantees inside one variable annuity.
However, an existing Accelerator Prime owner may have a guaranteed income benefit that is better than what is available today. Replacing the contract could reset the income calculation, start a new surrender period, trigger taxes on a non-qualified gain, eliminate valuable beneficiary protection, or require more premium to produce the same income.
Bottom line: Accelerator Prime is not a contract we would recommend buying today, and it is no longer sold anyway. Existing owners should compare the guaranteed income they already own with newer variable annuities and fixed indexed annuities before deciding whether to keep, exchange, or begin income from the contract.
What We Like
- Guaranteed Income Is Not Purely Performance-Based: The income benefit base can receive an annual bonus or a market step-up rather than relying only on investment returns.
- Single- and Joint-Life Income: The contract can provide lifetime withdrawals for one person or continuing income for a spouse, depending on the elected rider.
- Market Growth Potential: The variable investment options can participate directly in market gains, subject to investment expenses and market losses.
- Issue-Date Guarantees May Be Valuable: Some existing owners have withdrawal percentages, bonus terms, rider provisions, or income bases that would be difficult to replace.
- Optional Protection Benefits: Depending on the contract, owners may have lifetime income, accumulation protection, principal protection, or enhanced death-benefit guarantees.
- Income Can Continue After the Account Is Depleted: When the GLWB rules are followed, contractual lifetime income can continue even after the account value reaches zero.
What We Don’t Like
- No Longer Available for Sale: Accelerator Prime is now a legacy contract, so the review is primarily about whether existing owners should keep or replace it.
- Market Losses Are Possible: The account value can decline with the selected variable investment options.
- Layered Fees: The contract can combine investment expenses, income-rider charges, principal-protection fees, accumulation-guarantee fees, and death-benefit costs.
- The Rider Fee Can Be Based on a Larger Benefit Base: The fee may continue to rise even when the actual account value does not.
- Step-Ups Can Increase the Rider Fee: Accepting a higher benefit base may also lock in a higher ongoing rider charge.
- The Benefit Base Is Not Cash: The income base cannot normally be withdrawn as a lump sum and should not be described as an investment return.
- Complex Contract Design: Income riders, bonuses, step-ups, protection riders, variable investments, and multiple account values make the contract difficult to evaluate.
- Current Company Uncertainty: Delaware Life remains A- rated, but the negative outlook and ongoing investigations deserve monitoring.
Understanding the Delaware Life Accelerator Prime® Variable Annuity (APVA)
The Mechanics of the APVA
The Delaware Life Accelerator Prime® Variable Annuity is designed for individuals seeking growth-oriented investments with optional insurance guarantees. It combines stock market investments with protection features such as lifetime income, guaranteed accumulation values, and enhanced death benefits. While providing flexibility, it also imposes higher costs and the inherent risk of market fluctuations, important considerations for first-time buyers.
Income Protection: Lifetime Income Options
If generating lifetime income is your objective, the APVA presents two Guaranteed Lifetime Withdrawal Benefit (GLWB) riders:
- Income Boost GLWB: Designed for market flexibility and future income with attributes such as:
- 7.50% simple-interest growth on the income base
- Annual step-ups for potential income increases
- Open investment access to all fund options
- Allows cancellation after five years
- Fee: 1.50% of the income base annually
- Income Control GLWB: Offers higher guaranteed income with controlled fund options, featuring:
- 8.00% simple-interest growth on the income base
- Higher lifetime payout percentages
- Uses blended fund portfolios
- Fee: 1.35% of the income base annually
Asset Protection: Accumulation Guarantees
For those apprehensive about substantial market downturns, the annuity provides Guaranteed Minimum Accumulation Benefit (GMAB) riders:
- Armor Seven GMAB: Ensures that your account will at least match your starting investment after seven years.
- Armor Ten GMAB: Promises your account will be at least 110% of your starting investment after ten years.
Each rider incurs an annual cost of 0.60%.
Legacy Protection: Death Benefit Riders
The annuity includes optional death benefits to shield heirs from market losses:
- Return of Premium (ROP): Pays the greater of your account value or the total amount contributed—cost: 0.10%.
- Highest Anniversary Value (HAV): Delivers the highest contract value on any prior anniversary before age 81, if greater than your current balance or ROP—cost: 0.25%.
Fees and Contract Details
- Base annual charge: 1.20%
- Investment fund expenses: 0.45%–2.38%
- Annual contract fee: $30 (waived if value exceeds $100,000)
- Surrender schedule: 7 years (8% declining to 0%)
- Free withdrawals: 10% annually
- Rider costs: 0.10%–1.50% each
Total costs can exceed 3%–4% per year, meaning investments must perform admirably to cover expenses, especially in flat or declining markets.
Pros and Cons of the Delaware Life Accelerator Prime Variable Annuity
Pros
- Broad investment flexibility with over 85 professionally managed funds.
- Flexible income options allow you to defer or cancel riders.
- Competitive roll-up rates that increase income potential over time.
- Guaranteed accumulation options act as downside protection.
- Legacy protection riders are available for beneficiaries.
- Capability to add new premium contributions progressively.
Cons
- High total annual costs can undermine long-term returns.
- No principal protection; balances can fall with market losses.
- Complexity makes it hard to grasp without expert assistance.
- The seven-year surrender charge period limits short-term liquidity.
- Some riders limit investment flexibility.
- Comparable fixed-indexed annuities might offer similar or superior income with reduced risk.
Who This Annuity Suits
This product can be suitable for:
- Investors who understand and accept market risks.
- Individuals wishing to defer income and maximize roll-ups.
- Buyers who need flexible options for income, growth, and legacy protection.
- Those interested in tax-deferred investment growth.
- Households with extensive investment timelines.
Who Should Avoid This Annuity
This annuity may not be suitable for:
- Conservative savers desiring guaranteed principal protection.
- Retirees requiring immediate income.
- Buyers who prefer simplicity and low fees.
- Individuals who are hesitant about managing investments or complex products.
- Those striving to avoid surrender penalties and liquidity restrictions.
Post-Surrender Period Actions
After seven years, withdrawing or transferring funds is possible without penalty. If a lifetime income rider was selected, lifetime payments may continue. Transferring money to another annuity tax-free is also an option if superior terms are found.
Death Benefits: What to Expect
Beneficiaries receive the greater of the account value or the amount guaranteed under the selected death benefit rider. Funds avoid probate, though income taxes may apply to any gains.
Guidance for First-Time Buyers
This annuity intertwines investing and insurance, potentially valuable if growth potential is desired alongside protective measures for income and legacy. However, it might not suit risk-averse buyers or those prioritizing predictable, low-cost guarantees.
First-time buyers should contemplate: What is your primary goal—growth, protection, or income?
- If contractually guaranteed growth and safety are your primary priorities, evaluate standard MYGAs and compare live Delaware life annuity rates to see what their fixed accumulation options are paying.
- If market-linked returns without losses allure you, consider a Fixed Indexed Annuity (FIA).
- If long-term investing with income flexibility appeals to you, a product like the APVA might be suitable—but seek professional advice for clarity.
Comparing Quotes: A Crucial Step Before Purchase
The Accelerator Prime Variable Annuity is just one of many options. Before making a purchase, compare it with fixed and indexed annuities that may offer lower fees, more effective guarantees, or simplified income features. Reach out to The Annuity Expert to evaluate quotes, align with your retirement objectives, and ascertain whether this annuity—or another type—offers the best income and protection for your investment.
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