Our Equitable Structured Capital Strategies Income Annuity Review (Overall)
Equitable Structured Capital Strategies Income is a registered index-linked annuity (RILA) with a built-in guaranteed lifetime withdrawal benefit. It combines index-linked growth, a buffer against some market losses, and a rider designed to provide income for life.
We would not buy this annuity for retirement income. The lifetime income feature has some useful guarantees, but your account can still lose money in a market downturn. In our opinion, accepting downside risk and giving up some upside for a retirement paycheck is a stupid trade when fixed indexed annuities can provide lifetime withdrawals without negative index credits.
- Product type: Registered index-linked annuity with variable and indexed investment options
- Insurance company: An Equitable Financial Life Insurance Company issuer, depending on your contract and state
- Lifetime income: Built-in guaranteed lifetime withdrawal benefit with an additional charge
- Income options: Level or accelerated lifetime income; the election is made at issue
- Income growth: A guaranteed simple-interest deferral incentive and potential annual resets, subject to rider rules
- Access: Series B has withdrawal charges; Series ADV has no withdrawal charge but requires an advisory relationship
- Market risk: Losses can exceed the buffer, and money removed before an index segment ends can receive less protection
Equitable Structured Capital Strategies Income Annuity Alternatives
We would compare this annuity with the best annuities from financially strong companies before putting retirement money at risk. Fill out the form below or call us at (770) 755-1565 for a free comparison.
Our Professional Opinion on Equitable Structured Capital Strategies Income
We think RILAs are stupid, and this one does not change our mind. Equitable offers a guaranteed lifetime withdrawal benefit, but the account supporting it can lose value when the index falls beyond the selected buffer. The upside can also be capped. We would rather compare an income annuity that protects against negative index credits and see which contract actually pays more guaranteed income.
There are features we like. Equitable adds a guaranteed deferral incentive to the income benefit base while you wait, subject to the rider’s rules. If the account performs well, an annual reset can potentially increase that base further. That is better for planning future income than relying entirely on market performance. But the income base is not cash, and the rider costs money.
The accelerated income option has a catch that could wreck an income plan if you do not understand it: it starts with a higher payout rate, but the guaranteed income rate drops if the account reaches zero under the rider terms. The level option is designed to maintain its rate after ordinary depletion. If you are paying bills with this paycheck, ask for both guaranteed amounts before you choose.
Equitable is a good annuity company. Equitable Financial Life Insurance Company and Equitable Financial Life Insurance Company of America each have an A (Excellent) financial strength rating from AM Best. AM Best has placed the ratings under review with developing implications in connection with a proposed merger; that is not a downgrade. A strong company does not make the investments in this annuity safe from market losses.
Our recommendation is straightforward: compare the actual guaranteed lifetime payments from financially strong insurers using the same age, deposit, start date, and single- or joint-life coverage. If a fixed indexed annuity delivers the paycheck you need without exposing your account to market losses, we would rather own that.
What We Like
- Guaranteed lifetime withdrawals: The required rider can keep eligible income coming for life, subject to its rules and the selected income option.
- A guaranteed deferral incentive: The benefit base can receive a simple-interest addition while you wait to start withdrawals, subject to the rider terms.
- Potential income increases: Annual resets can raise the benefit base if the account value grows enough, even after income begins.
- Single and joint income choices: You can compare income for one life with coverage for a spouse.
- A level income option: Its income rate does not drop solely because ordinary covered withdrawals deplete the account.
- Death benefit choices: A return-of-premium death benefit is available subject to eligibility, and another death benefit option may be available for a charge.
What We Don’t Like
- Your account can lose money: The index buffer absorbs only a specified portion of losses at segment maturity. A bad market can still hurt your account.
- Early withdrawals can make losses worse: The buffer may not apply as expected before a segment matures. Even a withdrawal without a surrender charge can receive an unfavorable interim value.
- Accelerated income can drop at zero: A higher payment today can turn into a lower lifetime payment if the account runs out. That stinks if you expected the same income forever.
- The income rider has a mandatory fee: You pay for the GLWB, and its charge reduces the account value. Series ADV advisory costs may be additional.
- Extra withdrawals can damage the guarantee: Taking too much can reduce or even terminate the benefit.
- The income base is not cash: A growing benefit base is used to calculate rider benefits; it is not the amount you can surrender.
- Series B can impose withdrawal charges: Charges may apply to early distributions even though the contract also has a free-withdrawal provision.
How the Lifetime Income Benefit Works
The guaranteed lifetime withdrawal benefit is required when you buy the contract and carries a charge. The rider uses a separate benefit base and an income rate to calculate your annual income. Eligible withdrawals can continue for life even if the account reaches zero, but the amount depends on whether you selected level or accelerated income and followed the rider rules.
You can select single-life or joint-life coverage. For a joint election, the younger covered person’s age affects the income calculation. Compare the actual guaranteed payment with other products; a larger benefit base or a higher-looking payout percentage alone does not tell you which annuity pays more dollars.
Taking more than the permitted amount can reduce future income, and an excessive withdrawal that depletes the account can terminate the benefit. Get a free income heat map based on your age, state, deposit, income start date, and whether one or two lives are covered.
Level Income vs. Accelerated Income
Level income offers a lower starting income rate than accelerated income, but the rate does not drop just because the account value reaches zero through permitted withdrawals. That makes the paycheck easier to plan around.
Accelerated income offers a higher rate while the account has a value. If the account is depleted by something other than an excess withdrawal, the rider switches to a lower guaranteed lifetime rate. That reduction can be significant. You select the option at issue and cannot simply change it later.
Suppose your illustration shows a higher payment while money remains and a smaller payment after depletion. Build your retirement plan around understanding both amounts, not just the larger number. We would have a hard time recommending a paycheck that can drop when the account runs out, particularly when guaranteed expenses do not go down with it.
How the Deferral Incentive and Annual Resets Work
Before your first withdrawal, Equitable adds a deferral incentive to the benefit base on eligible contract anniversaries, generally for up to 20 years. It is calculated as simple interest on eligible contributions at the rate set for your contract. This can increase the value used to calculate income even if the index earns nothing. It does not add the same amount to your cash account.
For example, if you deposit $100,000 and your contract has a hypothetical 5% simple deferral incentive, an eligible year can add $5,000 to the benefit base. That is an example, not a current offer. The rider rules, additional deposits, and withdrawals affect the calculation.
An annual reset may increase the benefit base when the account value rises above it. A reset and a deferral incentive can both apply in the same year. The key catch: the first withdrawal stops future deferral incentives, including a required minimum distribution. The rider’s income-rate increases before withdrawals also stop, and additional contributions are generally no longer permitted. Certain advisory-fee arrangements have their own rules, so check the contract before paying an advisor from the policy.
How the Buffer Works and Where It Falls Short
You can allocate money to available indexed segments. A segment’s cap can limit the index gains credited, while its buffer absorbs a specified portion of losses when the segment reaches its scheduled maturity. You do not own the index or receive its dividends.
For a simple example, imagine a one-year segment with a 10% buffer. If the index falls 25% over the segment, the buffer absorbs the first 10 percentage points and the segment can lose 15%, before other applicable charges. This example is not a current offer. The exact terms and calculation depend on the segment.
Here is the part that really sucks: the end-of-term buffer is not necessarily available in the same way if you take money out before the segment matures. Interim-value calculations can reduce the amount received, potentially substantially. This can affect free withdrawals, required distributions, and rider withdrawals, not just a full surrender. Surrender charges may be separate.
What Does the Income Rider Cost?
The GLWB is included as a required rider when you buy the annuity, but it is not free. Its annual charge is calculated from the rider benefit base and deducted under the contract terms. The guaranteed maximum and the rate for your election appear in your contract. A larger benefit base can mean a higher fee in dollars, even if your account loses value.
Series ADV has a separate advisory arrangement that can add another layer of cost. Optional death benefits and underlying investment options may have their own expenses. Ask for every fee, how it is calculated, and its effect on your account. You may be able to drop the GLWB after the sixth contract anniversary, but doing so ends the rider guarantee.
Withdrawals and Surrender Charges
Series B generally allows a limited free withdrawal each contract year, with withdrawal charges potentially applying to amounts beyond the allowance during the applicable schedule. The schedule can be measured from each contribution, so a later deposit may have its own charge period. Series ADV has no withdrawal charge, but an advisory fee applies under its separate arrangement.
No surrender charge does not mean the amount withdrawn is protected from an unfavorable segment interim value. These are different calculations. Ask what you would actually receive before moving money, and keep your emergency fund somewhere you can access it. If you already own an annuity, request an annuity second opinion before deciding what to do.
Required Minimum Distributions
Before taking an RMD, check how it affects the income rider. If a required distribution exceeds your guaranteed annual income amount, Equitable’s automatic RMD service and an eligible payment plan can help prevent it from being treated as an excess withdrawal under the contract rules. An improperly handled excess withdrawal can reduce future benefits. Even when handled correctly, an RMD can trigger a segment interim-value calculation.
What Happens When You Die?
The standard return-of-premium death benefit is subject to eligibility and adjusted for withdrawals. An optional highest-anniversary-value death benefit may be available for a charge. The death benefit is not automatically the same as the GLWB income base. Withdrawals and advisory-fee payments can reduce benefit amounts under their respective rules.
An eligible spouse may have spousal continuation options. A joint-life income election and a spouse continuing a contract are not the same thing; ask how the selected death benefit and income rider would be handled before deciding.
Pros and Cons Compared With Other Annuities
- Compared with a MYGA: A fixed-rate annuity locks in interest for its term. Structured Capital Strategies Income offers a lifetime withdrawal benefit and market-linked potential, but its account can lose value and its rider carries a charge.
- Compared with a fixed indexed annuity: A fixed indexed annuity can offer a GLWB without negative index credits. We would compare actual guaranteed income and prefer not exposing the account to direct index losses.
- Compared with other RILAs: Equitable offers both level and accelerated income and a guaranteed deferral incentive. Other RILAs may have different buffers and fees, but we generally do not like accepting downside risk for capped upside.
- Compared with a variable annuity: A variable annuity can offer investment choices that rise or fall. Equitable’s structured segments offer a limited buffer at maturity, but can still lose value and restrict upside.
If growth is the goal, we would also compare fixed indexed annuities with competitive multiyear cap locks, including Oceanview CapLock and Sagicor Sage Accumulator. Their fixed index structure avoids negative index credits, although the cap does not guarantee a positive return and contract charges can apply.
Who Should Look Elsewhere?
If you want protected retirement savings, a predictable paycheck that does not drop when the account is depleted, or access to your money without worrying about interim segment values, we would start elsewhere. Someone comfortable accepting market risk may find the upside and buffer interesting, but we do not think that is a good trade for the retirement income needs most of our clients bring to us.
What We Recommend
We would skip Equitable Structured Capital Strategies Income and compare fixed indexed annuities with guaranteed lifetime withdrawal benefits. Look at the actual guaranteed payments, whether income can decrease, the rider cost, and what your family could receive. A RILA’s capped upside and downside exposure are not risks we want to add to a retirement paycheck without a compelling reason.
Contact The Annuity Expert for a free, no-obligation comparison. We can help you compare guaranteed income options based on your age, state, deposit, and retirement date. Call (770) 755-1565 or use the form below.
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