Our GBU Future Flex Preferred Annuity Review (Overall)
The GBU Future Flex Preferred 5 and 8 are flexible-premium fixed annuities. You can add money over time and earn interest declared by GBU, while retaining access to a portion of your account during the surrender period.
We like the ability to add money and the withdrawal flexibility, but we do not like locking up money for five or eight years when the initial rate is guaranteed for only one. If you want to know what you will earn for the entire term, we would compare a multi-year guaranteed annuity first.
- Insurance company: GBU Financial Life, a fraternal benefit society
- Product type: Flexible-premium deferred fixed annuity
- Versions: Preferred 5 and Preferred 8
- Initial rate: Guaranteed for the first contract year; later rates are declared by GBU, subject to the contract minimum
- Free withdrawals: Generally up to 10% annually, with a possible 20% allowance after an unused year, subject to contract rules
- Additional deposits: Accepted under the contract’s limits without starting a new surrender period
- Issuer rating: A− (Excellent) from AM Best
GBU Future Flex Preferred Annuity Alternatives
Before you settle for a one-year rate guarantee and a longer surrender schedule, compare the best annuities for your money. Fill out the form below or call us at (770) 755-1565 for a free comparison.
Our Professional Opinion on GBU Future Flex Preferred
The biggest problem is the mismatch between the rate guarantee and the surrender period. GBU guarantees the initial rate for one year, while the Preferred 5 and Preferred 8 have five- and eight-year surrender periods. GBU can declare a different rate after that first year, subject to the contract’s minimum. That stinks if you thought the “5” or “8” meant your starting interest rate was locked for the whole term.
We like that you can make additional deposits without starting a new surrender period, subject to the deposit limits. The ability to carry an unused free-withdrawal allowance into the following year is also better than a simple use-it-or-lose-it allowance. If you want to build savings gradually and need that flexibility, those features are worth looking at.
But if you already have the money available, we would usually compare a MYGA that locks in its interest rate for the period you choose. Why accept an eight-year surrender schedule with only one year of rate certainty unless the extra flexibility is worth it to you? Compare the fixed annuity rates and withdrawal terms before deciding.
GBU Financial Life is an OK annuity company with an A− (Excellent) financial strength rating from AM Best. That meets our minimum for a long-term annuity, but there is another issue to understand: GBU is a fraternal benefit society, and its contracts generally are not covered by state life and health guaranty associations. That matters when comparing the company standing behind your money; confirm the protection available with your state association. Depending on the contract and state law, a certificate holder may also be assessed a share of a reserve impairment.
If you plan to use the interest to pay your bills, compare the actual guaranteed paycheck available from an annuity with a lifetime income rider. This contract’s declared interest rate can change, and interest withdrawals are not guaranteed to last for life.
What We Like
- Add money over time: Additional deposits are accepted under the contract limits without starting another surrender period.
- First-year access: A portion of the account can generally be withdrawn without a surrender charge during the first year.
- Unused access can carry forward: If you do not use the allowance in one year, the following year’s free withdrawal can increase to 20%, subject to the rules.
- Health-related waivers: Qualifying nursing home confinement, home health care, critical illness, or cognitive impairment can provide additional access under the applicable provisions.
- No required investment tracking: GBU declares an interest rate; you do not need to follow an index or choose a cap.
What We Don’t Like
- Only one year of initial rate certainty: The rate may change after year one even though the surrender period continues.
- Eight years is a long commitment: The Preferred 8 may keep more of your money subject to surrender charges long after the initial rate guarantee ends.
- Fraternal society coverage: Do not assume the same state guaranty association protection that may apply to an annuity from a member insurance company.
- Not guaranteed lifetime income from interest withdrawals: A changing declared rate is a poor substitute for a lifetime income guarantee.
- Early access above the allowance can cost you: Surrender charges apply, and an applicable market value adjustment may affect the payout under the contract.
Preferred 5 vs. Preferred 8
The two versions share the same basic idea: flexible deposits, a declared fixed interest rate, and access to a portion of the account. The main differences are the surrender period and the minimum initial deposit.
| Feature | Preferred 5 | Preferred 8 |
|---|---|---|
| Initial deposit | Generally $1,000 minimum | Generally $10,000 minimum |
| Surrender period | 5 years | 8 years |
| Initial declared rate | Guaranteed for the first year | Guaranteed for the first year |
| Additional deposits | Accepted under contract rules | Accepted under contract rules |
| Free withdrawals | Generally 10%, with a potential 20% after an unused year | Generally 10%, with a potential 20% after an unused year |
A longer surrender period might come with a different interest offer, but the original declared rate is not locked for eight years. Compare what each version offers at purchase and whether you need the features enough to accept the commitment.
How the Interest Rate Works
GBU declares the starting interest rate when the contract is issued. That initial rate is guaranteed for the first contract year. Afterward, GBU declares renewal interest, which can be higher or lower, but cannot be less than the guaranteed minimum in your contract.
That difference is important. A fixed annuity can have a surrender period longer than its initial rate guarantee. A MYGA guarantees its stated initial rate for the chosen multiyear term. With Future Flex Preferred, you may not know today what you will earn throughout years two through five or eight.
Additional deposits are allowed subject to minimums and limits. Money added after the first year can receive the interest rate in effect when GBU receives it. Ask what rate applies to each deposit and whether the amount you plan to add affects your surrender period.
Compare Other Fixed Annuity Rates
Compare the interest guarantee, access, and insurance company before you commit. The products below may guarantee their rates for multiple years. Future Flex Preferred guarantees its initial declared rate for only the first year, so do not treat its surrender period as the length of its rate guarantee.
Withdrawals and the 20% Carryover
You can generally withdraw up to 10% of your account value each contract year without a surrender charge, including the first year. If you do not use that waiver in the preceding year, the available amount can increase to 20% in the following year. The allowance does not keep piling up indefinitely; contract conditions apply.
For example, if you do not use your allowance in one year and your account value is $100,000 when the following year’s allowance is calculated, you may have up to $20,000 available under the contract’s rules. Confirm the actual calculation and any other conditions before requesting a withdrawal.
That is a useful feature if you want some access without committing to a withdrawal every year. But “free withdrawal” means free of the applicable surrender charge, not that taking the money cannot affect the interest you earn or your future income plan.
If You Plan to Take Withdrawals
If you are taking interest to live on, compare a guaranteed lifetime withdrawal benefit and its actual guaranteed payment. Future Flex Preferred can declare a different rate after the first year, and its interest withdrawals do not promise a lifetime paycheck.
If you need withdrawals but not lifetime income, compare an annuity that adds a bonus to the account up front. A larger starting balance can leave more money to earn interest after withdrawals, even at a lower rate, but it does not automatically produce a better result. Compare the withdrawal rules and account values.
If your health is poor or you expect a shorter retirement, compare an annuity with a bonus that is available to your beneficiaries at death. Check the vesting and death-benefit provisions before assuming the larger amount will be paid.
Surrender Charges and Market Value Adjustment
During the five- or eight-year surrender period, taking more than the available free allowance can trigger surrender charges. They can reduce the amount you receive, including principal. If you might need the bulk of this money soon, do not put it here.
An applicable market value adjustment may also increase or reduce an early payout under the contract’s rules. State and contract terms matter. Before withdrawing more than the free amount, ask GBU for the actual amount you would receive.
When the surrender period ends, review the interest offer and renewal choices before deciding what to do next. The declared rate can change over time, so do not assume the original offer will continue.
Health Waivers and Required Minimum Distributions
The contract includes waiver provisions for qualifying health events. These can include nursing home confinement, home health care, terminal or critical illness, and certain limitations in daily activities or severe cognitive impairment. Eligibility, waiting periods, and state availability apply.
A waiver lets you access your own annuity money; it does not create a separate pool of long-term care insurance. Applicable required minimum distributions can also receive special withdrawal treatment. Check the contract and ask how the waiver is applied before requesting money.
What Happens When You Die?
Before annuity payments begin, the death benefit generally equals the accumulation value under the contract. Withdrawals reduce the amount left for beneficiaries. The contract does not turn a one-year declared interest rate into a guaranteed extra death-benefit bonus.
If your spouse is the beneficiary, ask about spousal continuation and how continuing the annuity affects the interest rate, access, and beneficiary choices.
GBU’s Fraternal Structure and Your Protection
GBU Financial Life is a fraternal benefit society. Its contracts generally are not covered by state life and health guaranty associations. That means you should not assume the guaranty association backstop commonly discussed with annuities issued by member insurance companies applies to this contract.
We care about this. GBU’s A− rating meets our minimum, but the promises still depend on GBU’s ability to pay. Ask your state’s guaranty association about the contract and compare the financial strength of the companies you are considering.
Pros and Cons Compared With Other Annuities
- Compared with a MYGA: A MYGA locks in its initial rate for a multiyear term. Future Flex Preferred offers flexible deposits and its carryover withdrawal feature, but its starting rate is guaranteed for only one year.
- Compared with a fixed indexed annuity: Future Flex Preferred uses a declared interest rate. An FIA uses index-linked crediting and can offer a lifetime income rider, but interest depends on its strategy.
- Compared with a RILA: A registered index-linked annuity can expose you to market losses beyond its buffer or floor. We think taking that risk while accepting limits on upside is a stupid trade when protecting retirement savings is the goal.
- Compared with a variable annuity: A variable annuity offers market investments that can rise or fall. Future Flex Preferred credits declared fixed interest instead.
Who Should Consider Future Flex Preferred?
Someone who wants to add smaller deposits over time, values the carryover withdrawal feature, and understands the one-year initial rate guarantee may find the design useful. We would still compare the current offer and the insurer with other fixed annuities before buying.
We would look elsewhere if you want to lock a competitive interest rate for the full five- or eight-year period, need most of your money soon, or want a guaranteed lifetime paycheck. If the company’s fraternal status is a concern, compare annuities issued by insurers that participate in the applicable state guaranty association.
What We Recommend
We like the withdrawal flexibility, but we would not choose Future Flex Preferred just because the first-year rate looks good. Compare a multiyear rate guarantee, the surrender schedule, the company, and the access you need. The Preferred 8 needs to offer a compelling reason to accept an eight-year commitment with a one-year starting rate.
Contact The Annuity Expert for a free, no-obligation comparison. We can compare fixed interest, access to your money, and guaranteed lifetime income based on what you need your savings to do. Call (770) 755-1565 or use the form below.
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