Our Professional Opinion on the Penn Mutual Premier Foundation Indexed Annuities
We would start with Premier Foundation Flex for accumulation, not automatically choose Plus for its bonus. Flex has a five-year surrender period; Plus commits you to ten years. A bonus added to your account is attractive, but it is not enough by itself to justify five more years of surrender charges.
The part we do not like is that Penn can change the indexed caps after each one-year segment while you are still committed to the annuity. We prefer a competitive cap locked for the entire surrender period when that choice is available. Premier Foundation does guarantee the initial rate on its fixed account for the selected product term; that is different from guaranteeing the indexed cap.
Penn Mutual is a great company. The issuing subsidiary, The Penn Insurance and Annuity Company, has an A+ (Superior) AM Best financial-strength rating, well above our A− minimum.
If guaranteed lifetime income is your goal, compare the optional lifetime withdrawal riders with other income annuities. For income you plan to start years from now, we prefer a contractual guaranteed roll-up over relying on projected index gains. Compare actual guaranteed payments using the same deposit, ages, income date, and single- or joint-life coverage.
What We Like
- A traditional S&P 500 choice: You do not have to rely on an engineered index.
- Annual crediting: The indexed accounts measure performance over one-year periods.
- A term-long fixed account guarantee: The initial fixed rate lasts for the selected product term.
- A real account bonus on Plus: The enhancement is added to contract value, subject to its vesting rules.
- A guaranteed growth rider option: You can compare contractual benefit-base growth for future income, for an additional charge.
What We Don’t Like
- Indexed caps can fall: The rate used to calculate potential indexed interest can change each year.
- Plus carries a ten-year commitment: The bonus needs to compensate for the longer restriction.
- The Plus bonus has a first-year catch: A withdrawal or death can cause the enhancement to be removed, subject to state exceptions.
- Income riders cost extra: Rider charges reduce actual account value; the benefit base is not money you can cash out.
Premier Foundation Indexed Annuity Overview
Premier Foundation is a fixed indexed annuity family with three versions:
- Flex: Five-year surrender period, with no premium payment enhancement.
- Prime: Eight-year surrender period, with no premium payment enhancement.
- Plus: Ten-year surrender period and a premium payment enhancement added to the account.
The minimum initial deposit is $25,000. The product is not offered in New York, and contract terms can vary by state. You can allocate money to a fixed account, available indexed accounts, or a combination.
Key Features
| Feature | What to know |
|---|---|
| Surrender periods | Five years for Flex, eight for Prime, and ten for Plus. |
| Indexed choices | One-year S&P 500 and S&P Global Broad Market Index accounts. |
| Fixed account | Initial rate guaranteed for the selected product term. |
| Plus enhancement | Credited to contract value, with a one-year vesting rule and state exceptions. |
| Free withdrawals | Up to 10% annually, subject to the contract terms. |
| Income riders | Guaranteed Growth or Inflation Security, for an additional charge; choose one. |
How the Indexed Accounts Work
The indexed options measure the S&P 500 or the S&P Global Broad Market Index over one-year periods. If the index rises, interest is credited up to the applicable cap. If it falls, the index credit for that segment is zero; later index declines do not take away interest already credited. Withdrawals and applicable rider charges can still reduce the contract value.
We like the annual point-to-point design. Over ten years, it provides ten opportunities for an interest credit. A two-year strategy provides five. More opportunities do not guarantee a better return, but we prefer the opportunity to lock in a gain each year.
The catch is the renewal cap. Penn guarantees the cap for the current one-year segment, not for the entire five-, eight-, or ten-year surrender period. A competing annuity with a competitive S&P 500 cap locked for its full term deserves a serious comparison. A cap is a ceiling on a possible credit, not a guaranteed annual return.
The Fixed Account Has a Different Guarantee
The initial fixed account rate is guaranteed for five years with Flex, eight with Prime, and ten with Plus. After that initial period, Penn declares rates for one-year renewal periods, subject to the contract’s minimum. The indexed caps do not share that initial term-long guarantee.
If you intend to put most of your money in the fixed account, compare the guaranteed result and access with a MYGA. A fixed rate that already meets your goal may be preferable to accepting uncertain indexed credits. Use the same deposit and time horizon; do not mistake a cap for a fixed rate.
The Plus Bonus and First-Year Vesting Rule
Plus adds a premium payment enhancement to actual contract value. Its amount depends on eligible deposits. Additional payments listed on the application and made within the first 45 days can help qualify for a higher tier under the applicable rules.
The enhancement becomes fully vested after one year. A withdrawal or death within 12 months of receiving it can cause the enhancement to be removed, with state exceptions. Connecticut protects the enhancement from that removal, and California has a death-related exception for an owner or annuitant over issue age 65.
This first-year rule matters if you are in poor health. Do not assume your family receives the bonus immediately. Compare the amount actually payable at death with an annuity whose bonus is fully vested and payable on a qualifying death.
Withdrawals and Surrender Charges
The contract offers an annual free-withdrawal allowance of up to 10% of contract value, subject to its terms. Confirm when the allowance begins before relying on money you might need immediately.
Withdrawals above the allowance can trigger a surrender charge during the applicable five-, eight-, or ten-year period. Standard charges start at 8% and decline over time; state schedules vary. A withdrawal can also reduce the death benefit and any income benefit.
Additional access may be available for qualifying medical or disability events. A waiver can be helpful, but it is not a substitute for cash you can access without meeting special conditions.
Optional Lifetime Income Riders
Premier Foundation offers two optional withdrawal benefits for an additional cost. You choose one; they cannot be combined. Each uses a separate benefit base to calculate income. That base is not the amount available for a lump-sum withdrawal.
The Guaranteed Growth Withdrawal Benefit provides guaranteed benefit-base growth for up to ten years or until income starts, whichever comes first. We like a contractual roll-up when you need income later because you do not have to count on favorable index returns for that growth.
The Inflation Security Withdrawal Benefit uses the Consumer Price Index in its benefit calculation, subject to rider limits. That can help address rising costs, but it does not promise to match your personal inflation. Compare the guaranteed starting payment and later increases with a level-income choice before deciding.
Both riders have charges deducted from your actual account. Ask for the guaranteed single- or joint-life payment, the fee, and what excess withdrawals do to the benefit. Do not buy an income rider if your only goal is accumulation.
Death Benefit and Spousal Continuation
Before annuitization, the death benefit is generally the greater of contract value or the minimum guaranteed surrender value, adjusted for applicable rider charges. Withdrawals reduce what remains for beneficiaries, and the Plus enhancement’s first-year rule can affect the amount paid.
An eligible spouse may be able to elect spousal continuation. Confirm the beneficiary designation, eligibility, and effect on an elected rider before assuming the contract can continue.
Our Final Verdict
We like Premier Foundation’s annual S&P 500 option and term-long fixed account guarantee. Flex is our starting point for accumulation. We would choose Plus only when its account bonus and overall terms justify the extra five years of surrender charges and the first-year vesting restriction. Compare a MYGA and an indexed annuity with a competitive term-long cap lock before deciding.
Contact The Annuity Expert for free quotes. We can compare Flex, Prime, Plus, and other annuities for your deposit, income goals, and access needs.
Book A Free Consultation
Get help from a licensed financial professional. This service is free of charge.
Let Us Answer Your Questions
Not quite ready for a meeting, but you have a question that needs answering? We’re happy to help. Leave an inquiry below, and one of our staff will respond via email.