Our Professional Opinion on the Reliance Accumulator Annuity
We would not recommend Reliance Accumulator 10 for most people who are buying an annuity for growth. The S&P 500 cap can change every year, yet surrender charges can last ten years. If the cap becomes unattractive, you can be stuck accepting it or paying to leave.
The five-year version is our starting point. We like the traditional S&P 500 option, first-year access, and no MVA. The optional enhanced death benefit also gives this product a reason to be considered for a buyer whose main goal is leaving money to family. That is a different goal from maximizing accessible account growth.
Reliance Standard Life Insurance Company is a great insurance company. Its A++ (Superior) rating from AM Best is the highest available and exceeds our A− minimum. Its financial strength is a reason to trust the guarantees, but the contract still has to earn our recommendation.
For accumulation, compare a competitive S&P 500 cap guaranteed for the entire surrender period and compare the guaranteed result from a MYGA. A cap lock does not guarantee an index gain, but it prevents the insurer from cutting that cap while the lock applies. A fixed annuity rate gives you a known result for its guarantee term.
What We Like
- A traditional S&P 500 option: It provides an understandable starting point for comparing growth potential.
- No MVA: An early excess withdrawal can incur surrender charges but has no market value adjustment.
- First-year access: Up to 10% may be available without a surrender charge, subject to the contract rules.
- An optional enhanced death benefit: An eligible buyer can add guaranteed simple growth to the death benefit for a charge.
- An excellent insurer: Reliance Standard has AM Best’s highest financial-strength rating.
What We Don’t Like
- No full-term cap lock: The cap and participation rate can change annually during the surrender period.
- Ten years is too long for most buyers: A long surrender period is hard to justify when the crediting terms can change each year.
- The death benefit is not your account: Its 8% simple growth is a benefit calculation, not 8% interest you can withdraw.
- The rider has a cost: The 0.40% annual charge reduces the annuity value.
- Regular payments depend on your allocation: Systematic withdrawals are available from the fixed strategy, not the indexed strategies.
Reliance Accumulator Annuity Overview
Reliance Accumulator is a single-premium fixed indexed annuity offered with five-, seven-, or ten-year surrender periods. The minimum deposit is $20,000. Maximum issue ages are generally 85 for the 5 and 7 and 80 for the 10. You can allocate money among available indexed strategies and a fixed-interest strategy.
Key Features
- Index choices: Options include the traditional S&P 500 and the volatility-controlled S&P MARC 5% ER; other strategies may be available.
- Crediting: Annual strategies can use caps, participation rates, or spreads; a fixed strategy is also available.
- Renewal: The initial cap and other crediting terms can change annually, subject to contractual limits.
- Free withdrawals: Up to 10% annually beginning in the first year, subject to the contract’s rules.
- MVA: None; surrender charges can still apply.
- Enhanced death benefit: Optional at issue for eligible owners, with a 0.40% annual charge and 8% simple growth for up to 13 years under the rider rules.
- Health waivers: Qualifying nursing care or terminal illness can allow additional access.
How Reliance Accumulator Credits Interest
Annual point-to-point strategies measure index performance over a contract year. Depending on the strategy, interest is subject to a cap, participation rate, or spread. A monthly-average strategy uses a different calculation. The fixed strategy earns a declared rate.
We would begin with the traditional S&P 500 when its terms are competitive. The S&P MARC index uses volatility controls and an excess-return calculation. A large participation rate on MARC does not mean it will outperform an S&P 500 strategy; the percentages are applied to different indexes.
A negative index result does not create a negative index interest credit, but you may earn no interest for the year. Withdrawals and the optional rider charge can reduce the account, and surrender charges can reduce early proceeds.
Your Cap Can Change Every Year
The initial cap, participation rates, spread, and fixed rate are guaranteed for the first contract year. Reliance Standard may declare new terms afterward, subject to contract minimums and maximums. The 10-year version does not guarantee its starting S&P 500 cap for ten years.
That is a problem. If a competitive cap is guaranteed for the entire surrender period, you know the insurer cannot cut that cap during the guarantee. We generally prefer that protection when the starting terms and other features are competitive. A locked cap is still a limit—not a guaranteed return.
The Enhanced Death Benefit
The optional rider provides 8% simple annual growth for up to 13 years under its rules. For example, on a $100,000 initial deposit with no withdrawals, the rider example shows a $108,000 death benefit at the start of the second year and $116,000 at the start of the third. This is not 8% interest added to the cash you can withdraw.
The rider charge is 0.40% annually of the enhanced death benefit amount and is deducted from the annuity value. If the amount used to calculate the charge is $100,000, the charge would be $400 for that year. The dollar amount can change as the benefit changes.
The rider must be selected at issue. The individual owner must also be the annuitant and generally age 75 or younger. It is not available for joint owners, joint annuitants, or corporate or trust owners, and it is not available in California. Other state restrictions may apply. Required minimum distributions reduce the rider benefit dollar for dollar; other withdrawals can reduce it proportionally.
We would consider the rider only when leaving a larger guaranteed benefit is a priority. Compare the actual benefit and cost with a bonus annuity that pays its bonus at death and, where available and appropriate, life insurance. If accessible account growth is your goal, paying for a death benefit you do not need can be a poor trade.
Withdrawals and Surrender Charges
The contract permits up to 10% in penalty-free withdrawals beginning in the first year, subject to its rules. Regular systematic withdrawals come from the fixed-interest strategy; withdrawals from indexed strategies are generally taken as a lump sum. Plan your allocation before depending on regular payments.
Withdrawals above the allowance can incur a surrender charge on the excess. There is no market value adjustment. The standard schedules are below; some state and issue-age schedules differ.
| Contract year | Accumulator 5 | Accumulator 7 | Accumulator 10 |
|---|---|---|---|
| 1 | 8% | 8% | 9% |
| 2 | 8% | 8% | 8% |
| 3 | 7% | 7% | 7% |
| 4 | 6% | 6% | 6% |
| 5 | 5% | 5% | 5% |
| 6 | 0% | 4% | 4% |
| 7 | 0% | 3% | 3% |
| 8 | 0% | 0% | 2% |
| 9 | 0% | 0% | 1% |
| 10 | 0% | 0% | 0.5% |
| 11+ | 0% | 0% | 0% |
No MVA is helpful, but a surrender charge can still reduce your cash surrender value. Keep money needed for unexpected expenses outside the contract.
Nursing Care and Terminal Illness
A qualifying nursing care waiver may allow up to 25% of annuity value without surrender charges in each qualifying year. The annuitant generally must be age 74 or younger at issue and meet a 90-day confinement requirement. Some states require confinement to begin after the first contract year.
After the first contract year, a qualifying terminal illness diagnosis may allow access to the full annuity value without surrender charges. Conditions and state availability apply. These benefits provide access to your money; they are not long-term care insurance.
Death Benefit and Spousal Continuation
The standard death benefit is generally the greater of annuity value or the minimum contract value. An eligible spouse named as sole primary beneficiary may be able to use spousal continuation, including the enhanced benefit when permitted. Confirm the ownership and beneficiary rules for your contract.
Compare the Guaranteed Alternative
Before choosing Accumulator, compare a MYGA and other indexed annuities using the same deposit, holding period, withdrawals, and insurer strength. A MYGA gives you a known interest rate. Accumulator may earn more, but it may also credit zero in an unfavorable year. Do not treat a cap as the interest rate you are guaranteed to earn.
Our Final Verdict on Reliance Accumulator
Accumulator 5 is the version we would examine first; Accumulator 10 is a tough sell for ordinary accumulation. The S&P 500 option and no MVA are appealing, but a ten-year commitment with annually changing caps gives the insurer too much control over your future opportunity. The death benefit rider may be worthwhile for a specific legacy goal, after comparing its cost and actual beneficiary benefit.
Contact The Annuity Expert for free annuity quotes. We will compare the rates, withdrawal rules, and alternatives for your retirement goals.
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