Our Professional Opinion on the Security Benefit ClearLine Annuity
We would not pay an ongoing advisory fee on ClearLine without first comparing annuities that do not charge one. Its commission-free label sounds attractive, but an adviser may still charge you for managing the contract. That fee can come directly out of your annuity year after year, including years when it earns no index interest. A commission-free annuity is not automatically a free annuity.
ClearLine does have features we like: no surrender charge in the stated schedule, traditional S&P 500 annual crediting, first-year withdrawals, and a return-of-purchase-payment feature. But no surrender charge does not mean you can always leave without an adjustment. An early withdrawal above the free allowance or a full surrender can face a market value adjustment during the seven-year period, depending on the state and contract.
Security Benefit Life Insurance Company is an acceptable company under our standards, with an A− (Excellent) AM Best financial-strength rating. We are not impressed by the word “commission-free” if the total cost and net growth opportunity are worse.
For growth, we would start by comparing ClearLine’s annual S&P 500 strategy, after any advisory fee, with a competitive annuity that locks its cap for the full surrender period. ClearLine’s cap can change each year. We would also compare a fixed-rate MYGA for the same intended holding period. If the guaranteed result already meets your goal, taking uncertain indexed credits and paying an advisory fee may not make sense.
What We Like
- No stated surrender charge: The schedule is 0%, although an MVA can still apply to an early exit.
- First-year access: You can generally withdraw up to 10% of your initial deposit without an MVA.
- Traditional indexes: Annual S&P 500, Nasdaq-100, and other choices provide alternatives to engineered indexes.
- A return-of-purchase-payment feature: Between the third and seventh anniversaries, an included rider can protect a calculated amount on full surrender or annuitization.
- No commission built into the sale: ClearLine is designed as a commission-free annuity. Check separately for advisory fees.
What We Don’t Like
- Advisory fees can drag down growth: An adviser may charge an ongoing fee even when no index interest is credited.
- No surrender charge is not full liquidity: The seven-year MVA can reduce the payout on an early surrender outside California.
- Annual caps can fall: A high starting S&P 500 cap is not locked for the seven-year MVA period.
- The return-of-purchase-payment feature has limits: It starts at the third anniversary and protects a figure reduced by prior deductions, not all your gains.
- No new lifetime-withdrawal rider: Do not buy this for guaranteed lifetime income assuming the annuity includes a GLWB.
ClearLine Annuity Overview
ClearLine is a single-payment fixed indexed annuity designed for accumulation and often offered through an investment adviser. Your deposit can be allocated among a fixed account and available index strategies. The contract can earn interest without directly investing in the index, but adviser fees and withdrawals can reduce the account value.
Key Features
- Issuer: Security Benefit Life Insurance Company, rated A− by AM Best.
- Deposit and issue ages: Generally a single deposit of at least $25,000, with issue ages up to 80; amounts above $2 million require approval.
- Index terms: Available strategies include one-year options, including traditional S&P 500 and Nasdaq-100 choices; crediting terms can reset.
- Surrender schedule: 0% in the stated seven-year schedule; an MVA can still apply.
- Free withdrawals: Generally 10% of the initial deposit in year one and 10% of beginning-of-year account value afterward.
- Return-of-purchase-payment rider: Included without an additional rider charge for qualifying full surrenders or annuitization from the third through the seventh anniversary.
- Advisory fees: Your adviser may charge a separate fee, which can be deducted from your annuity.
- Income rider: No new optional lifetime-withdrawal rider is available.
ClearLine is not available in New York. Product features, MVA rules, and distribution can vary by state and firm.
Is a Commission-Free Annuity Actually Free?
ClearLine does not pay a sales commission, but your adviser may still charge an ongoing advisory fee. The fee may be deducted from the annuity or billed elsewhere as part of your managed account. Ask where the fee comes from and how it is calculated before buying.
For example, if an adviser charges a hypothetical 1% annually on a $100,000 annuity value, the charge for that year is $1,000. If the index credits no interest and the fee is taken from the annuity, the account can decline even though the index itself cannot produce a negative credit. The actual charge depends on your agreement and account value.
We do not like paying an assets-under-management fee on an annuity simply because an adviser wants to keep the money on their platform. Compare the all-in cost, services, index terms, and likely net values with suitable annuities that do not carry an ongoing advisory fee. A fee may pay for broader services, but you should understand exactly what you receive for it.
How ClearLine Credits Interest
ClearLine offers annual point-to-point strategies based on the S&P 500, Nasdaq-100, MSCI EAFE, and Russell 2000, plus other choices. We would start with the traditional S&P 500 annual strategy. A cap limits the interest credited when the index rises, and the index option can credit zero in a flat or down year. You do not receive the index’s dividends directly.
Other options use a participation rate, a spread, a monthly sum, or a trigger. Some indexes use volatility controls or complex formulas. A larger participation rate on an engineered index does not prove that it will earn more than the traditional S&P 500.
For annual strategies, caps and other crediting terms are declared for a one-year term and can change for later terms, subject to contractual guarantees. We like annual opportunities to lock in a credit, but we would also compare an annuity with a competitive cap guaranteed for its entire commitment. ClearLine does not lock its initial cap for all seven years.
No Surrender Charge Does Not Mean No MVA
The stated surrender charge schedule is 0%, which is a real advantage if you value access. But the contract also has a seven-year period in which a market value adjustment can increase or decrease the amount paid on an applicable withdrawal or full surrender. California does not apply the MVA; other state variations may apply.
The ordinary free-withdrawal allowance is generally 10% of the deposit during the first year and 10% of the account value at the start of the year afterward. The allowance is protected from the MVA, but it does not apply to a full surrender or annuitization. Do not assume the first 10% of a full early surrender is automatically exempt from the adjustment.
An RMD calculated by Security Benefit is treated favorably under the contract’s rules. Before taking a larger withdrawal or transferring the whole annuity, request the actual cash surrender value. Ask how the MVA, adviser fees, and timing of any index credit affect the amount you receive.
The Return-of-Purchase-Payment Rider
The included return-of-purchase-payment rider applies to a full surrender or full annuitization from the third contract anniversary through the seventh contract anniversary. While it is in effect, the cash surrender value will be at least the purchase payment reduced by prior partial withdrawals and related deductions. There is no additional rider charge.
That feature can provide a useful exit floor, but it does not promise your original deposit plus all interest. Advisory fees deducted from the account are withdrawals, and other prior withdrawals or their associated adjustments can reduce the protected amount. Before year three, do not assume this rider protects an early full surrender. After the seven-year period, ask how the contract handles your exit and any uncredited interest.
Nursing Home and Terminal Illness Waivers
Qualifying health waivers can remove an applicable MVA after the contract’s waiting period. The nursing home waiver is not available in California or Massachusetts; the terminal illness waiver is not available in California or New Jersey. Eligibility and state-specific requirements apply.
These waivers give you access to your own annuity value; they are not long-term care insurance. Keep a separate emergency reserve because you may not qualify when you need money.
Death Benefit and Spousal Continuation
The death benefit is generally the greater of the account value, less any applicable partial rider charge, or the guaranteed minimum cash surrender value. The minimum is a separate formula based on part of the deposit, interest and specified reductions; do not confuse it with a promise that beneficiaries will automatically receive the original deposit plus growth.
If your spouse is the beneficiary, ask whether spousal continuation is available under your policy and what conditions apply. Confirm the beneficiary and ownership rules instead of assuming the contract automatically transfers to your spouse.
What We Would Compare Instead
If growth is your goal, compare the S&P 500 cap, advisor fee, MVA, and access rules with a similar FIA that guarantees its cap for the contract term. Also compare the outcome of a MYGA on the same deposit and timeline. An index cap is a ceiling on possible interest, not a fixed return.
If your goal is a guaranteed paycheck for life, ClearLine is not our starting point: it does not offer a new optional lifetime-withdrawal rider. Some contracts purchased before May 31, 2022 may include the optional Rising Income Rider; if you own one, confirm its income rules and charges. Compare an annuity with a guaranteed lifetime withdrawal benefit using the same ages, deposit, income start date, and covered lives. Annuitizing ClearLine is a different decision that turns your account into payments.
Our Final Verdict on ClearLine
We like the 0% surrender-charge schedule and annual traditional index options, but we would be cautious about paying an ongoing advisory fee on this annuity. The seven-year MVA and limited return-of-purchase-payment window also mean that “no surrender charge” is not the same as unrestricted access.
We would compare ClearLine’s net terms with no-advisory-fee alternatives, including a locked-cap indexed annuity and a MYGA. If ClearLine still offers the best combination of services, access, and growth potential after all fees, it may deserve a place in your plan. Do not buy it just because it is commission-free.
Contact The Annuity Expert for free annuity quotes. We can help compare ClearLine’s costs and features with other annuities based on your goals.
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