Our Professional Opinion on the Total Interest Annuity
We would not make Total Interest our first choice for a lump sum you want to grow at a guaranteed rate. Your initial rate is guaranteed for just one year, while surrender charges can apply for much longer. If the renewal rate falls, you may be stuck choosing between a disappointing rate and a charge to move your money.
A multi-year guaranteed annuity gives you a rate guaranteed for a stated number of years. We would compare that guaranteed result first. Total Interest deserves a look mainly when you want to contribute gradually—especially through an available 403(b)—and its rate and withdrawal rules are competitive for your situation.
Security Benefit Life Insurance Company is an acceptable insurer in our opinion. Its AM Best financial-strength rating is A− (Excellent), which meets our minimum for recommending a company. It does not have the higher rating of some competitors, so we would compare the rate and contract features with insurers rated A− or better rather than assume the company name makes the deal worthwhile.
What We Like
- Small ongoing deposits: A $50 monthly recurring contribution or a $2,500 lump sum can get you started, subject to the contract rules.
- Flexible funding: You may be able to make ongoing contributions through a 403(b), an IRA, or another eligible arrangement.
- A minimum interest guarantee: Your contract sets a minimum interest rate that protects against renewal rates falling below that floor.
- Return-of-purchase-payments option: A rider can provide a floor on a full surrender, subject to its cost and deductions.
- Death benefit: Before income begins, the contract value generally passes to your beneficiary without a surrender charge.
What We Don’t Like
- A one-year rate with a longer commitment: Security Benefit can set a lower renewal rate even while surrender charges remain.
- The bonus is temporary interest: It is not a lump-sum bonus added to your account when you deposit money.
- Later deposits can complicate an exit: Depending on the contract and state, contributions can have their own surrender-charge timing.
- Riders reduce your interest: Optional features have an ongoing cost and generally cannot be canceled once selected.
- Check first-year access: Do not count on a free withdrawal before the first anniversary until you confirm your contract’s rules.
Total Interest Annuity Overview
Total Interest is a flexible-premium fixed annuity. Unlike a single-deposit MYGA, it is designed to accept additional deposits over time. Each deposit earns the initial rate in effect when it is received for its first 12 months; different deposits can receive different rates.
It is available for eligible nonqualified savings, IRA annuities, and 403(b) arrangements, subject to state and plan rules. New sales are not available in New York or Idaho. Issue ages generally extend through 85, with state variations.
Key Features
- Deposit minimum: Generally $2,500, or $50 a month through an eligible recurring arrangement.
- Initial interest: Each contribution receives its initial rate for 12 months.
- Bonus interest: An additional rate applies for 12 months to eligible deposits made during the first contract year.
- Renewal rates: The insurance company declares later rates, subject to the contract’s minimum rate.
- Access: Generally up to 10% of contract value can be withdrawn without a surrender charge after the first year. Confirm first-year rules.
- Surrender charges: Charges may apply to withdrawals above the free allowance; timing can depend on the age of a deposit and the state.
- Optional riders: Return-of-purchase-payments protection and a 403(b) early-retirement waiver are available at issue for a cost, subject to eligibility.
How Your Interest and Bonus Work
The initial interest rate applies to a deposit for its first 12 months. Deposits made at different times can receive different initial rates. After that first year for a deposit, the applicable renewal rate is declared by Security Benefit, subject to the minimum in your contract. There is a separate second-year rate before the later renewal rate applies.
The bonus is an extra interest rate on eligible deposits received in the first contract year. It applies to each qualifying deposit for 12 months. It is not an immediate increase in your account balance. Texas uses an equivalent additional first-year interest arrangement.
For example, suppose a deposit earns a hypothetical 4% initial rate plus a 1% bonus interest rate. It earns at the combined rate for the applicable period; a $100,000 deposit does not immediately become $101,000. Those rates are examples, not current offers.
The extra interest can help, but we would not buy a contract with years of surrender charges solely for a one-year interest enhancement. Compare what you can guarantee over your full savings timeline, including what happens when the bonus and initial rate end.
Withdrawals and Liquidity
After the first contract year, you can generally take a free withdrawal of up to 10% of contract value annually without a surrender charge. Confirm whether your particular contract permits any ordinary free withdrawal in the first year. Keep money you may need immediately outside the annuity unless you know how the withdrawal will be treated.
If you plan to live on the interest: Compare the annuity with a guaranteed lifetime withdrawal benefit using the same deposit, income start date, and covered lives. Withdrawing interest from Total Interest does not guarantee a paycheck for life.
If you want withdrawals without lifetime income: Compare a bonus annuity that credits an upfront bonus to the actual account. A larger starting balance might support the same withdrawals and leave more to compound, even at a lower interest rate. Compare the same withdrawals and dates, including fees, surrender value, and any bonus recapture.
If you are in poor health or expect a shorter retirement: Compare an annuity with a bonus that fully vests and is payable on a qualifying death. Look at what beneficiaries actually receive after withdrawals and restrictions. Total Interest pays its applicable death benefit, but future unearned interest is not paid in advance.
Surrender Charges and Ongoing Deposits
Withdrawals above the free allowance can trigger a surrender charge. A contract’s surrender-charge period can last up to ten contract years; some states have a shorter contract-level limit. Depending on the state and contract, the calculation may be tied to when each deposit was made or to the age of the contract.
That distinction matters if you contribute regularly. A later contribution may have less time to work through its charge schedule before you need it. Ask for the schedule applicable to every deposit and the date all charges end. Your cash surrender value can be lower than the contract value if you leave early.
We do not like accepting a long surrender period while the credited rate is only locked one year at a time. If you intend to roll over a lump sum and leave it alone, a comparable MYGA may give you a better-defined result for the period you select.
The Optional Return-of-Purchase-Payments Rider
The return-of-premium feature is an optional rider selected when the contract is issued. On a full surrender, it guarantees a floor based on your purchase payments, reduced by prior withdrawals, rider charges, and applicable premium taxes. It does not guarantee that you will keep all credited interest when you exit early.
The cost is a 0.10 percentage-point reduction in the overall crediting rate, charged for ten years. The rider generally cannot be canceled and is not available in Texas, Vermont, or Washington. Availability and details can vary by state.
We like knowing there may be a floor on an early exit, but paying for a feature for ten years stinks if you never needed it. Compare the net interest and exit value with a shorter annuity or a contract that provides the access you need without this rider.
Early-Retirement Waiver for 403(b) Owners
The optional early-retirement waiver is for eligible 403(b) or Roth 403(b) contracts. It can waive surrender charges after at least five contract years if you are at least 55 and separated from service at or after age 55. The rider reduces the overall crediting rate by 0.25 percentage points, charged for ten years, and generally cannot be canceled. It is not available in Connecticut, Maryland, Massachusetts, Texas, or Washington.
The feature can help someone whose 403(b) retirement plan permits the arrangement, but do not assume turning 55 alone qualifies you. Check your separation date, contract age, plan rules, and the rider’s cost before selecting it.
Death Benefit and Spousal Continuation
If the owner dies before annuity payments begin, the death benefit is generally the full contract value paid to the beneficiary without a surrender charge, less any applicable state premium tax. Withdrawals reduce the money available to your family.
If your spouse is the beneficiary, ask whether spousal continuation is available and what ownership and beneficiary rules apply. Do not assume your spouse can keep the same contract without confirming the specific terms.
Our Final Verdict on Total Interest
We would generally choose a MYGA for a lump sum when the goal is to lock in a dependable rate. Total Interest’s flexible deposits can be useful for someone building savings over time, but its one-year guarantee, long surrender rules, and optional rider costs deserve a hard look.
If you need to make ongoing 403(b) or IRA contributions, compare the net rate, access, and available alternatives under your plan. If you want guaranteed income for life, compare actual lifetime payments rather than relying on whatever interest the company declares in future years.
Contact The Annuity Expert for free annuity quotes. We can compare Total Interest with fixed annuities and lifetime-income options based on your goals and access needs.
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