Our Professional Opinion on the Thrivent Security Preference Annuity
Security Preference is a simple fixed indexed annuity with a useful S&P 500 option and a withdrawal feature that can reward you for leaving the money alone. We like the choice of five-, seven-, and nine-year surrender periods. But the annual cap can change during that commitment, so a great first-year offer is not enough for us to recommend buying it.
Thrivent Financial for Lutherans has an A++ (Superior) rating from AM Best. That is great and comfortably above our A− minimum. Still, a great insurance company does not guarantee the best growth: compare the actual cap and terms with alternatives before deciding.
We would compare Security Preference with other indexed annuity rates, especially annuities that lock a competitive S&P 500 cap for the full surrender period. If your priority is predictable interest rather than the chance to earn more, compare fixed annuity rates for the same commitment.
What We Like
- Recognizable index: The annual S&P 500 option is easier to follow than many proprietary index strategies.
- Three commitment periods: Five-, seven-, and nine-year schedules let you choose how long to commit.
- Larger access after waiting: Skipping withdrawals can increase the free amount to 20% or 25% under the contract rules.
- Strong insurer: Thrivent’s A++ AM Best rating is excellent.
- Fixed account option: You can allocate money to declared fixed interest as well as the indexed account.
What We Don’t Like
- The cap can fall: It resets annually, even while your money remains subject to surrender charges.
- The charge starts at 9%: Leaving early above the free amount can be costly.
- No guaranteed indexed return: A flat or falling S&P 500 can produce no indexed interest for that year.
- A longer commitment buys no certainty about renewal caps: Do not assume the current cap will stay for five, seven, or nine years.
Security Preference Annuity Overview
Security Preference is a single-deposit fixed indexed annuity for accumulating retirement savings. You can allocate money to an S&P 500 indexed account, a fixed account, or both. The indexed strategy is annual point-to-point, while the fixed account earns a declared interest rate that can change at renewal.
- Surrender periods: Five, seven, or nine years.
- Indexed strategy: Annual S&P 500 point-to-point, subject to a cap.
- Fixed account: Declared interest with a contractual minimum.
- Free access: Generally 10% per contract year, with a larger allowance after qualifying periods without withdrawals.
- Health waivers: Qualifying confinement or terminal condition may waive surrender charges.
- Availability: Not available in New York.
Eligible retirement funds can be used to purchase an annuity. An IRA-to-annuity transfer should follow the applicable transfer rules.
S&P 500 Cap and Annual Interest
We like the annual S&P 500 strategy because you get an opportunity for interest to be credited each year. The annuity is not invested in the index, and its calculation does not include stock dividends. If the index rises beyond the cap, interest is limited to the cap; if it falls, the indexed account credits 0% for that period.
For example, if the index rises 8% and your cap is 6%, the indexed account credits 6%. That is a hypothetical example, not an offer. Credited interest is added to the account, but the cap can change at each annual reset. A cap locked for the full surrender period can provide more certainty, although it still must be competitive when you buy.
The fixed account gives you another choice, but its declared rate can also reset. If you need a rate locked for several years, a MYGA offers a clearer guarantee than relying on either annual reset.
Withdrawals and Surrender Charges
Thrivent generally allows a withdrawal of up to 10% of the contract value each contract year without a surrender charge. If you make no withdrawals for one full contract year, the free amount can rise to 20%; after two consecutive contract years without withdrawals, it can rise to 25%. This is a valuable feature if you can plan ahead, but the larger allowance does not make the entire contract freely accessible.
Surrender charges can apply to withdrawals above the available allowance. Each schedule starts at 9% and declines one percentage point per year: the five-year schedule ends at 5%, the seven-year schedule at 3%, and the nine-year schedule at 1%. A longer term may offer a better initial cap, but it also keeps the restriction in place longer.
Health Waivers
A qualifying confinement or terminal condition may allow surrender charges to be waived, subject to contract rules and availability. These provisions can make a difficult situation easier, but a withdrawal uses your own savings; it is not a substitute for long-term care insurance.
Death Benefit and Income Choices
If you die before converting the contract to payments, your beneficiary receives the applicable death proceeds. If an eligible spouse continues the annuity under its rules, spousal continuation can preserve the contract rather than immediately distributing it. Once you convert the annuity to income payments, the chosen payout option determines what, if anything, continues to beneficiaries.
If lifetime income is your main goal, compare a guaranteed lifetime withdrawal benefit with Security Preference’s option to convert the account into an immediate annuity. Converting the money can limit access to the amount used for income, while a GLWB has its own charges and withdrawal conditions.
What We Recommend
We would consider Security Preference when a competitive S&P 500 cap and its higher potential free-withdrawal allowance matter more than locking in a specific interest rate. Compare the five-, seven-, and nine-year versions carefully: a longer surrender schedule is a bad deal if you might need your money early.
If a strong insurer offers a competitive S&P 500 cap locked for the full commitment, we would generally prefer that certainty. Contact The Annuity Expert for free quotes and help comparing the cap guarantees, withdrawal features, and insurance companies.
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