Our Professional Opinion on the MultiRate Annuity
MultiRate has a great insurance company and useful access, but we do not like the seven-year surrender charge when you choose a shorter interest guarantee. A three-year guarantee, for example, does not mean your money becomes fully accessible after three years. For most people who want a predictable three- or five-year savings plan, we would compare an annuity whose surrender period ends with its rate guarantee first.
MultiRate also adds extra interest only in the first year. That makes the opening rate look better than the rate that applies for the rest of a longer guarantee. We would compare the actual year-by-year rates and ending values with other annuities before deciding whether that enhancement is worth it.
The issuer, Western-Southern Life Assurance Company, is part of the Western & Southern Financial Group and has an A+ (Superior) AM Best rating. That is a great rating and above our A− minimum. The company’s strength does not make a seven-year commitment the right deal for everyone.
Compare the same deposit, withdrawal assumptions, and time horizon with other fixed annuities. Look beyond the first-year rate and check when you can leave without a charge.
What We Like
- Great insurer: The issuing company’s A+ rating is comfortably above our minimum.
- Access from the first year: The contract permits up to 10% in annual free withdrawals immediately.
- Return of premium protection: The cash surrender value has a floor based on premiums paid, adjusted for distributions.
- Multiple rate periods: You can divide your deposit among available guarantee periods.
What We Don’t Like
- Seven years of surrender charges: A short rate guarantee does not provide a matching short exit.
- The first-year enhancement ends: The rate for later years of a multiyear guarantee is lower than the initial enhanced rate.
- Renewal rates can change: After a guarantee period, the interest rate is declared annually.
- The premium floor does not guarantee all interest: If you leave early, you may receive less than your full account value.
MultiRate Annuity Overview
MultiRate is a single-deposit deferred fixed annuity. You select from available interest guarantees of up to seven years and can divide your deposit among periods. The guarantee choices and the surrender charge schedule are separate features.
- Issuer: Western-Southern Life Assurance Company.
- Initial deposit: One premium; the minimum is $5,000 for nonqualified contracts and $2,000 for qualified contracts.
- Rate guarantees: Available initial periods up to seven years, with a first-year-only rate enhancement.
- Surrender charge period: Seven contract years, regardless of the selected guarantee period.
- Free withdrawals: Up to 10% of contract value each year starting immediately, subject to a $250 minimum.
- Death benefit: Contract value paid to the beneficiary during the deferral period without a surrender charge.
MultiRate can be purchased in an IRA or with other eligible retirement money. A transfer or rollover should be coordinated with the existing account’s rules. Product features and availability vary by state.
The First-Year Interest Enhancement
The initial rate includes an interest enhancement that applies only during the first year. For a multiyear guarantee, the guaranteed rate for the remaining years is the initial rate minus that enhancement. After the selected period, the insurer declares the renewal rate annually, subject to the contractual minimum.
Suppose a hypothetical five-year option pays 5% in year one, including a one-percentage-point enhancement. The rate for years two through five would be 4%, not 5%. These are example rates, not an offer. Ask for the actual schedule and ending value; do not compare the first-year number with another annuity’s level five-year rate as if they were equivalent.
If you are using the interest for income, the drop after year one matters to your budget. For growth, the important comparison is how much you will have after the full period, using the same withdrawals and compounding assumptions.
Why a Short Guarantee Does Not Mean a Short Commitment
MultiRate applies its surrender charge schedule for seven contract years. Choosing a shorter interest guarantee does not shorten that schedule. Once the short guarantee ends, a renewal rate can change annually while a charge still applies to withdrawals above the free allowance.
That is the biggest drawback. If you want to review your money after three years and move all of it without a surrender charge, we would start with a three-year fixed annuity that aligns its guarantee and surrender periods. A longer commitment may be worthwhile if MultiRate’s total result and access features are compelling, but the opening rate alone is not enough.
Withdrawals and Surrender Charges
You may withdraw up to 10% of the contract value each contract year without a surrender charge, beginning immediately. The allowance does not carry over if unused, and withdrawals have a $250 minimum. We like that the allowance starts in year one; many annuities make you wait.
Amounts above the allowance can face a surrender charge. The seven-year schedule is 7%, 7%, 7%, 6%, 5%, 4%, and 3%, then zero. The charge applies to the amount withdrawn above the free allowance, subject to contract rules.
The contract also guarantees a cash surrender value of at least the premium paid, adjusted for distributions. That does not mean every early withdrawal is charge-free, and it does not promise that every dollar of credited interest will be available after a full surrender. The protection matters most when an early exit would otherwise reduce the payout below the applicable floor.
Using the Interest for Retirement Income
If you plan to live on the interest, compare MultiRate with an annuity that offers a guaranteed lifetime withdrawal benefit (GLWB). Interest withdrawals do not themselves guarantee income for life, and MultiRate’s rate changes after the initial period.
If you want withdrawals but do not need lifetime income, compare an annuity with an upfront bonus credited to the actual account. The larger starting balance can sometimes leave more money after withdrawals even at a lower rate; compare actual values, access, and fees.
If you are in poor health or expect a shorter retirement, compare an annuity whose bonus fully vests and is payable at a qualifying death. Depending on the contract and timing, it could leave more to your beneficiaries than waiting for years of interest.
Health Waivers and Death Benefit
Qualifying confinement in a long-term care facility or hospital for at least 30 days, or a qualifying terminal illness, can waive surrender charges. Requirements and state availability apply. A waiver lets you access your own money; it is not a replacement for long-term care insurance.
If the owner dies during the deferral period, the beneficiary receives the contract value determined when the claim is processed without a surrender charge. When available, spousal continuation may give an eligible surviving spouse the ability to continue the contract under its rules.
Who Should Consider MultiRate?
We would consider it when the actual rates and full-period value are competitive, you value the immediate 10% allowance and return-of-premium floor, and you can accept the seven-year surrender schedule. Dividing a deposit among rate periods can be useful, but the allocations do not create separate early-exit dates.
We would look elsewhere if you want the whole account available when a shorter rate guarantee ends. A level-rate MYGA with a matching surrender period is easier to evaluate and may offer a cleaner exit. If reliable lifetime income is the priority, compare a GLWB based on guaranteed payments and the same income start date.
Our Final Verdict
MultiRate is not our first choice for a short-term fixed annuity. The first-year rate enhancement and seven-year surrender schedule make it easy to mistake a short rate guarantee for a short commitment. Its immediate withdrawal allowance and premium floor are valuable, but they do not erase that mismatch.
Compare the complete schedule, projected ending value, and access against a fixed annuity with a matching guarantee and surrender period. Contact The Annuity Expert for free annuity quotes and a personalized comparison.
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