Review of Sagicor Life Insurance Company
The following Sagicor review will shine some light on the unique niche products offered by this innovative life insurance company.
About Sagicor Life Insurance Company
Sagicor Life Insurance Company operates as a full-service life insurance company licensed in 45 states and the District of Columbia. The company is rated A- (Excellent) according to A.M. Best Company, which is the 4th best of out 16 total ratings buckets. The rating reflects the company’s financial strength and capacity to meet its continuing financial obligations.
Sagicor operates as a wholly-owned subsidiary of Sagicor Financial Corporation Limited (SFCL), which is one of the oldest insurance groups in the Americas. SFCL has operations in 22 countries and focuses on providing its customers with world-class service with integrity and value.
Products Offered By Sagicor Life Insurance Company
Sagicor offers some unique products, focused on specific market niches. The company offers the following different types of products:
- Permanent Life Insurance
- Term Life Insurance
Characteristics of Annuities
In the current low-rate environment, investors have looked to a variety of alternatives to savings accounts, money market funds, and CDs to find higher yields. One option that can offer attractive investment returns without requiring you to take on a high level of risk are annuities.
Annuities are insurance products offering the same tax-deferred growth available in life insurance policies but are focused primarily on providing investment returns rather than life insurance benefits. As a result, returns from annuities may be very competitive with other forms of investments, whether income-oriented or equity-oriented.
Annuity contracts often require investors to keep their money in the annuity for a certain amount of time (typically anywhere from 1 – 8 years) before being able to access the funds, so they are generally not ideal as short-term investments for investors who want access to the bulk of their principal within a short time. However, for longer-term investors, or for investors who want to receive an income stream from their policy, the tax-deferred growth annuities offer can make them a very attractive investment option.
Annuities generally fall into two categories,…
Fixed annuities which pay a fixed rate of interest over a specified time period, from as short as a year or less to as long as 10 years or so, and
Variable annuities which offer subaccounts which invest in the stock market and provide returns comparable to equity-focused mutual funds.
In addition to building up long-term savings, some investors purchase immediate annuities which offer them a steady income stream from their annuity investments.
In taking income from an annuity a contract owner can either annuitize the contract and receive income based on the funds in the account and their investment performance or withdraw funds without annuitizing – the contract owner must generally be over 59 ½ years of age to avoid IRS penalties for early withdrawal.
One annuity product currently offering attractive yields over 3, 5, and 7-year periods is a fixed annuity from Sagicor called the Milestone MYGA (Multi-year Guaranteed Annuity).
Sagicor Milestone MYGA
The MYGA is a single premium deferred annuity (SPDA) that offers highly competitive rates. Policies can be issued up to 90 years of age. Applications can be made either via paper or electronically.
There is a $15,000 minimum premium for both qualified and non-qualified accounts. The maximum contribution amount is $750,000, with higher amounts permissible with home office approval. No annual contract fees are charged for the account and the policy’s death benefit can be paid out either in a lump sum or in an available settlement option.
Other features of the annuity include:
Immediately earns interest:
The entire amount of the premium invested in the annuity begins working right away, earning a guaranteed interest rate that grows tax-deferred over the selected time period.
Principal is protected in the product as none of the money you invest is placed in the stock market. Thus, the guaranteed interest rate you receive, and your principal, are safe from market risk. Your premium payments, minus any surrender charges that may apply and market value adjustments, are backed by the claims paying ability of Sagicor.
As mentioned above, the Milestone MYGA grows completely tax-deferred, which enables your funds to grow faster than they would if they were subject to taxation on a yearly basis. Both the initial and compound interest your premium earns are tax-deferred. This tax-deferral enables you to accumulate more money over time, and only pay income taxes when funds are withdrawn.
Starting in the second year of the contract you can withdraw up to 10% of the previous year’s anniversary accumulation value without incurring a surrender charge or a market value adjustment (MVA). The minimum amount that can be withdrawn is $500.
The death benefit is paid to the contract’s beneficiary(ies) and equals the accumulation account value of the annuity without taking into account surrender charges or MVAs.
Market value adjustment (MVA):
A Market value adjustment (MVA) applies to any full surrender or partial withdrawal in excess of the maximum penalty-free withdrawal while the guarantee period is in effect. The MVA can increase or decrease available benefits in accordance with the direction interest rates move. The MVA does not impact the death benefit or guaranteed surrender value of the policy.
A surrender charge is applicable to withdrawals in excess of the penalty-free withdrawal limit. There is a surrender charge schedule for each guarantee period. The surrender charge is calculated as a percentage of the accumulation value and declines over time. If you renew the annuity for a new guarantee period, the surrender charge schedule resets and begins again.
Upon the completion of a 3 or 5-year guarantee period, there is a 30-day window for penalty-free withdrawals. While the window is in effect, a full or partial withdrawal of annuity funds can be undertaken with no surrender charge or MVA.
If no such withdrawal occurs, the 3 or 5-year guarantee period renews automatically at the current guaranteed interest rate with accompanying surrender charge and market value adjustment. A 3-year guarantee period can be renewed for a second go-round.
After an initial 7-year guarantee period, a second 5-year guarantee period or a third 3-year guarantee period, renewals occur on an annual basis at the guaranteed interest rate in effect at the time and withdrawals can be taken at any time with no surrender charge or MVA.
Strategies for Using the Sagicor Milestone MYGA Annuity
As a SPDA (single premium deferred annuity) paying very competitive interest rates, there are a variety of ways the Milestone MYVA annuity can fit into your financial plans. This fixed annuity is currently paying 3.6% on a five-year term.
I get rate sheets every month and this product is by far paying the highest interest. I have had success with using this to create an income stream to fund LTC or life products. Safe bucket of money with tax deferred growth. Much better option than CDs.
For those who don’t need the income now, the product can be used to build up tax-deferred savings over time. This option can be especially attractive if you are maxed out on other retirement savings options such as 401ks or IRAs.
The high maximum contribution limit associated with the policy means that you can set aside a substantial amount of savings for later use in the Milestone MYGA annuity contract.
In modern markets it can be difficult to determine the optimum strategy for saving money, given the wide variety of choices available.
One benefit of an annuity such as the Sagicor product is its simplicity – it offers a guaranteed method of building savings or generating income at an attractive rate of return. The Sagicor annuity product is designed to offer investors steady interest at a favorable rate.
The flexibility offered by the product makes it suitable for long-term financial planning efforts. Once the guarantee period has elapsed, funds can be withdrawn from the annuity without surrender charges during a 30-day period if desired.
Annuity funds can also be withdrawn to provide an income stream in accordance with an available annuitization payout option or remain in the policy to continue to grow over another guarantee period depending on what initial guarantee period was chosen.
This flexibility gives you the option of altering your plans for the funds in the annuity after the initial guarantee period has expired or sticking with them if there is no reason to change your approach.
As you can probably see, we here at I&E are pretty big fans of Sagicor, but we would be remiss if we didn’t state for the record that they are just one of many quality life insurance companies one can choose from.
This is why…
Here at I&E, we have chosen to remain and independent life insurance brokerage that is able to work with dozens of different life insurance companies so that when it comes time to helping you determine which life insurance company is going to be the “best” for you, we don’t have to simply rely on just one or two different options.
So, what are you waiting for? Give us a call today and see what we can do for you!