EquiTrust Fixed Indexed Annuity Portfolio

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EquiTrust Fixed Indexed Annuity Portfolio: A Comparative Analysis for Financial Professionals

1.0 Introduction: Navigating the EquiTrust Product Refresh

EquiTrust has recently undertaken a significant refresh of its product portfolio, strategically categorizing its offerings to better align with specific client goals such as accumulation and income. This restructuring presents a timely opportunity for financial professionals to re-evaluate the suite of solutions EquiTrust provides. The purpose of this report is to deliver a detailed, comparative analysis of EquiTrust's key fixed indexed annuity (FIA) products, equipping advisors with the clarity needed to make informed client recommendations in this new landscape.

This analysis will provide an in-depth review of the following products:

Smart Boost Index

Market Edge Bonus Index

Market Power

Market 10

The Bridge

To begin, it is essential to ground any product recommendation in a solid understanding of the issuing carrier's financial stability, which serves as the bedrock for the long-term guarantees these contracts provide.

2.0 EquiTrust Company Profile and Financial Standing

Before recommending any annuity product, it is a matter of due diligence for advisors to understand the financial strength and stability of the issuing insurance carrier. A client's confidence in a long-term contract is directly tied to their confidence in the company's ability to meet its future obligations. EquiTrust has established itself as a significant player in the annuity marketplace, and its financial ratings provide a clear picture of its standing.

Below is a summary of EquiTrust's current financial ratings from several key independent agencies:

Rating Agency Rating

AM Best B++

Fitch A-

Standard & Poor's A-

Weiss Safety Rating B-

This combination of ratings positions EquiTrust as one of the strongest B++ rated companies in the industry. As noted in industry analysis, its risk-based capital (RBC) and solvency ratios are superior to those of most A-rated companies, suggesting that AM Best's B++ rating may not fully reflect the underlying financial strength that other agencies have recognized with their A- ratings. Now, let's transition from the carrier's financial foundation to a high-level comparison of its product offerings.

3.0 At-a-Glance Product Comparison Matrix

This section provides a high-level matrix for a quick, comparative overview of the core features of each annuity. This table is designed to serve as an executive summary for busy advisors, allowing for a rapid assessment of which product might align with a client's initial objectives before a deeper dive.

Feature Smart Boost Index Market Edge Bonus Index Market Power Market 10 The Bridge

Primary Goal Accumulation & Legacy Enhancement Aggressive Accumulation Balanced Accumulation Flexible Accumulation Long-Term Care (LTC) Funding

Bonus/Benefit 40% "Boost" over 10 years 20% Bonus over 3 years 12% Upfront Bonus 8% Bonus on premiums in first 5 years LTC Benefit Multiplier (up to 3.25x)

Surrender Term 10 Years 10 Years 14 or 10 Years (State Dependent) 10 Years Not specified in source materials

Premium Type Single Premium See Detailed Analysis Single Premium (flexible in year 1) Flexible Premium (first 5 years) Fixed, Finite Premiums

Liquidity 7% of premium after year 1 10% after year 1 See Detailed Analysis Return of Premium Feature See Detailed Analysis

Key Feature Day-one 140% death benefit (5-yr payout) No-fee, multi-year bonus vesting Large, day-one vested bonus Flexible contributions with bonus No-underwriting LTC coverage

Having reviewed this high-level comparison, the following sections will provide a more granular analysis of each product's mechanics and strategic applications.

4.0 Detailed Product Analysis: Accumulation-Focused Annuities

This section provides a deep dive into each of EquiTrust's primary accumulation-focused FIAs. The analysis will break down the mechanics, ideal client profile, and unique value proposition of each product, offering advisors the specific details needed to align features with client needs.

4.1 EquiTrust Smart Boost Index

* Objective and Ideal Client Profile: The Smart Boost is an accumulation-focused FIA engineered for clients who prioritize guaranteed growth and robust legacy protection. The ideal client is someone seeking principal protection who also desires a substantial, guaranteed enhancement to their death benefit from day one, perhaps as an alternative to traditional life insurance for which they cannot qualify.

* The "Boost" Mechanic Explained: The product's core feature is its 40% "Boost." This is a 4% simple interest credit applied annually, which guarantees a 40% increase to the account value over the 10-year contract term if index performance does not exceed this amount. Critically, the full 40% boost is applied to the death benefit on day one, immediately creating an enhanced legacy value of 140% of the premium. This enhanced death benefit is available to beneficiaries who elect to receive the payout over a five-year period. EquiTrust can offer more competitive caps and participation rates because the "Boost" is not an "advance on interest" like a traditional bonus. A bonus forces carriers to pre-allocate funds, thereby reducing the capital available to purchase index options and resulting in lower growth potential for the client.

* Crediting Strategies: The Smart Boost offers a straightforward set of crediting options primarily focused on the S&P 500 Index:

  * Fixed Account: 4.5% annual rate.

  * S&P 500 Index:

    * Point-to-Point with Cap (8%)

    * Point-to-Point with Participation Rate (50%)

    * Performance Trigger (6.5%): A unique feature where if the S&P 500 has any positive change, the contract is credited 6.5%. This trigger rate is competitive with the full cap rates offered by many traditional bonus annuities.

  * S&P 500 Dynamic Intraday TCA Index: Point-to-Point with Participation Rate (70%).

* Liquidity and Access: The contract allows for an annual 7% penalty-free withdrawal of the initial premium (not the account value), beginning in the second contract year. This structure provides a predictable withdrawal amount regardless of market performance. The product also includes standard nursing home and terminal illness waivers.

* Strategic Consideration for Advisors: This product is a powerful tool for clients who are uninsurable or seeking a life insurance alternative, providing a significant legacy benefit without underwriting.

4.2 EquiTrust Market Edge Bonus Index

* Objective and Ideal Client Profile: The Market Edge is EquiTrust's newest accumulation product, designed for clients seeking a significant, front-loaded bonus to aggressively kick-start accumulation potential without being encumbered by an annual fee.

* Bonus Structure: The contract features a 20% bonus credited over the first three years. The structure is as follows: 8% is credited upfront on the initial premium, followed by a 4% credit on the entire accumulation value at the first, second, and third contract anniversaries. A key differentiator is that this is a no-fee product. This stands in contrast to many other high-bonus annuities that charge a fee, often around 1%, for the life of the contract, which can erode long-term gains.

* Crediting Strategies: The product includes several crediting options, including a "buy-up" feature that allows the client to pay a 1% fee in exchange for higher cap or participation rates.

  * Annual Point-to-Point with Cap (Standard and Buy-Up)

  * Annual Point-to-Point with Participation Rate (Standard and Buy-Up)

  * S&P 500 Dynamic Intraday 2-Year Point-to-Point

* Liquidity and Access: The product offers 10% penalty-free withdrawals of the account value, available after the first contract year.

* Strategic Consideration for Advisors: This is your lead product for clients focused purely on maximizing accumulation value quickly, as the no-fee structure and multi-year bonus create a powerful compounding effect.

4.3 EquiTrust Market Power

* Objective and Ideal Client Profile: The Market Power is an enhanced accumulation product offering a significant, immediately vested upfront bonus. It is well-suited for clients with a lump sum who want to maximize their initial premium with a large, simple, and straightforward bonus.

* Bonus Structure: The bonus has been increased to 12% and is fully vested on day one on the cash value. While designated as a single premium product, it offers a rare flexibility: all additional premiums deposited within the first contract year also receive the full 12% upfront bonus.

* Crediting Strategies: The income rider has been removed from this product to position it purely for accumulation. Similar to the Market Edge, "rate buy-up" accounts have been added. The 50% participation rate buy-up on the S&P 500 Dynamic Intraday Index is a particularly powerful feature for clients seeking higher growth potential.

* Strategic Consideration for Advisors: Position this as the ideal solution for clients who value simplicity and immediate gratification, offering a large, day-one vested bonus without complex multi-year crediting schedules.

4.4 EquiTrust Market 10

* Objective and Ideal Client Profile: The Market 10 is positioned as a flexible accumulation tool, ideal for clients who plan to make contributions over several years. Its structure is particularly well-suited for clients funding an IRA over time or those who anticipate receiving funds periodically that they wish to add to the contract.

* Bonus Structure: The bonus on this contract has been raised to 8%. Crucially, this bonus is applied to all premiums deposited within the first five contract years, making it a true flexible-premium bonus product.

* Key Features and Commission: The Market 10 includes a Return of Premium feature at no additional fee, providing a valuable layer of liquidity and principal access. In a move to make the product more attractive to advisors, the commission has been increased to 7%, making it highly competitive in the 10-year FIA space.

* Strategic Consideration for Advisors: This is the go-to product for younger clients still in their accumulation phase or for those planning systematic IRA contributions, as the bonus applies to ongoing premiums for five years.

With the accumulation-focused products thoroughly examined, we now turn our attention to the more specialized solutions within the EquiTrust portfolio designed for advanced planning needs.

5.0 Specialized Planning Solutions

Beyond standard accumulation, the EquiTrust portfolio offers powerful, specialized tools for advanced planning scenarios. This section details solutions designed to address the significant financial challenges of long-term care and effective tax management.

5.1 Long-Term Care Planning with The Bridge

* Product Concept and Value Proposition: The Bridge is a fixed indexed annuity with a fully integrated Long-Term Care rider, designed to make LTC protection more accessible and affordable. It offers a compelling value proposition, providing as high as $3.25 of LTC benefits for every $1 invested, effectively leveraging a client's assets to cover potential future care costs.

* Accessibility and Underwriting: The product's most significant differentiator is its "zero underwriting" feature. Unlike traditional LTC insurance, there are no extensive medical tests. The application process consists of five health questions and a brief video call that includes a simple mobility test. Based on this, clients are placed into one of three benefit classes. Critically, issuance is guaranteed up to age 80, opening up LTC planning to a much wider demographic.

* Benefit Structure: This is not a "use it or lose it" policy. The underlying cash value grows based on the performance of the chosen index options, with principal protected from market downturns. If the client passes away without fully utilizing the LTC benefit pool, the remaining underlying cash value is paid as a death benefit to their beneficiaries, eliminating the "use it or lose it" risk of traditional LTC insurance. Furthermore, the LTC benefits are designed to increase over time, providing a hedge against the rising costs of care.

* Payout and Support: Benefits are paid directly to the policyholder on a monthly basis, not on a reimbursement basis, which provides maximum flexibility in how the funds are used for care. Policyholders also gain access to the "Never Stop" personal wellness ally program, a concierge service that helps navigate care options and offers discounts on wellness services.

5.2 Portfolio-Wide Partial Tax Conversion Strategy

* Strategic Advantage: A key differentiator across the entire EquiTrust FIA portfolio is its partial tax conversion capability. This feature allows clients to systematically convert funds from a traditional IRA to a Roth IRA over multiple years. This is a powerful tax-planning tool that enables clients to manage their tax brackets strategically, converting smaller, varying amounts each year to avoid being pushed into a higher tax bracket by a single lump-sum conversion.

* Mechanics of Conversion: When a client decides to convert a portion of their funds, EquiTrust creates a new, mirrored contract (either a Roth IRA or a non-qualified annuity). This new contract has the same effective date, account allocations, crediting strategies, and features as the original. Money is then moved from the original contract to the mirrored one according to the client's chosen conversion schedule. This mirrored-contract approach is administratively seamless for both the client and the advisor, eliminating the need for new applications or a complex re-underwriting process for each conversion event. This highly flexible feature is available on all of EquiTrust's indexed annuity products.

The following section will synthesize this detailed analysis into an actionable framework for matching these products to specific client scenarios.

6.0 Advisor Synthesis: Matching Product to Client Profile

This final section synthesizes the preceding analysis into an actionable framework. Its purpose is to directly assist advisors in matching a client's specific financial objectives with the most suitable EquiTrust annuity product, streamlining the recommendation process.

* For the client seeking maximum legacy enhancement and guaranteed growth from day one:

  * Recommendation: Smart Boost Index

  * Justification: This product's unique 40% death benefit boost is available from day one (on a 5-year payout), providing an immediate and substantial increase to the estate. Its no-fee "boost" structure ensures that this benefit does not compromise the potential for competitive interest credits.

* For the client seeking the highest possible front-loaded bonus to maximize accumulation potential:

  * Recommendation: Market Edge Bonus Index

  * Justification: The 20% no-fee bonus, credited over the first three years, provides a significant and aggressive boost to the accumulation value early in the contract, making it ideal for those with a primary goal of growth.

* For the client who wants a large, simple, and immediately available bonus on a lump-sum premium:

  * Recommendation: Market Power

  * Justification: This is the most straightforward high-bonus option. Its 12% bonus is fully vested on day one and applied directly to the cash value, offering immediate, tangible value for a single premium deposit.

* For the client planning to make ongoing contributions over several years (e.g., annual IRA contributions):

  * Recommendation: Market 10

  * Justification: Its 8% bonus on all premiums made in the first five years makes it a true flexible-premium solution. This structure is perfectly designed for clients who are still saving and plan to add funds systematically over time.

* For the client whose primary concern is protecting their nest egg from the high costs of future long-term care:

  * Recommendation: The Bridge

  * Justification: Its guaranteed issue (no underwriting) basis, significant benefit multipliers, and flexible direct payouts make LTC protection accessible and powerful. The feature that passes unused benefits to heirs removes the "use it or lose it" drawback of traditional LTC policies.

* For any client in a high tax bracket considering a multi-year Roth conversion strategy:

  * Recommendation: Note that all analyzed products support this advanced strategy.

  * Justification: The choice among them would depend on the client's secondary goal (e.g., accumulation, legacy). EquiTrust's partial tax conversion is a powerful, portfolio-wide feature that adds value to any of their FIAs when used for qualified funds.

In conclusion, the refreshed EquiTrust portfolio provides a versatile suite of specialized tools. By moving away from a one-size-fits-all approach, EquiTrust has empowered advisors to more precisely address a 

wide range of client needs, from aggressive accumulation and flexible savings to sophisticated legacy and long-term care planning.