Equitrust Life Insurance Company Review

July 6, 2020
Jonathan Fritz
B.A. Risk Management
Life Insurance Agent

EquiTrust life insurance company is based in West Des Moines, Iowa. This company offers a wide array of life insurance and annuity products for wealth building and retirement planning purposes. Despite being new to the insurance industry, the company has successfully managed to carve out a niche for itself, which is no small feat. Below is a look into the history of EquiTrust, its financial ratings, products they offer, and the pros and cons of purchasing a life insurance policy from this company.

Our Take

EquiTrust is a small company with a niche set of products. Its index-linked life insurance policies and annuity products are concrete, but they do not cater to the needs of a diverse customer base. These products are for people age 40 and up but not over about 85. Those who do not fall into this age group or are looking for a term life policy, a whole life policy, or a variable universal life policy, there are other options available. EquiTrust, however, is not the company for these types of policies. There are many other companies offering a wide selection of term, whole, and universal policies to choose from.
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Company History and Background

EquiTrust is not exactly a household name in the insurance industry, yet, as the company is only about 20 years old. Despite this, EquiTrust has managed to achieve several impressive milestones within a time, which is no small feat. EquiTrust began its operations in 2003 as a subsidiary of FBL Financial Group, which is a multi-billion dollar holding company also based in Iowa. Initially, FBL’s presence was limited to only 15 states, but after the EquiTrust entity came about, the company’s presence spread throughout the country. In 2004, EquiTrust started offering index-linked annuity products for retirement planning purposes. In 2006, the company had assets worth over $5 billion. In 2011, Guggenheim Partners acquired EquiTrust for $440 million.

 In 2012, the company had assets worth over $10 billion under the new management. In 2015, Magic Johnson Enterprises bought a 60 percent interest in EquiTrust and became a controlling shareholder. In 2016, EquiTrust had assets worth over $17 billion. In 2019, Ward Benchmarking recognized EquiTrust as one of the top 50 life insurance companies in the country. (1)

Financial Strength and Ratings

AM Best Rating
B++
Our Rating
Phone

877-249-3694

Founded

2003

Products sold

Annuities, Permanent

One of the reasons why EquiTrust managed to solidify its position in the industry, despite catering to the financial needs of only one niche customer base, is its financial stability. In 2008, when EquiTrust the $7+ billion in assets had more than doubled, the company proved itself to be stable and dedicated in its approach towards investments. EquiTrust also has a strong solvency ratio, which is a strong indicator of the company’s ability to survive unforeseen setbacks and meet its financial commitments.

Current Financial Ratings of EquiTrust.

  • A. Best: B++ (Good)(2)
  • Standard & Poor’s: BBB+ (Good)(3)

A B++ rating is not a bad rating by any means. It is well above the average and shows the company is financially stable. At the same time, however, a B rating pales in comparison to an A+ rating. An A rating is reserved for the industry’s topmost performing providers. Financial ratings, however, change from time to time depending on the company’s performance and debt-to-asset ratio. EquiTrust, as mentioned, is a fairly young company, so if it continues to perform well, its ratings are likely to also improve over the coming years.

EquiTrust Products

Life Insurance

EquiTrust offers two index-linked life insurance policies that offer a guaranteed death benefit as well as a wide range of living benefits.

Growth Suite Life

This is a single premium policy available to applicants between the ages of 45 and 80. EquiTrust offers four different index accounts for approved members to choose from to link to a policy’s cash value component. The cash value account grows in value throughout the policy’s term period, and the growth rate is dependent on the index account’s performance. This account is protected against the possibility of negative returns, so the index credit will never be less than zero, regardless of market conditions.

Also, EquiTrust allows policyholders to take out loans against a policy’s cash value. These loans are payable back at a 4 percent interest. If the loan amount remains unpaid for a long time, the policyholder risks a lapse in the policy. If the insured passes away after taking the loan but before paying it back, the outstanding amount is deducted from the death benefit, while the remainder is paid to the beneficiary as planned.

From the second year of the coverage period, policyholders may make partial withdrawals every year, as long as the amount does not exceed 10 percent of the accumulation value. The insured may choose to surrender the policy, either partially or fully, at any time for any reason, though a surrender charge may be due upon doing so. This charge will depend on the face value amount of the policy and how far along the policy is into the coverage period. Upon the death of the insured, the beneficiary will receive either the face value amount or the accumulation value, whichever is greater.

Secure Suite Life

This policy is available to applicants between the ages of 45 and 85. This policy is also an index-linked single premium policy. There are four different index accounts to choose from to link to the cash value account. The cash value account is protected against negative returns, so the rate of return will never dip below zero, regardless of the market conditions. Policyholders do have the option here to take out a loan from the accumulated cash value; however, failing to repay the loan on time will incur penalties. If the loan is not repaid, the outstanding amount owed is deducted from the policy’s death benefit. If the insured passes away while the policy is still in force, the beneficiary will receive the face value amount or the accumulated cash value, whichever one is greater.

One perk of this policy is a five percent bonus on the premium that is added to the total value of the policy. Policyholders may make partial withdrawals every year, as long as the amount that is withdrawn does not exceed five percent of the total accumulation value. The insured also has the option of surrendering this policy fully or partially at any time.

Accelerated Death Benefit Rider

EquiTrust offers an accelerated death benefit rider included with both the index-linked life insurance policies free of cost. This rider allows the insured to receive a portion of the death benefit for treatment and care should he or she develop a chronic or terminal illness or be admitted to a long-term care facility due to the health condition.,

Annuity Products

EquiTrust offers a variety of annuity products to plan for post-retirement life.

Choice Four Annuity

This is a single premium annuity product with an annual reset rate of interest. The premium amount could be anywhere from $10,000 to $1 million. The interest rate reset every 12 months, depending on several factors. It will, however, never fall below the minimum guaranteed rate of interest.

Certainty Select Annuity

This is a single premium annuity product with a guaranteed rate of interest for a specific time period (three, five, six, eight, or 10 years). Thereafter, the company may change the interest rate depending on several factors. However, it will never fall below the minimum rate of interest the company guarantees.

Market Seven Index Annuity

This flexible premium annuity product features a fixed-rate account as well as four index-linked accounts. The first-year premium is $10,000. From the second year onwards, premiums can range from anywhere between $2,000 to $250,000 per year, depending on your preference. Surrender charges are applicable for the first seven years, after which the insured may partially or fully surrender the contract without any charges.

Market Value Index Annuity

This is a flexible premium annuity product with a fixed-rate account in addition to eight index-linked accounts. The first-year premium is $10,000, and premiums range from $2,000 to $250,000 from the second year onwards.

Surrender charges are applicable for 10 years, after which the insured may partially or fully c the contract without any charges.

Market Ten Bonus Index Annuity

This is a flexible premium product with an optional income rider. If added to the policy contract, the income rider provides guaranteed income for a lifetime. The company pays a six percent bonus on the premiums paid in the first five years. The product has a fixed-rate account and a few index-linked accounts.

Market Power Bonus Index Annuity EquiTrust

This is a single premium product with a fixed-rate account and a variety of index-linked accounts. This one too has an optional income rider that provides lifetime income. The company pays a 12 percent bonus on the first-year premium the insured pays.

Pros and Cons of EquiTrust

Pros

  • The company offers a wide range of annuity products along with some index-linked life insurance products that make it easier to choose a product ideally suited for the financial needs of the policyholder.
  • The biggest advantage of index-linked products is they are not as volatile as market-based products but offer a much higher rate of return than fixed-rate products. This makes this type of policy a good fit for anyone looking to maximize the returns on their investment without taking big risks.
  • EquiTrust offers a wide range of living benefits, which policyholders can make use of in the event of an emergency, medical or otherwise. For a life insurance policy, the accumulated cash value is accessible to the policyholder for his or her financial needs. For an annuity, a partial withdrawal available for the purchaser’s financial needs.
  • The company also offers an accelerated death benefit rider with almost all of its products. In case the policyholder develops a chronic or terminal illness during the annuity product or insurance policy coverage period, a partial withdrawal or full cash value withdrawal is accessible to pay for medical treatment or long-term care.

Cons

  • EquiTrust is a small company, and they designed their products to cater to a small sect of the market, appealing to a small, niche customer base. They do not offer a diverse range of products, which most other top insurance providers in the industry boast about.
  • EquiTrust does not offer traditional term and whole life policies, which is what a majority of customers need. While its index-linked products have good growth potential, they are not the right choice for anyone who is looking for affordable coverage for a specific period (pure term policy) or lifelong coverage (whole life or universal life policies).
  • The company has a B+ rating, which is not a bad rating, but at the same time, it is not an A+ rating, which is what top insurers in the country are custom to receiving consistently.

References

  1. Life Health Ward's 50 Companies- Available from: https://ward.aon.com/ward-benchmarking/wards50/life-health/
  2. AM Best Downgrades Issuer Credit Rating of EquiTrust Life Insurance Company - Available From: https://www.spglobal.com/marketintelligence/en/news-insights/trending/dWDHiUzld194gWLntMvYbw2
  3. Equitrust Financial Strength- Available from: https://www.equitrust.com/strength/financial-strength/