EliteDesigns II review

Yes, for the right buyer — and the right buyer is narrow. It is a good annuity for someone who already works with a fee-only or fee-based advisor on taxable money, has more than $50,000 to commit (and ideally more than $500,000 to capture the lower M&E breakpoint), and wants to defer taxes on portfolio income without locking into a surrender schedule. It is a poor fit for anyone who wants a guaranteed living benefit, a death benefit step-up rider, or commission-based service.

The rational reason to choose EliteDesigns II is the combination of tax deferral, full liquidity, and breakpoint M&E pricing on a non-qualified account. An advisor running a tax-aware accumulation strategy can use the contract to defer dividends and rebalancing gains that would otherwise create annual tax drag in a taxable brokerage account. The 300-plus subaccount lineup means the advisor does not have to compromise the model — they can usually find close cousins of the funds they would have held outside the wrapper. And because there is no surrender schedule, the contract can be exchanged or unwound if the planning thesis changes.

I think EliteDesigns II is best for non-qualified money in the hands of a fee-based advisor running a long-horizon accumulation plan, especially when the account size is closing in on or above the $500,000 breakpoint. It works for clients who are still building wealth in their 40s, 50s, or early 60s and who want the tax-deferral feature of an annuity without the cost of features they will not use. It is less appropriate for retirees who need guaranteed income, for buyers without an advisor relationship, and for clients whose money is already in a qualified account where the tax-deferral wrapper is redundant.

You are buying a tax-deferred investment account with insurance-company packaging, not an income guarantee. There is no cap, no participation rate, no buffer, and no floor. Your contract value is the sum of your subaccount values, marked to market, less the M&E and administration fees. The "insurance" content of the contract is thin by design — a standard death benefit equal to contract value, with an optional 0.35% rider that turns it into a return-of-premium guarantee. The product's purpose is to let an advisor run a portfolio inside a tax-deferred envelope without the operational friction of a surrender period.

The core feature is the subaccount platform itself. EliteDesigns II offers more than 300 investment options spanning U.S. and international equity, fixed income, real estate, commodities, alternatives, and target-date series. Allocations can be rebalanced and reallocated by the advisor without tax consequence inside the contract, which is one of the structural advantages of any VA — internal trades are not taxable events.

Two practical notes. First, the menu includes Dimensional and Vanguard subaccounts, which is uncommon and meaningful for fee-only advisors who use those families on the taxable side. Second, the 0.25% annual administration fee jumps to 0.65% for the Dimensional and Vanguard subaccounts specifically. That premium claws back a meaningful chunk of the low-expense-ratio advantage those funds normally offer, so the math has to be re-run when those families are used inside this wrapper rather than outside it.

The most useful secondary feature is the optional return-of-premium death benefit for 0.35% per year. The standard death benefit is just contract value, which gives the beneficiary no insurance backstop at all. The optional rider guarantees the beneficiary receives at least the greater of total purchase payments (less withdrawals and fees) or current contract value. For 35 basis points, that is a reasonable hedge for clients who are uncomfortable with the idea of dying in a drawdown and leaving heirs less than what was invested. Whether it is worth turning on depends on time horizon — younger investors with decades of compounding ahead may find the rider hard to justify; investors closer to drawdown years often do not.

There is no surrender schedule. EliteDesigns II is fully liquid from day one — 100% of contract value is accessible with no withdrawal charges and no contingent deferred sales charges. Systematic withdrawals are available with a $100 minimum. That liquidity is the defining advantage of the advisor-channel structure versus a traditional B-share VA, where 6 to 8 years of surrender charges typically apply.

The usual federal tax rules still apply — withdrawals before 59½ may trigger a 10% IRS penalty on the gain, and withdrawals come out gain-first under standard non-qualified annuity tax accounting. That is the tradeoff for the tax deferral, not a product flaw. RMD treatment for qualified versions is not specifically disclosed in the brochure materials reviewed, which is consistent with a product whose primary use case is non-qualified accumulation.

There are four fee layers to keep track of. The first is the base M&E charge at 1.20% per year for contracts under $500,000, dropping to 1.00% for contracts of $500,000 or more. The second is the 0.25% annual administration fee, which rises to 0.65% specifically on Dimensional and Vanguard subaccounts. The third is the optional 0.35% return-of-premium death benefit rider, only paid if elected. The fourth is the underlying fund expense ratio on whichever subaccounts are chosen — those numbers vary fund by fund and are layered on top of everything else.

The headline trade is straightforward. The contract buys tax deferral and full liquidity, paid for with 1.20% to 1.45% in wrapper fees plus underlying fund expenses, plus whatever the advisor charges as a separate management fee. Whether that is competitive depends on the advisor fee and the client's marginal tax rate on portfolio income outside the contract. For a high-bracket client in a high-yield or actively managed portfolio, the math can work. For a client in a low tax bracket holding tax-efficient passive funds, the wrapper is probably not worth its cost.

Legal Entity: Security Benefit Life Insurance Company

Parent: Eldridge Industries

A.M. Best Rating: A-