ForeIncome II 5-Year with Guaranteed Income Builder (Morgan Stanley) review

It depends on your situation. If you are a Morgan Stanley client looking for protected lifetime income with a shorter-than-usual surrender commitment, this is a reasonable choice. The 10% roll-up and built-in chronic illness benefit are genuine strengths, and five years is a notably short lock-up for an income product. The product becomes a weaker fit if your main goal is accumulation, if you plan to defer income for the rider's full 15-year runway, or if you are primarily shopping for the lowest rider fee in the category — at 1.20% on a growing withdrawal base, the cost adds up over a long deferral period.

The primary reason is to establish a guaranteed lifetime income stream with the ability to reclaim full liquidity after five years rather than ten. The 10% annual roll-up on the income base means future guaranteed income grows at a predictable rate regardless of how the index strategies perform. For a Morgan Stanley client already using that platform for retirement planning, buying a product within that relationship simplifies the process. The bundled Income Enhancement Benefit — which can boost income payments if you lose the ability to perform activities of daily living — adds a care-cost layer without a separate rider charge, which makes the overall value proposition more complete for buyers thinking ahead about health-related risks.

I think this annuity is best for someone in the pre-retirement window — roughly the mid-50s to early 70s — who is working with a Morgan Stanley advisor, wants to earmark long-term dollars for future income, and specifically wants the ability to fully exit the contract after five years rather than committing for a decade. It is a good fit for someone who expects to activate income within a few years of the surrender expiration, and who values the chronic illness enhancement as a built-in safety net. It is a weaker fit for buyers primarily seeking growth, for those who want a simpler or cheaper income guarantee, or for those planning to defer income for more than a decade, since a longer-dated income contract would likely offer a lower rider fee over that horizon.

You are not buying stock-market upside. You are buying a lifetime income framework built around a principal-protected annuity, distributed through the Morgan Stanley platform. The core of the contract is the Guaranteed Income Builder: a separate bookkeeping figure called the withdrawal base that grows by a guaranteed 10% per year while you defer, up to 15 years. When you activate income, your age and that base determine a guaranteed annual payment you can take for life — even if the actual account value eventually reaches zero. The index crediting is secondary to that income guarantee; the contract is designed to fund the guarantee first, which means the caps and participation rates are modest compared to a pure accumulation FIA. The Morgan Stanley distribution means the contract is not available outside that channel, but the insurance and benefit terms are substantively the same as the standard version.

The Guaranteed Income Builder Benefit — formally the Guaranteed Lifetime Withdrawal Benefit XII — is built into the contract at no separate choice required. Before you turn income on, the rider credits the withdrawal base with a guaranteed 10% each year, compounding the income figure for up to 15 years or until you activate, whichever comes first. The fee for this rider is 1.20% per year, charged on the withdrawal base. Because the base is designed to grow faster than the account value — especially in flat or low-return index years — the dollar amount of the fee increases over time even if your account value stays flat. When you activate income, the payout percentage is set by your age at activation, applied to the withdrawal base. That payment continues for life. Critically, the withdrawal base is not a cash value; you cannot take it as a lump sum, and surrendering the contract means giving up any income guarantee tied to it.

The Income Enhancement Benefit is a chronic illness provision built into the contract at no additional charge. If you become unable to perform a specified number of activities of daily living, this benefit can increase your annual income payments to help offset care-related costs. That is a meaningful addition for an income-focused contract, because long-term care events are one of the primary risks that can destabilize a retirement income plan. Getting that coverage built in — without buying a separate rider or long-term-care policy — improves the contract's overall value relative to income FIAs that offer only the base withdrawal guarantee. The contract also includes nursing care and terminal illness waivers that can allow surrender-free access to funds under qualifying circumstances.

The five-year surrender period is the most distinctive structural feature. Charges run 8%, 8%, 7%, 6%, and 5% in years one through five, then fall to zero. That is substantially shorter than most income-focused annuities, which typically run seven to ten years. After year one, you can take up to 10% of the beginning-of-year contract value each year without withdrawal charges (in year one, the free amount is based on premiums paid). A market value adjustment — MVA, meaning your effective surrender value moves with interest rates — applies to amounts beyond the free withdrawal during the surrender period, so your actual exit cost in years one through five depends on the rate environment at the time.

The structural tension is the same one present in the open-market version. The rider rewards you for deferring income for up to 15 years, but the surrender charges only last five. Past year five, you can exit the contract entirely — but doing so means surrendering the income guarantee you have been paying for. For a buyer who plans to activate income around years five to eight, the design works well: you get the income guarantee and regain full liquidity at roughly the same time. For a buyer planning maximum deferral, the short surrender is irrelevant, and you are simply paying a premium rider fee without the benefit of compressed commitment.

The primary cost is the 1.20% annual rider fee charged on the withdrawal base. That is on the higher end of the built-in income FIA peer group; comparable products often price the fee between 1.00% and 1.10%. Because the fee is charged on the growing withdrawal base rather than the account value, the dollar amount climbs year over year as the 10% roll-up compounds. The trade is explicit: that fee buys the guaranteed 10% roll-up and the lifetime income floor. If you activate income and hold the contract long enough, the guarantee more than covers the cost. If you cancel before activating income, you paid for a feature you never used.

The crediting side reflects the income-first construction. The fixed account rate and index cap rates are modest — a 4.50% annual cap on the S&P 500 Annual Point-to-Point and a 2.75% fixed account rate are representative of the snapshot disclosed in the brochure materials. Figures like these change with each renewal period; ask for a current rate sheet before committing. There is no premium bonus and no base contract fee, which keeps the structure clean — the rider fee is the only ongoing charge beyond the crediting tradeoff.

Legal Entity: Forethought Life Insurance Company

Parent: Global Atlantic Financial Group

ForeIncome II is issued by Forethought Life Insurance Company, a Global Atlantic Financial Group subsidiary. Global Atlantic is a sizable institutional insurer with broad annuity distribution. For a product built around a lifetime income guarantee, carrier financial strength matters more than in a simple accumulation contract — the guarantee runs for your lifetime, which may be decades after the surrender period ends.