Foundations Annuity 5 review

Yes, for the right buyer. If your goal is accumulation with principal protection and you can leave the money in place for 5 years, this is a solid product — the index menu is broader than most short-duration FIAs, and the 1% premium bonus and 4.50% fixed account rate (as of the brochure date) add some immediate tangibility to the value proposition. It is less appealing for anyone who might need the money before year five, wants lifetime income, or is uncomfortable with an MVA exposure on top of surrender charges.

The main reason to pick Foundations Annuity 5 is depth of choice inside a shorter contract. Four benchmark indices plus multiple volatility-managed strategies give buyers more ways to position for index-linked growth than a simpler FIA would. The fixed account at 4.50% also gives buyers a concrete anchor if they want certainty rather than index exposure during a given contract year. The 1% account-value bonus at issue is a modest head start.

I think this product is best for buyers in the 50-70 age range who want to protect a portion of savings from direct market losses, prefer a 5-year horizon over a longer lockup, and want real index diversity inside the contract. It works well in both qualified and non-qualified accounts — the RMD-friendly provision removes one common source of friction for IRA holders. It is a poor fit for anyone who needs liquidity within the first few years, is shopping primarily for guaranteed income, or is in a state where the MVA applies and plans to exit before maturity.

You are not buying market participation. You are buying a principal-protected insurance contract that uses index performance to determine how much interest may be credited each year. Your principal cannot lose value from index declines, but your upside is shaped by caps, participation rates, or spread deductions depending on the strategy. The 1% premium bonus adds to your account value at issue, but it is subject to the same surrender schedule — it is not free money you can withdraw immediately. The Guaranteed Minimum Cash Surrender Value (87.5% of premiums at 1% GMIR) is the contractual floor on what you can receive if you surrender early.

Foundations Annuity 5 offers 15 index-linked crediting strategies plus a fixed account, which is an unusually wide menu for a 5-year product. The core strategies use four benchmark indices — S&P 500, Nasdaq-100, MSCI EAFE, and Russell 2000 — with annual point-to-point crediting. The S&P 500 also has annual average and monthly sum variations. Beyond those, the contract adds several volatility-managed or risk-controlled index strategies: the S&P 500 Factor Rotator Daily RC2 7%, the S&P Multi-Asset Risk Control (MARC) 5%, the Morningstar Wide Moat Focus Barclays VC 7%, and the S&P 500 Low Volatility Daily Risk Control 5%.

The cap on standard S&P 500 annual point-to-point strategies was in the 9.4%–9.5% range per the brochure date; the spread on the S&P 500 Low Volatility strategy was approximately 1.75%. Participation rates on enhanced strategies ranged from 130%–200%, though those rates change and should be confirmed with the carrier directly. The practical takeaway is that buyers get more ways to express a view on different market environments — domestic large-cap, international developed, small-cap, and diversified risk-controlled options — than a basic FIA typically provides.

The secondary feature worth noting is the RMD-friendly provision. During the surrender charge period, required minimum distributions from qualified contracts are not subject to surrender charges or MVA. That removes a real source of tension for IRA holders who might otherwise face penalties simply from satisfying their annual distribution requirements. The Terminal Illness and Nursing Home waivers available after the third contract anniversary add meaningful protection against scenarios where forced liquidity becomes unavoidable.

The 9% first-year charge is on the steeper end for a 5-year product. Combined with the MVA — which applies in most states (not in AK, CA, IN, MN, MO, NH, NJ, OH, OR, PA, SC, TX, UT, WA) — early exit can be significantly more expensive than the surrender schedule alone suggests. The MVA is a Market Value Adjustment, meaning the penalty for surrendering can increase or decrease depending on where interest rates are at the time. In a rising-rate environment, the adjustment typically works against you.

The 10% annual free withdrawal provision (after year one) helps manage the lockup. It applies to the prior contract anniversary account value and is not subject to surrender charges or MVA — giving buyers meaningful annual access without triggering penalties. State variations in CT and DE include reduced surrender charges, so buyers in those states should confirm the local schedule.

There is no base contract fee and no income rider fee because no income rider is offered. That keeps the structure clean for accumulation-focused buyers. The tradeoffs are structural rather than explicit: caps and participation rates limit upside, the volatility-managed indices have embedded index costs that reduce effective crediting, and the MVA in most states adds exit risk that goes beyond the stated surrender schedule. The 1% premium bonus is a true account-value credit but it comes with vesting through the surrender period — you cannot withdraw it immediately without paying the surrender charge on it like any other contract value.

Legal Entity: Security Benefit Life Insurance Company

Parent: Eldridge Industries

A.M. Best Rating: A-