Brighthouse Financial Shield Annuity Review

The Brighthouse Shield Level Select 6-Year Annuity is an index-linked annuity that features income tax deferral until you begin making withdrawals, meaning your money can grow without interference from the IRS. The S&P 500® Index, Russell 2000® Index and MSCI EAFE Index are all available, although your money will only follow the index rather than be invested in it. One-, three- and six-year terms are offered, so feel free to pick what’s best for your plans. If you’d prefer, you can place your assets in a fixed account as well, but only a meager 1.10% rate will apply to it.

The “Shield” title represents the level of interest protection you can get with all the annuities in this suite. For the Select 6-Year Annuity, you’ll receive access to the Shield 10, 15 and 25 rates. These act as an insurance plan against index losses that surpass that percentage. For example, Shield 15% annuitants whose contract experiences an 18% drop in returns will be able to salvage 15% of that amount, leaving them with just 3% in realized losses. On the contrary, anything under that threshold is removed. Also, the more significant the protection, the lower the rates cap you will receive.

Fees

Like all Shield annuities, there are no annual fees.

You are permitted by Brighthouse to withdraw as much as 10% of your account annually without having to pay any penalties. However, should you pass that mark during the first six years of your contract’s life, you will have to pay a withdrawal charge. This fee starts at 7% for the first two years and goes to 6%, 5%, 4% and 3% every year after that.

59.5 is the IRS’ cutoff age for early withdrawals from a retirement account, including annuities. Should you break this rule, you may face a 10% income surtax.

Realistic Return Expectations

With the Shield Level Select 6-Year Annuity, you can choose to allocate your assets to one, two or all three of the indices that Brighthouse offers. This makes the return possibilities endless, and therefore creating an extremely customizable environment that’s dependent on your retirement plans and risk tolerance. Furthermore, the ability to select your own term length (one-, three- or six-year) and a Shield Rate (10, 15 or 25) can also make it difficult to gauge this annuity’s reasonable returns.

The Brighthouse Shield Level Select 3-Year Annuity employs a withdrawal charge schedule half the size of its predecessor on this list, along with a slightly altered term and Shield Option system. With this account, you’ll only be able to pick from a one- or three-year term for your index-linked rates with either the S&P 500® Index, Russell 2000® Index or MSCI EAFE Index.

Furthermore, there are solely Shield 10 and 15 Options available. Because the Shield 15 offers 5% more coverage than the Shield 10, the rate cap associated with your contract will be lesser than the latter option, should that be your final choice.

In some states, Brighthouse will issue a fixed account in conjunction with your indexed Select 3-Year Annuity. However, this comes with a rather unimpressive 1.10% interest rate in an attempt to have you invest your money in the market’s performance.

Fees

There is a three-year declining withdrawal fee for this annuity if you take out more than 10% of your account’s value during a 12-month period. This charge will be 6% during your first two years as an owner and 5% for year three.

You will not have to pay an annual fee with this contract.

A 10% bonus income tax charge awaits any annuitants that withdraw before age 59.5, so wait as long as possible before taking payments.

Realistic Return Expectations

The fixed-rate account associated with this contract is fairly unimpressive, but your index-linked returns could be solid. The rate caps for this annuity's three-year term are higher than the one-year term, meaning your potential gains could be higher with the three-year version. However, just like all investment-related things, returns are variable depending on market conditions.

The Brighthouse Shield Level Select Advisory Annuity is tax-deferred annuity as well, a benefit that will aid the growth of your money without income taxes. While you will be charged income tax on payments you take, Brighthouse does not charge withdrawal fees for this annuity. Like all Shield contracts, its long-term performance is dependent on the quality of the returns from the S&P 500®, Russell 2000® and MSCI EAFE indices. You are free to allocate your money as you please between them or in just one, but you are required to abide by one-, three- and six-year terms. The company may allow you to invest in a fixed account too, but just a 1.10% rate awaits.

There are three Shield options included with this annuity: Shield 10, 15 and 25. These represent return percentages that your money is protected by in case of major market declines. So if you have chosen the Shield 25 Option, and the market experiences a 22% drop, your account won’t lose any value. Should that raise to 27%, the option will cut that to just a 2% loss.

Fees

This low-cost annuity has no annual fee or withdrawal charges.

There is still one major charge to look out for, though. The IRS threatens to impose a 10% tax surcharge on any withdrawals made by annuitants prior to age 59 ½, so try to hold off until you get there.

Realistic Return Expectations

Similar to the Brighthouse Shield Level Select 6-Year Annuity above, this annuity offers one-, three- and six-year interest rate terms, along with Shield 10, 15 and 25 Options. Again, the more protection you’re looking for, the lower your potential returns will be capped.

Brighthouse Shield Level 10 Annuity offers continued tax-deferred benefits until the day you begin receiving annuity distributions. With just a one-year term included as part of this annuity, your account will renew on an annual basis, as well as your S&P 500®-, Russell 2000®- or MSCI EAFE-indexed assets.

Because of the short-term nature of this contract, only the Shield 10 is available. So the index or indices you select result in a 13% loss, your account’s value will subtract by just 3%. But if it falls within that 10%, all is forgotten. Residents of some states will be granted a fixed account to accompany this annuity. Feel free to place some of your money there, but just know that you will earn at just a 1% rate.

While this is technically a Brighthouse annuity, you can only open one through Wells Fargo Advisors.

Fees

Although most annuities come with some sort of annual fee, Shield annuitants need not worry about this extra cost.

During your first six years as an account holder, you’ll be able to withdraw as much as 10% of your contract’s value every 12 months. However, a fee awaits anyone who passes that mark. The prospectus for this annuity states that years one and two are accompanied by a 7% charge, with each subsequent year dropping to 6%, 5%, 4% and 3%, respectively.

If your annuity is performing well and you’re in need of some cash, it can be tempting to pull from your account ahead of schedule. But you may want to avoid this, as a possible 10% income tax surcharge is given out to annuitants 59.5 years old and younger.

Realistic Return Expectations

Because the Shield Level 10 Annuity only comes in one-year terms at a time, its interest rates are liable to change much more often than that of other annuities available through Brighthouse. Even still, there are very marginal differences between the caps on the three indexes, so the growth potential is roughly the same. As of Feb. 2021, the fixed rate associated with this annuity is 1.10%.

Unlike most Shield annuities, the Brighthouse Shield Level 10 Advisory Annuity is not subject to any withdrawal charges. However, it does share the same income tax deferral and index-linked perks of its peers. The same three indices are available (S&P 500®, Russell 2000® and MSCI EAFE), and your terms will be renewed every 12 months, as opposed to other accounts that feature three- and six-year terms too. Again, you may be given a fixed account, but any moneys placed in there will grow at a weak 1% rate.

The Shield 10 Option is the lone protection available for annuitants of this contract. This could be nerve-racking for some, but because your terms adjust on an annual basis, there is a significantly smaller chance a major market decline would be in the works. To be clear, a Shield 10 Option insures you for losses up to 10%, meaning that a fall of 15% would be shrunk to just 5%.

Brighthouse created this annuity, but as it stands now, the contract can only be had through Wells Fargo Advisors.

Fees

Withdrawal and annual contract charges are completely nonexistent in the fee schedule of this annuity.

If you take any payments from your annuity account prior to turning 59.5 years old, you run the risk of receiving a 10% income tax surcharge, courtesy of the IRS. This could be devastating, so make sure that you weigh the pros and cons before doing so.

Realistic Return Expectations

Annuitants who purchase the Shield Level 10 Advisory Annuity will be limited to solely one-year terms and Shield Option 10. At least for now, this simplistic approach has created a situation where all three indices available through Brighthouse receive essentially the same rate benefits and restrictions. In turn, there’s almost no difference in their return potentials, although this is dependent on how you allocate your assets. For the fixed rate, Brighthouse is currently offering 1.10% (Feb. 2021).