Case Study - FIA with Bonus Case Study
A 13% Bonus, a 10 Year Commitment, and the Importance of Looking Beyond the Sales Presentation
A 13% premium bonus. Protection from market declines. An opportunity to participate in index growth.
For someone planning for retirement, that combination can sound compelling. Add a presentation suggesting that a fixed indexed annuity, or FIA, could potentially outperform the market, and the recommendation may seem even more attractive.
But what does the client actually receive? What does the contract cost? How much money is available if circumstances change? And what does accepting a 10 year surrender charge schedule mean for the client’s financial flexibility?
This Case Study - FIA with Bonus Case Study examines a 10 year fixed indexed annuity purchased on March 3, 2025, with an initial premium of $154,409.70 and a 13% premium bonus of $20,073.26.
The records demonstrate why consumers and their professional advisors should examine the entire contract before accepting a recommendation.
The bonus is easy to understand. The financial commitment behind it requires a closer look.
The Central Issue Is the Recommendation and Review Process
The concern in this case is how the product was recommended and understood. The records do not establish that the insurance company failed to honor its contract.
A contract can operate according to its terms while delivering results that differ significantly from what the buyer expected.
According to the case background, the client did not obtain an independent second opinion before proceeding. That was a missed opportunity to review the recommendation without pressure to complete a sale.
An independent review could have explored whether the client understood:
The difference between a bonus and earned interest.
The 10 year surrender charge schedule.
The amount available through permitted withdrawals.
The charges associated with the selected strategies.
The timing of index credits.
The possibility of changes to future crediting terms.
The alternatives available for the same financial objective.
The absence of a second opinion does not remove the recommending professional’s responsibility. It means the client missed an additional opportunity to verify the recommendation before committing the money.
The Starting Point: A $154,409.70 Premium and a 13% Bonus
The initial transaction history shows:
Initial transaction | Amount |
Premium deposited on March 3, 2025 | $154,409.70 |
13% premium bonus | $20,073.26 |
Premium plus bonus before charges | $174,482.96 |
Charge posted on the issue date | $181.78 |
The bonus increased the reported starting value. However, a bonus credit is not interest generated through investment performance, and its availability can depend on contractual conditions.
Before treating a bonus as an advantage, ask:
Where is it credited? When does it become fully vested? What happens to it if the client withdraws money, surrenders the contract, or dies?
The review should also compare the complete contract with reasonable alternatives that do not offer a bonus.
A larger bonus does not automatically mean a better contract.
What Happened After the Bonus Was Added?
Across both transaction pages, the records show one posted index credit and recurring charges.
Recorded activity | Amount |
Index credit posted March 3, 2026 | $4,938.88 |
Twelve charges of $181.78 | ($2,181.36) |
Eight charges of $184.63 | ($1,477.04) |
Total visible charges | ($3,658.40) |
Index credit remaining after visible charges | $1,280.48 |
The calculation reconciles to the reported accumulated value:
$154,409.70 premium + $20,073.26 bonus + $4,938.88 index credit − $3,658.40 charges = $175,763.44
The accumulated value therefore stood only $1,280.48 above premium plus bonus at the snapshot date.
Measured against the original premium, accumulated value increased approximately 13.83%. However, most of that increase came from the initial 13% bonus.
Measured against premium plus bonus, the additional increase was approximately 0.73% over the observed period. These are cumulative calculations, not annualized returns.
The bonus contributes to reported value, but it should be distinguished from subsequent earnings when assessing performance.
Identify Charges Without Counting Them Twice
The transaction history categorizes the deductions as “RiderCharge.” Most descriptions say “Monthaversary,” while the March 2026 entry says “StrategyCharge.”
The strategy summary separately displays a 1.25% annual strategy charge rate.
These labels require clarification. They do not establish that a separate rider expense must be added to another separate strategy expense. The transaction deductions may represent the displayed strategy charge.
A proper review should identify the contractual basis for each deduction and reconcile the stated rate with the actual dollar charges.
Accurate analysis means accounting for every expense without overlooking a charge or counting it twice.
High Participation Rates Are Not Guaranteed Returns
The strategy summary shows participation rates ranging from 130% to 285%, together with a 1.25% annual strategy charge rate for each displayed allocation.
A participation rate above 100% can sound impressive. But it applies to the specified index under the contract’s crediting formula.
It does not automatically apply to the conventional S&P 500.
For example, 200% participation in a 2% index gain would produce 4% before applicable charges and other adjustments. It does not mean the client receives twice the stock market’s return.
FINRA explains that indexed annuity credits depend on contractual methods and limitations, including participation rates, caps, and fees. Credited interest can differ substantially from the referenced index’s performance. www.finra.org
Before selecting an allocation, request the index’s full name, methodology, live inception date, and explanation of any volatility controls or embedded deductions. Ask whether the historical presentation includes simulated results from before the index existed.
The Two Year Index Terms Were Still Unfinished
The screenshot shows two year point to point terms ending in March 2027 and March 2028.
Neither set of terms had ended as of October 22, 2026. The current index readings therefore should not be treated as final term returns.
A fair assessment must recognize that the current accumulated value is documented while future credits from unfinished terms remain uncertain.
The client should understand when interest is measured and credited before accepting the strategy.
Accumulated Value Is Not the Same as Accessible Money
The contract values screenshot is dated October 22, 2026.
Contract value or adjustment | Reported amount |
Accumulated value | $175,763.44 |
Estimated death benefit | $177,743.19 |
Surrender value | $148,887.94 |
Withdrawal charge | $11,372.93 |
Market value adjustment | ($141.73) |
Free withdrawal amount | $8,862.02 |
Each figure answers a different question.
Accumulated value is the reported value within the contract before applicable surrender adjustments.
Estimated death benefit concerns the amount potentially payable to beneficiaries under the contract’s provisions.
Surrender value is the reported amount available upon full surrender, subject to the applicable calculation and taxes.
The accumulated value exceeded the original premium. However, the surrender value was $5,521.76 below the original deposit, or approximately 3.58% less.
The screenshot also reports no gross withdrawals since inception.
The Surrender Calculation Needs a Complete Explanation
Subtracting the displayed withdrawal charge and market value adjustment from accumulated value gives: $175,763.44 − $11,372.93 − $141.73 = $164,248.78
That still exceeds the reported surrender value by $15,360.84.
The screenshots do not explain that entire remaining difference. Bonus recapture or another contractual adjustment could be involved, but the explanation must be verified through the contract and a written surrender calculation.
A complete review should reconcile every dollar between accumulated value and surrender value.
A 10 Year Surrender Schedule Creates a Long Financial Commitment
This FIA has a 10 year surrender charge schedule.
Purchased on March 3, 2025, that period generally extends to the tenth contract anniversary in March 2035, subject to the contract’s precise provisions.
At the October 2026 snapshot, the client was still in the second contract year, with more than eight years remaining before that anniversary.
Consumers often describe this as having their money “locked up.” More precisely, access is restricted by the financial consequences of withdrawing beyond the contract’s allowances or surrendering early.
The statement shows a free withdrawal amount of $8,862.02. That provides some access, but it does not mean the entire accumulated value is freely available.
The difference between accumulated value and surrender value was: $175,763.44 − $148,887.94 = $26,875.50
That amount represents the total difference between the displayed values. It should not be described as the separately listed surrender charge alone.
FINRA warns that early surrender charges and forfeitures can reduce the amount received from an indexed annuity below the original premium. www.finra.org
Protection against negative index performance does not automatically mean unrestricted access to the full account value.
Two Year Index Terms Do Not End the 10 Year Surrender Schedule
These timelines serve different purposes:
Contract feature | What it governs |
Two year index crediting term | When the selected strategy measures performance and determines its credit |
Ten year surrender charge schedule | How long withdrawals or surrender may be subject to contractual charges |
A two year index term can end while the surrender schedule continues.
An opportunity to renew or change allocations is not necessarily an opportunity to withdraw the entire account without surrender charges.
Can the Client Afford to Restrict Access for a Decade?
Over 10 years, a client’s circumstances can change significantly.
Healthcare needs, family responsibilities, housing costs, and retirement income requirements may create a need for additional cash.
Before purchase, the review should determine whether the client has sufficient accessible assets outside the annuity. It should also examine the annual surrender percentages, bonus vesting terms, market value adjustment provisions, and any applicable withdrawal waivers.
The complete schedule is not shown in these screenshots, so its annual percentages should be obtained from the contract rather than assumed.
The question is whether the contract fits the client’s life, including the possibility that life will change.
How Did the FIA Compare With the S&P 500?
The S&P 500 closed at 5,849.72 on March 3, 2025, and 7,623.68 on October 23, 2026. That represents approximately 30.33% price growth. www.morganstanley.com
Applying that change to the original premium produces:
Comparison item | Amount |
Starting amount | $154,409.70 |
S&P 500 price growth | 30.33% |
Hypothetical ending benchmark value | $201,235.30 |
Hypothetical dollar gain | $46,825.60 |
FIA accumulated value | $175,763.44 |
Difference between displayed values | $25,471.86 |
The hypothetical benchmark received no premium bonus.
However, the comparison has important boundaries. The FIA snapshot is dated October 22, while the benchmark ends October 23. The benchmark excludes dividends, investment expenses, and taxes. It is a mathematical index comparison, not an actual investment account.
Stock investments also carry downside risk that differs from an FIA’s contractual protections, and the FIA’s displayed index terms were unfinished.
This does not establish that the client should have invested entirely in stocks or that an FIA will always underperform.
It demonstrates why potential market outperformance should not become the client’s expectation without a clear explanation of the conditions, risks, and tradeoffs.
A 10 Year Commitment Does Not Guarantee Today’s Rates for 10 Years
The surrender schedule can continue for a decade even when certain crediting terms are guaranteed for shorter periods.
Some indexed annuity contracts permit changes to participation rates, caps, or fees at specified times. The contract determines what may change and when. www.finra.org
Before purchasing, ask:
Which terms are guaranteed for the full 10 years?
Which terms can change at renewal?
What contractual minimums or maximums apply?
Can an index option be discontinued or replaced under specified provisions?
What choices would the client have?
What would it cost to exit if future terms became less attractive?
The screenshots do not establish that unfavorable changes occurred in this case.
They highlight why renewal provisions should be reviewed alongside surrender restrictions. The client may remain subject to exit costs even when future crediting opportunities change.
Consumers Need Independent Advocacy and Transparent Compensation
Commission compensation creates an incentive to complete a sale. That incentive deserves disclosure and scrutiny.
It does not prove that every commission compensated professional gives poor advice. Likewise, a fee arrangement does not automatically eliminate conflicts.
The meaningful questions are whether the professional compares reasonable alternatives, documents the recommendation, explains compensation, and is willing to recommend no transaction.
Consumers should ask:
“Can I hire you to evaluate this recommendation without being expected to purchase another product?”
For CPAs, attorneys, fiduciaries, and fee only investment advisors, an independent insurance review can help connect a complex contract with the client’s broader financial plan.
An advocate should help the client understand both the benefits being purchased and the flexibility being surrendered.
Use the Free Look Period to Review the Actual Contract
Annuity buyers generally have a limited cancellation period after receiving the contract, commonly 10 to 30 days, depending on applicable requirements. The contract should state the deadline and return procedure. www.investor.gov
Use that time to compare the delivered contract with the sales presentation.
Review the bonus provisions, surrender schedule, strategy charges, crediting terms, guarantees, and renewal provisions. Confirm whether the proposed 10 year commitment fits the client’s liquidity needs.
Do not assume that asking questions extends the cancellation deadline.
A short review window can be the client’s opportunity to reconsider a decade of withdrawal restrictions.
Existing Owners Should Review Before Replacing
Disappointing results should trigger analysis before another transaction.
Request a current surrender quote and a written explanation of every adjustment. Confirm upcoming crediting dates, bonus vesting provisions, renewal options, and withdrawal allowances.
Then compare the consequences of keeping the contract, changing allocations when permitted, taking allowed withdrawals, or replacing it.
A new bonus does not erase the cost of leaving an existing contract.
A replacement may also begin a new surrender schedule. Any recommendation should demonstrate that the expected benefits justify the costs, restrictions, and benefits given up.
LIR’s Commitment to Consumer Advocacy
At LIR, LifeInsuranceReview.com, we want the insurance industry to work better for consumers through greater transparency, stronger accountability, and meaningful consumer protections.
Our leadership team brings more than 150 years of combined experience. We evaluate fixed indexed annuities and help consumers evaluate and design FIA, registered index linked annuity, and variable annuity strategies when appropriate.
Our work with CPAs, attorneys, fiduciaries, and fee only investment advisors focuses on helping clients understand recommendations before committing their money.
An independent analysis should clearly explain its scope, fees, and conflicts. Any separate product implementation role should also be disclosed.
The lesson from this Case Study - FIA with Bonus Case Study is that a compelling bonus cannot replace a complete review.
Before purchasing an annuity or changing an existing contract, visit LifeInsuranceReview.com to explore an independent assessment.
Your financial decisions deserve clear explanations, documented comparisons, and an advocate focused on your interests.
FAQs - Case Study - FIA with Bonus Case Study
1. Is a 13% FIA bonus the same as earning a 13% return?
No. A premium bonus is a contractual credit. It should be distinguished from interest earned after purchase, and its availability depends on the bonus provisions.
2. How much did this FIA grow beyond premium plus bonus?
As of October 22, 2026, accumulated value was $1,280.48 above premium plus bonus. The visible history reconciles that amount as $4,938.88 in index credit minus $3,658.40 in charges.
3. Does a 10 year annuity mean no money can be withdrawn for 10 years?
No. This statement shows a free withdrawal amount of $8,862.02. However, withdrawals beyond applicable allowances or full surrender can trigger charges and other adjustments. The contract governs access and exceptions.
4. Do surrender charges end when a two year index term ends?
No. The index crediting period and surrender charge schedule are separate. This contract’s two year strategies operate within a 10 year surrender schedule.
5. Does the annuity automatically end after 10 years?
Not necessarily. The end of the surrender charge schedule is different from the termination or maturity of the annuity. Review continuation provisions and any outstanding index terms before withdrawing.
6. Why was surrender value below the original premium?
Contractual adjustments reduced the amount available upon exit. The displayed withdrawal charge and market value adjustment do not explain the entire difference, so a complete written reconciliation is needed.
7. Does a high participation rate guarantee strong returns?
No. It applies to a specified index under a contractual formula. A high participation percentage can still produce a modest credit if the underlying index gain is modest.
8. Are the transaction charges separate from the 1.25% strategy charge?
The screenshots do not establish that they are separate expenses. The transaction labels and strategy rate must be reconciled against the contract to avoid double counting.
9. Are current rates guaranteed for the full 10 years?
Do not assume so. The surrender period and rate guarantee period can differ. Review the contract’s guarantees, renewal provisions, and limits on permitted changes.
10. Can an FIA outperform the S&P 500?
A particular FIA can produce a better result during some periods, especially when markets decline. That possibility does not guarantee outperformance or establish that it is the best choice for a particular client.
11. Does this case prove the agent or insurer acted improperly?
No. The screenshots document values and transactions. Evaluating the recommendation requires the contract, sales materials, disclosures, communications, and client circumstances.
12. Should an owner surrender because an FIA trails the stock market?
Not automatically. Surrender can create costs and eliminate benefits. Review the alternatives and their consequences before making a decision.
13. When should a consumer obtain an independent review?
Ideally before purchase. The free look period offers another important opportunity. Existing owners should also consider a review before a major withdrawal, renewal decision, or proposed replacement.
Case methodology: Contract figures come from the four supplied screenshots. The 10 year surrender period is based on the case information provided; the complete annual schedule is not included in those screenshots. Contract values are dated October 22, 2026, while the S&P 500 comparison ends October 23, 2026. The benchmark excludes dividends, expenses, and taxes. This educational case study is not a recommendation to surrender or replace a contract.
