The Corebridge Financial Value+ Protector III is a sophisticated fixed indexed life insurance plan designed to offer tax-deferred growth potential, principal protection from market downturns, and guaranteed lifetime income options. It is a long-term retirement savings vehicle that balances potential growth linked to market indices with safety features typical of an annuity.

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Key Features and Objectives

The primary goal of the Value+ Protector III is to provide a retirement solution that mitigates sequencing risk (the risk of poor investment returns early in retirement) and longevity risk (the risk of outliving one's savings).

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Principal Protection

A cornerstone of the Value+ Protector III is its promise of principal protection. Premiums paid into the plan are not directly invested in the stock market. Instead, they are placed in the insurance company's general account. This guarantees that market downturns will not directly decrease the plan's contract value. If the linked index performs negatively, the credited interest rate for that period will simply be zero.

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Tax-Deferred Growth

Like most life insurance plans, the earnings within the Value+ Protector III grow on a tax-deferred basis. This means the owner does not pay taxes on the interest earned until withdrawals are made, typically during retirement. This allows for compounding growth on the gross amount, potentially leading to a higher account balance over time compared to a similarly performing taxable account.

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Index-Linked Interest Potential

The life insurance plan's potential growth is tied to the performance of one or more external market indices (e.g., the S&P 500 Index, sector-specific indices, or proprietary indices). However, the contract does not directly invest in these indices. Instead, the interest credited is calculated based on a portion of the index's positive performance, subject to specific interest-crediting methodologies.

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Crediting Strategies

Interest crediting is the most complex aspect of FIAs. The Value+ Protector III typically offers various strategies, allowing the policyholder to customize the balance between potential growth and protection.

 

Strategy Component

Description

Cap Rate

The maximum percentage of index growth that can be credited to the plan in a given period.

Participation Rate

The percentage of the index gain that is credited. If the participation rate is 60%, and the index gains 10%, the credited rate is 6%.

Spread/Margin/Asset Fee

A deduction taken from the index's positive return before interest is credited. If the index gains 10% and the spread is 3%, the credited rate is 7%.

Index Choices

A selection of indices the policyholder can choose to link their growth to, often including standard indices and sometimes volatility-controlled indices.

 

Interest is generally credited at the end of a specific crediting period (usually one year).

Access to Funds and Liquidity

Withdrawal Provisions

The Value+ Protector III is intended as a long-term retirement vehicle, and withdrawals before age 59½ may be subject to a 10% federal tax penalty in addition to ordinary income taxes.

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Surrender Charges

Like most index life insurance, the policy includes a surrender charge schedule that applies if the owner makes withdrawals exceeding the penalty-free amount, or surrenders the entire contract, within the initial contract period (typically 7-10 years). The surrender charge is a percentage of the amount withdrawn or surrendered and generally declines over the surrender charge period.

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Penalty-Free Withdrawals

Most policies allow for a certain percentage of the contract value (e.g., 5-10%) to be withdrawn each year without incurring surrender charges, even within the surrender period.

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Income Rider Options (Guaranteed Lifetime Withdrawal Benefit - GLWB)

A critical component often purchased with the Value+ Protector III is an optional income rider (GLWB). This feature is designed to address longevity risk by providing a guaranteed income stream for life, regardless of how the underlying contract value performs.

 

• Income Base (Benefit Base): This is a separate value used only to calculate lifetime income payments. It is typically guaranteed to grow at a specific, often high, roll-up rate (e.g., 5-8% simple or compound interest) for a set deferral period, even if the actual contract value grows slowly or stays flat.

• Withdrawal Percentage: The percentage of the Income Base that can be withdrawn annually as guaranteed lifetime income. This percentage typically increases the longer the policyholder defers taking income and may be higher for joint (spousal) life coverage.

• Guarantees: The income payments are guaranteed to last for the life of the covered individual(s), providing predictable cash flow in retirement.

 

Note: The income rider comes with an explicit annual fee, typically calculated as a percentage of the Income Base.

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Death Benefit

The policy generally includes a death benefit, which is paid to the named beneficiaries upon the death of the insured(or owner). The death benefit is usually the greater of:

 

1. The contract value as of the date of death.

2. The total premiums paid, less any prior withdrawals.

 

The death benefit avoids probate and is received income tax-free by the beneficiaries (though the gain inside the contract is generally taxable as ordinary income).

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Target Audience

The Corebridge Financial Value+ Protector III is best suited for individuals who:

 

• Are approaching or in retirement (typically 50-75 years old).

• Prioritize principal protection and preservation of capital over maximum growth potential.

• Seek guaranteed lifetime income to cover essential expenses in retirement.

• Have a long-term time horizon and can comfortably commit funds for the surrender period.

• Have already maximized contributions to qualified retirement plans (e.g., 401(k), IRA) and are looking for another vehicle for tax-deferred growth.