Forethought Life Insurance Company Review

Forethought Life Insurance Company, more commonly known as Forethought, is a life insurance company based in Indianapolis, Indiana. A part of the Global Atlantic Financial Group, Forethought specializes in final expense insurance policies and annuity products.

In this review, we take a look at the history and background of Forethought, its financial ratings, its product range, and the advantages and disadvantages of choosing the company as your insurer.

Our Take

Forethought is an excellent choice for those who are looking for a final expense policy or an annuity product. Few life insurance companies can match the range of features and benefits offered by Forethought’s final expense policies. Similarly, their annuity products are second to none in terms of investment options, growth potential, and additional benefits.

Life Insurance Products Offered by Forethought

Preneed Life Insurance

This is the product that put Forethought on the map. This is a unique product that is designed to take care of your funeral expenses.

Forethought’s preneed policy is linked to a funeral services provider (a funeral home for example) and pays for the services they provide. It is essentially a contract between the insurance company and the funeral services provider.

In the event of your death, the company pays the funeral services provider directly. Your family does not come into the picture at all. This provides you with peace of mind knowing your funeral planning is taken care of.

How It Works

Forethought has a list of affiliated funeral service providers, from which you can choose one whose funeral service package meets your budget and needs and sign a contract with them.

The contract specifies the services offered by the company and the charges for the same. The total amount mentioned in the contract is paid by the insurance company after your death.

Why Choose a Preneed Policy?

The biggest advantage of a preneed policy is that it reduces your family’s burden – financial and otherwise – in the event of your death.

The death of a loved one is a moment of distress for the family. It can be hard for the grieving members of your family to plan a funeral and memorial service for you. It can be even more difficult to keep track of all the expenses and make the payments.

With a preneed policy in place, your family does not have to worry about the funeral and memorial service at all. Everything is taken care of by the funeral service provider, as specified in the contract.

The payment for the services rendered is made by the insurance company. It allows your family to focus on what is important – remembering your life and cherishing your memories.

Moreover, since the contract is signed when you are alive, you get to decide what kind of funeral and memorial service you want. So, you can be sure that you will be remembered exactly the way you want.

Final Expense Insurance

In addition to preneed life insurance, Forethought offers a regular final expense policy called the TrustGuard Gold Plan. The policy is different from the final expense policies offered by most other insurance companies.

TrustGuard Gold Plan is a whole life policy that can be linked to a Funeral Expense Trust or an Estate Planning Trust, depending on your needs.

TrustGuard Gold Plan – Funeral Expense Trust

This plan is designed to cover your funeral expenses. The payout can be anywhere from $2,500 to $15,000, which should be sufficient to cover all the expenses associated with your funeral service.

After buying the policy, you are required to transfer the ownership of the policy to the funeral expense trust. There are no charges associated with the ownership transfer. Once you do, the policy is owned entirely by the trust.

After your death, the payout from the insurance company can be used to pay for your funeral service. The remaining amount, if any, goes directly to your estate.

TrustGuard Gold Plan – Estate Planning Trust

This is a two-in-one plan which not only pays for your funeral service but also allows you to leave a legacy for your family. The payout can be anywhere from $2,500 to $100,000.

You can buy the policy and transfer the ownership to the estate planning trust without paying any fees. After your death, the payout from the policy can cover the expenses associated with your funeral. The remaining amount goes directly to your designated beneficiaries.

What Makes TrustGuard Gold Plan Different?

Unlike regular final expense policies, TrustGuard Gold Plan is not owned by the policyholder, but by a trust. What this means is that the death benefit proceeds are protected from creditors.

Under normal circumstances, your family might be forced to pay the creditors (hospitals, nursing homes, banks, and private lenders) using the money they receive from the insurance company. With a trust in place, creditors do not have any access to the funds from your life insurance policy.

You can rest assured knowing that the money you have kept aside will only be used for your funeral service and the rest of the amount will be passed on to your beneficiaries.

Moreover, unlike the preneed life policy, this one does not require you to choose a company from a list of affiliated funeral service providers. You can choose to sign a contract with any funeral service provider of your choice.

After the funeral and memorial service is over, the service provider needs to file a claim with the insurance company. The amount will be settled within 48 hours.

Now, let us take a look at the annuity products offered by Forethought.

Annuity Products

Forethought offers an extraordinarily wide range of annuity products for retirement planning purposes.

These products allow you to set up a source of passive income in your retirement, which can be used to meet your financial needs both in the short term (day-to-day expenses and bills) and the long term (treatment, long-term care, a legacy for your family, and so on).

Forethought offers four different types of annuity products – fixed annuities, fixed index annuities, income annuities, and variable annuities.

Fixed Annuities

If you are looking for a safe, risk-free way to generate an income in your retirement, a fixed annuity is the best choice for you. The money you invest grows at a fixed rate, without any exposure to the market conditions.

The rate of interest is declared by the company periodically, depending on its performance and several other factors. The interest paid by the company will never fall below the minimum guaranteed rate of interest.

Fixed Index Annuities

This type of annuity has a higher growth potential than a fixed annuity, as it is linked to the performance of a market index. There is a cap or upper limit on the amount of money that can be credited to your account.

However, even with the upper limit, the returns are usually higher compared to a fixed annuity product.

Moreover, your investment is not exposed to the risks of the market, since it is not directly invested in the market in the first place. Your account is only designed to mimic the performance of a market index. When it performs well, you get higher returns. When it goes down, you do not lose money.

Income Annuities

This is a single premium annuity that converts a portion of your investment into an income stream. You get to decide when the payments start, whether you need the payments for a specific time or a lifetime and whether you want to share your income with your partner or spouse.

Variable Annuities

Out of all the annuity products offered by Forethought, this is the one with the highest growth potential.

You are offered a wide range of investment options to choose from, most of which are managed by professionals. There is no cap on the amount of earnings you can receive. So, when the market conditions are favorable, you can get significant returns on your investment.

At the same time, you should remember that variable annuity products do not have any downside protection.

So, when the market goes down, you could lose money. The good news, however, is that Forethought offers optional benefits at an additional cost, which can protect your investment during downturns.

Let us now discuss the advantages and disadvantages of choosing Forethought as your insurance provider.

Advantages

Financial Stability

Forethought and its parent company are financially stable and have an ‘A’ rating from the most respected credit rating agencies in the world. This is a good sign, as you know that the insurance provider is capable of meeting their commitments to their customers.

Excellent Final Expense Policies

Forethought is in a league of its own when it comes to final expense policies. The company offers a preneed policy, which directly pays your funeral service provider, thereby reducing your family’s burden. Moreover, you get to choose how you want to be remembered by your loved ones.

The company also offers a final expense policy which can be linked to a funeral expense trust or an estate planning trust. Since the trust owns the policy, your creditors cannot access the money in the event of your death.

After paying for the funeral service, the rest of the money is passed on directly to your beneficiaries.

Wide Variety of Annuity Products

Forethought offers a variety of annuity products for those who are looking to plan for their retirement. From fixed annuities to fixed index annuities, income annuities, and variable annuities, you have many options to choose from.

Disadvantages

Lack of Term and Permanent Life Policies

Forethought only offers final expense policies. It does not offer term life, whole life, or universal life policies. This is, needless to say, a big downside since final expense policies are only sought after by older people.

Young and middle-aged people mostly buy term and permanent life policies, since they require insurance coverage for longer periods and have financial needs to take care of.

It should be noted that Global Atlantic, the parent company of Forethought, offers term life and permanent life policies through another one of its subsidiaries – Accordia Life and Annuity Company. So, if you need a regular life insurance policy, you might want to check out the products offered by Accordia.

History and Background

Forethought Life Insurance Company was established in 1985 as a direct subsidiary of Hillenbrand Industries. Within just seven years of its inception, Forethought managed to issue life insurance policies worth $1 billion.

By 1995, Forethought had issued policies worth more than $2 billion and had over $1 billion in assets. In 1996, the company became the leading provider of preneed insurance policies in the entire country.

In 2004, Forethought became an independent company, at which point it had issued insurance policies worth over $4 billion. The company soon expanded its presence all over the country and managed to build a nationwide customer base.

In 2014, Forethought was acquired by the Global Atlantic Financial Group. The company currently operates as a fully-owned subsidiary of Global Atlantic.

Forethought Life Insurance Financial Ratings

• A.M. Best: A (Third highest of 13 ratings)
• Standard & Poor’s: A– (Seventh highest of 21 ratings)
• Moody’s: A3 (Seventh highest of 21 ratings)

Global Atlantic has assets worth $50 billion, out of which nearly $25 billion is under the management of Forethought Life Insurance Company(Source).

Based on the ratings and the assets under its management, it is safe to conclude that Forethought is in a financially stable position and is capable of honoring its commitments to its customer base.

Final Thoughts on Forethought

Forethought is an excellent choice for those who are looking for a final expense or annuity product.

On the other hand, if you need a traditional term life, whole life, or universal life policy, you have to buy it from a different company.

There are plenty of companies that offer top-notch term and permanent life products that can meet your financial needs. We have reviewed many of these companies right here on noexam.com.