Micah Hesting | Advisor Relationships/Business Development Strategist
As of September 10, 2019, Allianz has pulled back the reins a little on their 360 index annuity offering by reducing their “base withdrawal percentage” by 20 basis points and their “annual increase percentage” by 5 basis points on both income options. For those of you not familiar with the Allianz 360 index annuity contract, the base withdrawal percentage is based on the client’s age at the time the contract is issued and is a determining factor in amount of “for-life” income the client will receive. The annual increase percentage is an amount that is added to the base withdrawal percentage each year during the accumulation phase of the contract, so it is a determining factor of income as well. With two income determining factors being lowered, the contract does not look as good as it did before the changes. However, I still think it is a competitive contract for clients looking to generate income with the opportunity to increase those payments as well as protect their actual account value.
Below are examples of how each income option available in this contract works with the new percentages.
Level income option:
A 64-year-old client would start out with a base withdrawal percentage of 5%. That 5% would increase by .24% (annual increase percentage for a 64-year-old) until a distribution comes out of the account. Once the client starts taking income, that increase will stop. The paycheck they will receive for life will be based off the income percentage attained at the time of their first distribution multiplied by the “high watermark” set in the account up until that point.
The high watermark is set by interest credited to the account each year plus a 25% interest credit bonus given by Allianz. For example, if the client invested $100,000 and did not take a distribution in the first year and had a 4% interest credit in that year, their high watermark would go from $100,000 to $105,000 and lock in (4% plus 25% interest credit bonus = 5% total credit).
Increasing income option:
This option works just like the level option but with the addition of high watermarks after you start taking distributions. For example, if we had a 64-year-old taking income right away that invested $100,000, their initial for-life paycheck would be $4,100 (4.1%). If in the first year they were to get an index credit of 4%, Alliance would then credit an additional 25% making the total a 5% credit. Now the client’s new high watermark would be locked in at $105,000, and their new paycheck would be $4,305 a year until they reach a new high watermark.
If you would like more information on the Allianz 360 index annuity contract or need the updated sales material, please contact the Allianz sales desk at 800.950.7372 option 1.
Contact Micah Hesting for more information:
Advisor Relationships/Business Development Strategist