Allianz 222 Fixed Indexed Annuity

[LauderdaleBAUS]

Its a hell of alot better than putting it into a VA. I didnt see where he said he only had a 10 year life expectancy, but if you only have a 10 yr life expectancy that payout % isnt really gonna make a difference. I would put it into something liquid like a managed portfolio at an income manager. The 222, 360 and 365i are focused on lifetime income riders. At least if you draft income from them you dont lose access to your principal. These products are designed for deferral, so no I would not recommend it to someone with 10 years left. I use the product as a supplement to their other incomes from pension and managed income portfolios.

 

[scagnt83]

Its a hell of alot better than putting it into a VA. I didnt see where he said he only had a 10 year life expectancy, but if you only have a 10 yr life expectancy that payout % isnt really gonna make a difference. I would put it into something liquid like a managed portfolio at an income manager. The 222, 360 and 365i are focused on lifetime income riders. At least if you draft income from them you dont lose access to your principal. These products are designed for deferral, so no I would not recommend it to someone with 10 years left. I use the product as a supplement to their other incomes from pension and managed income portfolios.

The last line of his post said he didnt expect to live past the 10 year surrender period (even though it is really a 15 year surrender product).


My only question to you is why Allianz when there are products with higher caps/higher riders/shorter surrender/same ratings...... ?????

 

[sonic1]

Lauderdale BAUS is correct. No reason to put it into an annuity if life expectancy is less than the surrender period UNLESS the client is wanting it to pass on as a death benefit only. If the client is wanting it to pass on then you've got many good choices. None of which is the 222. You should consider LSWs Marquee 8 or Athene's benefit 10 for their guaranteed death benefit. Another option is a big bonus with good caps. Perhaps like NWLs Ultra Future or AEIs Bonus Gold. Since of all these policies are Full Account Value at death, the bonus becomes especially valuable. Forethought's 25% bonus is NOT an account value bonus and therefore shouldn't be a consideration for the purposes of this discussion.

 

[SanDiego619]

Lauderdale BAUS is correct. No reason to put it into an annuity if life expectancy is less than the surrender period UNLESS the client is wanting it to pass on as a death benefit only. If the client is wanting it to pass on then you've got many good choices. None of which is the 222. You should consider LSWs Marquee 8 or Athene's benefit 10 for their guaranteed death benefit. Another option is a big bonus with good caps. Perhaps like NWLs Ultra Future or AEIs Bonus Gold. Since of all these policies are Full Account Value at death, the bonus becomes especially valuable. Forethought's 25% bonus is NOT an account value bonus and therefore shouldn't be a consideration for the purposes of this discussion.

I guess I missed why you think the 222 wouldn't work for a good death benefit. 15% bonus on the "PIV" account. 150% indexing credit to the PIV (With an uncapped strategy available). That huge account can be passed on as long as the beneficiary takes it over 5 years. I personally would want that anyway so I wouldn't blow all the money right away

 

[Josh Landis]

Does anyone know if this is the best Fixed Indexed Annuity for a 69 year old?
Problem I see is only after 10 years can you get the proceeds of the increased value derived from the indexing. Not sure I'll live that long by family mortality.

Tahoe Ray is giving some great advice. It sounds like you need to have a more in depth conversation with someone who can give you unbiased advice. You say that you're 69 and not sure that you will live 10 years. What are your goals with the money? What do you want to accomplish? Do you want to pass it along to beneficiaries? Guarantee income for life? LTC benefits? Liquidity? If you answer these questions you will get much better recommendations.

However, here is what I can tell you about the 222 and it's important to understand the difference in the Accum Value and what they call the PIV value (protected income value or simply an income account value).

There are two bonuses that are credited on the PIV (not the accum value). One being a 15% bonus on the premium and the other being a 50% bonus on any interest credited.

This is where I think there is some confusion. The surrender period is 10 years. However, here are your options...

1.) Full accumulation value is available after the 10 year surrender period (remember accum doesn't have any of the bonuses).
2.) You can elect to annuitize the full accum value (again no bonuses) over at least 10 years after you have held it for 5 years.
3.) You can elect to annuitize the full accum value (again no bonuses) over a period of 10-30 years after you have held it for 1 year (this is used with what they call the Flexible Annuity Option Rider and at certain ages the client may be able to take payments over a period of less than 10 years)
4.) Surrender the policy for the greater of the accum value (no bonuses) less surrender charges or the guaranteed minmum value (no bonus)
5.) Take the lifetime income payments calculated from the PIV (which includes the bonuses)

What is important about these payout options is that the only way you keep the bonuses that are credited is by taking the Lifetime Income payments. And what this means is that you're keeping the bonuses in the PIV value which is used to calculate the Lifetime income...you're never going to actually walk away with this value, unless your beneficiary is walking away with it over a 5 year payout.

As far as the death benefit goes...there are two options

1.) The greater of the accum value, guaranteed minimum value available as a lump sum (no bonuses)

2.) The PIV (with bonus) taken over a period of at least 5 years

The 222 also offers many crediting methods with the most popular being what they call the Barclays Dynamic Balance index which is an uncapped option with a 1.5% spread. The have options for other indexes, but caps are low...for ex. the S&P option right has a 4.25% annual cap.

The Barclays Dynamic index was created on July 19th 2013 so it has only been around for about 4 months. It has back testing that shows what it would have done had it existed over the past 10 years. The goal is that it shifts the allocation between the S&P and the Barclays bond index on a daily basis. The issue I see with this is that they say the product is supposed to shift the allocation to the S&P when the volatility in the S&P is low and shift it to the Barclays bond index when the volatility in the S&P is high.

Few things here...one, I think that as an uncapped product we want to take advantage of the volatility in the market. We are already protected on the downside, so we don't want to miss out on upside volatility. Two, we don't know how they are accomplishing this...did Allianz figure out a way to beat the S&P and do what the best money managers in the world have been trying to do forever. Three, interest rates are low so we don't want to be allocated in the bond index...and four, we don't know much about this index. The ticker symbol I found was BXIIUDBI, but can't find it on Bloomberg using this ticker cited in Yahoo Finance (not sure if anyone else can find it?)

Now this is not to say that the index can't do great and perform well...I don't know the answer to that, but this is what we do know about it.

 

[SanDiego619]

The last line of his post said he didnt expect to live past the 10 year surrender period (even though it is really a 15 year surrender product).


My only question to you is why Allianz when there are products with higher caps/higher riders/shorter surrender/same ratings...... ?????

Clearly you haven't looked into Allianz' core income 7 product. 7 year product, high caps or even uncapped if you go with the BUDBI (and its only .5% spread). Great American used to be the best for this space IMO until this product. The only good thing about Great American is that it will issue up to age 85.

----------

Tahoe Ray is giving some great advice. It sounds like you need to have a more in depth conversation with someone who can give you unbiased advice. You say that you're 69 and not sure that you will live 10 years. What are your goals with the money? What do you want to accomplish? Do you want to pass it along to beneficiaries? Guarantee income for life? LTC benefits? Liquidity? If you answer these questions you will get much better recommendations.

However, here is what I can tell you about the 222 and it's important to understand the difference in the Accum Value and what they call the PIV value (protected income value or simply an income account value).

There are two bonuses that are credited on the PIV (not the accum value). One being a 15% bonus on the premium and the other being a 50% bonus on any interest credited.

This is where I think there is some confusion. The surrender period is 10 years. However, here are your options...

1.) Full accumulation value is available after the 10 year surrender period (remember accum doesn't have any of the bonuses).
2.) You can elect to annuitize the full accum value (again no bonuses) over at least 10 years after you have held it for 5 years.
3.) You can elect to annuitize the full accum value (again no bonuses) over a period of 10-30 years after you have held it for 1 year (this is used with what they call the Flexible Annuity Option Rider and at certain ages the client may be able to take payments over a period of less than 10 years)
4.) Surrender the policy for the greater of the accum value (no bonuses) less surrender charges or the guaranteed minmum value (no bonus)
5.) Take the lifetime income payments calculated from the PIV (which includes the bonuses)

What is important about these payout options is that the only way you keep the bonuses that are credited is by taking the Lifetime Income payments. And what this means is that you're keeping the bonuses in the PIV value which is used to calculate the Lifetime income...you're never going to actually walk away with this value, unless your beneficiary is walking away with it over a 5 year payout.

As far as the death benefit goes...there are two options

1.) The greater of the accum value, guaranteed minimum value available as a lump sum (no bonuses)

2.) The PIV (with bonus) taken over a period of at least 5 years

The 222 also offers many crediting methods with the most popular being what they call the Barclays Dynamic Balance index which is an uncapped option with a 1.5% spread. The have options for other indexes, but caps are low...for ex. the S&P option right has a 4.25% annual cap.

The Barclays Dynamic index was created on July 19th 2013 so it has only been around for about 4 months. It has back testing that shows what it would have done had it existed over the past 10 years. The goal is that it shifts the allocation between the S&P and the Barclays bond index on a daily basis. The issue I see with this is that they say the product is supposed to shift the allocation to the S&P when the volatility in the S&P is low and shift it to the Barclays bond index when the volatility in the S&P is high.

Few things here...one, I think that as an uncapped product we want to take advantage of the volatility in the market. We are already protected on the downside, so we don't want to miss out on upside volatility. Two, we don't know how they are accomplishing this...did Allianz figure out a way to beat the S&P and do what the best money managers in the world have been trying to do forever. Three, interest rates are low so we don't want to be allocated in the bond index...and four, we don't know much about this index. The ticker symbol I found was BXIIUDBI, but can't find it on Bloomberg using this ticker cited in Yahoo Finance (not sure if anyone else can find it?)

Now this is not to say that the index can't do great and perform well...I don't know the answer to that, but this is what we do know about it.

You repeated a lot of the information I had on the first page.

The only thing I would nit pick is your number three problem or question with the BUDBI. You say that we don't want to be allocated in the Bond Index. That's the whole point of this Dynamic index. If the bond index isn't performing, it will allocate funds to the S&P. Last time I looked, this strategy was at 8% YTD (and oh BTW, you can get another 50% of that in the 360 or 222). That's not too shabby.

 

[Josh Landis]

Clearly you haven't looked into Allianz' core income 7 product. 7 year product, high caps or even uncapped if you go with the BUDBI (and its only .5% spread). Great American used to be the best for this space IMO until this product. The only good thing about Great American is that it will issue up to age 85.

----------


You repeated a lot of the information I had on the first page.

The only thing I would nit pick is your number three problem or question with the BUDBI. You say that we don't want to be allocated in the Bond Index. That's the whole point of this Dynamic index. If the bond index isn't performing, it will allocate funds to the S&P. Last time I looked, this strategy was at 8% YTD (and oh BTW, you can get another 50% of that in the 360 or 222). That's not too shabby.

This is where I disagree. If you read through the policies about the index it only says that while the S&P has high volatility it will be re-allocated to the bond index and when the S&P is low volatility it will be reallocated to the S&P. When you say "if the bond index isn't performing, it will allocate funds to the S&P" is NOT correct. It doesn't matter if the bond index is performing or not because it is allocated based on how volatile the S&P is as stated in the Allianz policy. Also, can you please share with us where you were able to find the 8% YTD (and by YTD I'm guessing you mean the 4 months it's existed)? I was unable to find the ticker symbol to track the actual index.

Also, my point here is that, isn't an indexed annuity protected form downside? If so, why do we want to be reallocated to the bond index when the market is volatile (bc remember this works on upward volatility just as it does downward volatility) when we are already protected on the downside? This is basically a way of capping the return. If the S&P goes up too much it gets re-allocated to the bond index, if it goes down too much it gets re-allocated to the bond index.

This is an index that was created and back-tested to show what it would have done if it were created 10 years ago. Be mindful that it's easy to show what something would have done if it existed 10 years ago because they know exactly what they needed to do. It's like me telling you if I would have started picking the super bowl winners 10 years ago, here's what I would have picked...I got them all right by the way.

 

[SanDiego619]

This is where I disagree. If you read through the policies about the index it only says that while the S&P has high volatility it will be re-allocated to the bond index and when the S&P is low volatility it will be reallocated to the S&P. When you say "if the bond index isn't performing, it will allocate funds to the S&P" is NOT correct. It doesn't matter if the bond index is performing or not because it is allocated based on how volatile the S&P is as stated in the Allianz policy. Also, can you please share with us where you were able to find the 8% YTD (and by YTD I'm guessing you mean the 4 months it's existed)? I was unable to find the ticker symbol to track the actual index.

Also, my point here is that, isn't an indexed annuity protected form downside? If so, why do we want to be reallocated to the bond index when the market is volatile (bc remember this works on upward volatility just as it does downward volatility) when we are already protected on the downside? This is basically a way of capping the return. If the S&P goes up too much it gets re-allocated to the bond index, if it goes down too much it gets re-allocated to the bond index.

This is an index that was created and back-tested to show what it would have done if it were created 10 years ago. Be mindful that it's easy to show what something would have done if it existed 10 years ago because they know exactly what they needed to do. It's like me telling you if I would have started picking the super bowl winners 10 years ago, here's what I would have picked...I got them all right by the way.

I submitted a long response to this a few days ago. I'm guessing it didn't work because I included a link to check on the BUDBI. Very quick summary. I'm not saying to throw a client into this 100% (although a ton of agents are right now) but how could you not want to capture the potential? Are you telling me that there aren't clients who wouldn't want to try an uncapped strategy while still having zero chance of losing money? It's still the S&P 500 and a bond index that has been around for a while. It's not attached to penny stocks.... Anyway, I don't want to type out another huge response. The YTD is now 9.3% BTW and it is on Barclays' website. I apparently can't include the link. Maybe personal message?

 

[InsuranceCat]

Hi CR69,

The best thing to do is to go sit down with a local qualified Allianz Preferred agent with your questions. And, they are great questions. Because I am not your insurance agent, I cannot give you full advice, and my formal advice is to seek the right professionals for the appropriate advice.

Regarding FIAs, there is a lot of misconception out there because terms are thrown left, right, and center. The money is fully held in the general account of the insurance company, and thus can have full principal protection. It is just that the interest earning crediting method is tied to your chosen calculation.

For the 222, you can think of it as a traditional 10 year walkaway, where you can have up to 90% of the original money you put in back over the initial 10 year contract period AND the bonused values are for lifetime income. Chances are, if you are needing higher levels than 10% a year, you probably are not looking for any sort of investment product and you will be better off with a checking account. Because the 15% bonused values are upfront, earn interest with extra bonuses ongoing, and come with no additional rider charges or fees, you should keep that in mind when comparing 222 to other long-term products.

The 222 may be an excellent choice for people who are looking for a 10 year walkaway with an enhanced death benefit with no additional fees (so as long as the family wants the DB to last over 5 years). Here is a truism: now after 10 years, you may or may not be alive. If you are alive, would you like a guaranteed income check (with built-in potential pay raises) for life even if the accumulation value (think account value) is zero? If you are not alive, would you like your family (beneficiaries) to have the freedom to take a guaranteed payout with bonuses?

Now for the agents and the tech speak, the uncapped Barclays Index has a 100% participation rate. Its basically trying to get the best value for the option money, and has a bit of a contrarian viewpoint. Most of the uncapped indexing calculation methods have fees and some method of dampening the volatility. Allianz owns an exclusive right to use the Barclarys Index for a period of time before other companies can carry the index. And, you can lookup the chart of the index too.

One very nice thing about the 222 is that the guaranteed ledger looks very nice. Also, as a buyer as well as an agent, be careful to know the difference between what is a rollup rider rate and what is a true interest rate or IRR rate. A rollup rate is for some specific benefit. And most of it, or all of it, by design is the client's own money.

Your qualified Allianz preferred agent can help you navigate and understand the 222. It is a very easy and suitable product for many, but not for everybody.

-InsuranceCat

 

[Josh Landis]

Hi CR69,

The best thing to do is to go sit down with a local qualified Allianz Preferred agent with your questions. And, they are great questions. Because I am not your insurance agent, I cannot give you full advice, and my formal advice is to seek the right professionals for the appropriate advice.

Regarding FIAs, there is a lot of misconception out there because terms are thrown left, right, and center. The money is fully held in the general account of the insurance company, and thus can have full principal protection. It is just that the interest earning crediting method is tied to your chosen calculation.

For the 222, you can think of it as a traditional 10 year walkaway, where you can have up to 90% of the original money you put in back over the initial 10 year contract period AND the bonused values are for lifetime income. Chances are, if you are needing higher levels than 10% a year, you probably are not looking for any sort of investment product and you will be better off with a checking account. Because the 15% bonused values are upfront, earn interest with extra bonuses ongoing, and come with no additional rider charges or fees, you should keep that in mind when comparing 222 to other long-term products.

The 222 may be an excellent choice for people who are looking for a 10 year walkaway with an enhanced death benefit with no additional fees (so as long as the family wants the DB to last over 5 years). Here is a truism: now after 10 years, you may or may not be alive. If you are alive, would you like a guaranteed income check (with built-in potential pay raises) for life even if the accumulation value (think account value) is zero? If you are not alive, would you like your family (beneficiaries) to have the freedom to take a guaranteed payout with bonuses?

Now for the agents and the tech speak, the uncapped Barclays Index has a 100% participation rate. Its basically trying to get the best value for the option money, and has a bit of a contrarian viewpoint. Most of the uncapped indexing calculation methods have fees and some method of dampening the volatility. Allianz owns an exclusive right to use the Barclarys Index for a period of time before other companies can carry the index. And, you can lookup the chart of the index too.

One very nice thing about the 222 is that the guaranteed ledger looks very nice. Also, as a buyer as well as an agent, be careful to know the difference between what is a rollup rider rate and what is a true interest rate or IRR rate. A rollup rate is for some specific benefit. And most of it, or all of it, by design is the client's own money.

Your qualified Allianz preferred agent can help you navigate and understand the 222. It is a very easy and suitable product for many, but not for everybody.

-InsuranceCat

I would recommend calling an independent advisor. There are many advisors who work completely independent of any carriers. Calling your Allianz preferred agent would be like asking a Chevrolet salesman about Chevrolet trucks.