Income Bonus

[AnnuityGuy63]

American Equity Estate Shield 35% income Bonus
Athene Agility 25% Bonus
Allianz ABC/ 222 35% Bonus

Does anyone else have a big Income Bonus like these 3?

 

[Allen Trent]

American Equity Estate Shield 35% income Bonus
Athene Agility 25% Bonus
Allianz ABC/ 222 35% Bonus

Does anyone else have a big Income Bonus like these 3?

dont a couple of those have MVA adjustments? If I recall, American Equity income bonus isnt available until after the surrender schedule has expired, like year 10

That list of 3 carriers reads like a class action news publication from when the Attorney Generals of many states sued the carriers with the 2 tier annuities

 

[scagnt83]

dont a couple of those have MVA adjustments? If I recall, American Equity income bonus isnt available until after the surrender schedule has expired, like year 10

That list of 3 carriers reads like a class action news publication from when the Attorney Generals of many states sued the carriers with the 2 tier annuities

Most FIAs have MVAs. Id say apx 75% or more of the market overall. But that only really matters if they cash out before surrender... so it shouldnt really be that big of a deal if the product is being sold responsibly.

These are all income focused products. If you dont plan on taking the income and keeping it forever, its not the right fit for the situation.

They cant be beat though for income if you have a 7+ year time frame until income starts. I think all 3 allow for the income to increase with inflation. And all 3 double the income for a LTC need (with no LTC underwriting, income must be turned on before ltc need)

They also use the rider value as the DB, so its an enhanced DB vs. normal index account.

Im sure plenty are being sold irresponsibly. With Athene, the bonus is only on the rider value and not on accumulation value. But they are powerful for creating income for the right client.

 

[AnnuityGuy63]

Most FIAs have MVAs. Id say apx 75% or more of the market overall. But that only really matters if they cash out before surrender... so it shouldnt really be that big of a deal if the product is being sold responsibly.

These are all income focused products. If you dont plan on taking the income and keeping it forever, its not the right fit for the situation.

They cant be beat though for income if you have a 7+ year time frame until income starts. I think all 3 allow for the income to increase with inflation. And all 3 double the income for a LTC need (with no LTC underwriting, income must be turned on before ltc need)

They also use the rider value as the DB, so its an enhanced DB vs. normal index account.

Im sure plenty are being sold irresponsibly. With Athene, the bonus is only on the rider value and not on accumulation value. But they are powerful for creating income for the right client.

I agree I was wondering if there are any other companies that have a product with a big income bonus like these 3?

 

[Allen Trent]

if the product is being sold responsibly.

Agree. But many agents selling products with an MVA can't explain how it works & can be a defacto double surrender penalty when rates have changed

 

[scagnt83]

Agree. But many agents selling products with an MVA can't explain how it works & can be a defacto double surrender penalty when rates have changed

Very true. I always wonder how many actually disclose it properly to be honest.

 

[scagnt83]

I agree I was wondering if there are any other companies that have a product with a big income bonus like these 3?

Not that I know of. @Tahoe Ray might know of some.

 

[Allen Trent]

Very true. I always wonder how many actually disclose it properly to be honest.

I had an agent email a client that currently owns an MVA MYGA. He said now would be a good time to surrender the annuity & get a new one because the rising interest rates would allow the MVA component to offset the base surrender charge. I don't think he understands the inverse relationship of bonds/interest rates & that MVA is the way the carrier manages interest rate risk of early sale of bonds. The surrender charge is is also there to recover the commission, issue/investment costs

 

[Tahoe Ray]

American Equity Estate Shield 35% income Bonus
Athene Agility 25% Bonus
Allianz ABC/ 222 35% Bonus

Does anyone else have a big Income Bonus like these 3?

SILAC (50%), F&G (18%), North American (25%), Global Atlantic (20%)

I'm sure there's more.

Are you just trying to max early income? If so, look at AIG's Assured Edge. It's almost like a SPIA that you don't have to annuitize (not indexed, it's fixed. No exclusion ratio though)

 

[scagnt83]

I had an agent email a client that currently owns an MVA MYGA. He said now would be a good time to surrender the annuity & get a new one because the rising interest rates would allow the MVA component to offset the base surrender charge. I don't think he understands the inverse relationship of bonds/interest rates & that MVA is the way the carrier manages interest rate risk of early sale of bonds. The surrender charge is is also there to recover the commission, issue/investment costs

Actually he is partially correct. Rising interest rates usually lower surrender charges over time. That doesnt mean all contracts are at parity, but many are much higher than the normal surrender value without a MVA.

If rates are lower than when the contract started, carriers are selling premium bonds in order to take on lower yielding bonds.

But if rates are higher than when the contract started, carriers are selling discounted bonds to purchase higher yielding bonds... thus making them more money.

I realize that is not taking into account the book value and its impact on the carrier. I think some MVA adjustments take that into account. But Im looking at contracts right now with positive MVA adjustments... none are at parity... but its a huge reduction in surrender charges for some.

Also, the MVAs with some carriers seem to have a much greater impact when rates rise vs. others.