North American Summit Edge Fixed Index Annuity Review

Why This Annuity Exists and What It’s Designed to Do

The Summit Edge Fixed Index Annuity (FIA), issued by Midland National® Life Insurance Company, is a long-term retirement vehicle designed to give investors the upside of market-linked growth with full protection from market losses. The product also includes an optional income rider, the Summit Income Strategy, which provides Guaranteed Lifetime Withdrawal Benefits (GLWB). These benefits allow the annuity owner to create a lifetime income stream they cannot outlive, without having to annuitize the contract. This annuity is structured to meet the needs of risk-averse investors who want:

• Principal protection from downturns.
• Tax-deferred growth.
• Diversified index-linked options for potential upside.
• Lifetime income with optional features for spouses and healthcare needs.
• Legacy benefits for heirs.

Acronym Reference

How the Annuity Earns Interest: Index Crediting Methods Explained

Your contract’s growth depends on the index crediting method chosen. Each method offers a different way to earn interest based on market performance. Here’s what each method means—and the trade-offs involved:

• Annual Point-to-Point With Participation Rate (PR)
  • How it works: Measures how much the index increased from the start to the end of the 12-month period. You earn a percentage (PR) of that gain.
  • Pros: Transparent, annual reset, and moderate upside.
  • Cons: Returns are limited by the participation rate.
• Annual Point-to-Point With Index Cap Rate (Cap)
  • How it works: Same as above, but your credited interest is limited to a declared cap.
  • Pros: Simple and easy to track.
  • Cons: You give up any return above the cap.
• Monthly Point-to-Point With Index Cap Rate
  • How it works: Tracks index changes each month. The 12-month total determines your return, but each positive month is capped, and negatives are uncapped.
  • Pros: Can outperform in consistently rising markets.
  • Cons: Volatile months can significantly drag returns.
• Two-Year Point-to-Point With Participation Rate
  • How it works: Measures index change over two years and credits based on PR.
  • Pros: Potentially higher returns if the market grows steadily over two years.
  • Cons: Ties up your funds longer before crediting interest.
• Enhanced Participation Rate (Subject to Strategy Charge)
  • How it works: You pay a strategy charge to receive a higher PR on either the annual or two-year method. The charge is deducted whether or not the index earns interest.
  • Pros: Potential for more upside.
  • Cons: Could result in loss of premium if the index performs poorly. Adds risk.
• Downside Protection Strategy
  • How it works: If the index ends flat or negative, you earn a Declared Performance Rate (DPR). If the index increases, you get 0%.
  • Pros: Stability in flat/declining markets.
  • Cons: You give up all growth if the index rises.
• Fixed Account
  • How it works: Earns a declared Fixed Interest Rate (FIR) annually. FIR is guaranteed for one year and declared annually thereafter.
  • Pros: Guaranteed growth. Safe option.
  • Cons: Will underperform in a rising market.

Which Indexes Are Available and Which Ones We Trust

We recommend using only the S&P 500® Index, which is the only traditional market index offered and has decades of real historical performance. Avoid engineered indexes unless your primary goal is downside risk control with minimal growth.

Income Benefits: The Optional GLWB Rider Explained

The GLWB (Guaranteed Lifetime Withdrawal Benefit) rider, branded as Summit IncomeStrategy, turns this annuity into a source of protected lifetime income. Here’s how it works:

• Roll-Up Rate (Guaranteed Growth of the Income Base)
  • How it works: Your GLWB value (also known as the income base) grows at 8% simple interest per year for 10 years, regardless of market performance.
  • Important: The GLWB value is not available as a lump sum—it’s only used to calculate income.
• Lifetime Payment Amounts (LPA)
  • LPA is the annual income you receive, based on your age and GLWB value when you activate income.
    • Level LPA
      • Starts higher.
      • Stays the same for life.
      • Ideal if you need consistent income.
    • Increasing LPA
      • Starts lower.
      • Increases annually based on a declared annual increase rate (AIR), which is set at income start.
      • Helps fight inflation.
• LPA Reserve
  • Unused income can be stored and used later, up to a max.
  • Adds flexibility if you don’t need full income every year.
• LPA Multiplier
  • Doubles income for up to 5 years if you’re confined to a qualified care facility.
  • Provides long-term care-like coverage without buying an LTC policy.
• Spousal Continuance
  • Allows a surviving spouse to continue income benefits.
  • Income may continue at the current rate or be recalculated depending on how the annuity was structured.

Calculate Lifetime Income

Liquidity and Withdrawal Features

• 10% Penalty-Free Withdrawals: After year 1.
• Excess RMDs: Waived from surrender charges by company practice.
• MVA: Applies to early withdrawals, can increase or decrease value.
• Nursing Home Waiver: Full accumulation value available if confined to care facility (subject to state rules).
• After Surrender Period: Full liquidity. Contract can continue to earn, or value can be transferred.

Death Benefit: What Happens to Your Money When You Die

Your beneficiaries receive the full accumulation value, including interest earned but excluding any future roll-up value. The death benefit is not affected by market losses. The payout is:

• Lump sum or
• Spousal continuance if GLWB is active and the spouse is the designated beneficiary.

What You Gain and What You Give Up

Other Insurance You Should Consider

• Term or Permanent Life Insurance: Helps preserve your original premium for your heirs. If you’re drawing income from this annuity, life insurance ensures a legacy is still left behind—especially if you pass early in retirement.
• Standalone Long-Term Care Insurance: While the LPA multiplier can double your income during care facility confinement for up to five years, it’s not a substitute for comprehensive long-term care coverage. A dedicated long-term care insurance policy offers broader benefits, including at-home care, inflation protection, and state-specific Medicaid partnership benefits.
• Long-Term Care Annuities (Asset-Based LTC): These are fixed annuities with a long-term care rider. They allow your annuity value to be multiplied (often 2–3x) to cover qualified long-term care expenses. They’re ideal for clients who don’t qualify for traditional LTC insurance or want to self-insure with leverage. Unlike the Summit Edge’s multiplier, these annuities are LTC-qualified and offer tax-advantaged benefits under IRS Section 7702B.

Is It Right for You?

Best for:

• People ages 50–75 seeking protected retirement income.
• Those concerned about longevity risk and market volatility.
• Individuals who want to avoid annuitization but still need lifetime income.

Not Ideal for:

• Investors who want uncapped market gains.
• Those needing full liquidity within the first 5–10 years.
• People unwilling to pay a fee for enhanced growth or income features.

What Happens After the Surrender Period Ends?

• All surrender charges and MVA end.
• Full liquidity is available.
• You can:
  • Start GLWB income.
  • Leave it to grow.
  • 1035 exchange into a new annuity.

Final Thoughts: A Balanced, Conservative Option—But Be Informed

The Summit Edge Fixed Index Annuity is a strong fit for those who value safety, modest growth, and flexible lifetime income. The optional GLWB rider gives this traditional income annuities it doesn’t require annuitization. However, the enhanced crediting strategy charges, proprietary index options, and long-term surrender periods may not be worth the trade-off for everyone.

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