Allianz Accumulation Advantage® Fixed Index Annuity Review
The Allianz Accumulation Advantage® is a fixed indexed annuity designed primarily for protected accumulation. It offers principal protection from market losses, fixed and indexed interest options, tax-deferred growth, and several ways to access the money over time.
We would not consider this one of our favorite accumulation annuities. The biggest issue is that most of the contract’s upside potential can be changed at renewal, while many of the more attractive participation rates are tied to engineered or volatility-controlled indexes rather than straightforward traditional indexes.
For someone who wants safe accumulation, we generally prefer an annuity that lets you lock a competitive cap for multiple years instead of hoping the insurance company keeps future renewal rates attractive.
Allianz Accumulation Advantage Product Details
| Product Type | Fixed Indexed Annuity |
| Primary Purpose | Accumulation |
| Surrender Charge Period | 10 Years |
| Minimum Premium | $20,000 |
| Maximum Premium | $1,000,000 without prior approval |
| Maximum Issue Age | 80 |
| Additional Premium | Allowed during the first 18 months |
| Free Withdrawals | Generally up to 10% of paid premium annually after the applicable waiting period |
| Market Value Adjustment | Yes |
| GLWB | No |
| Return of Premium | No contractual return-of-premium feature |
Allianz is an excellent annuity company. Our concern with the Accumulation Advantage is the product design and renewal-rate structure, not the financial strength of the insurance company.
Our Professional Opinion
We generally do not recommend the Allianz Accumulation Advantage when the primary goal is safe accumulation because we think there are better accumulation-focused FIAs available.
The biggest problem is renewal-rate risk. Allianz can change cap rates, participation rates, and other crediting terms after the applicable crediting period, subject to the contract’s minimum guarantees. That means you can make a 10-year commitment to the insurance company without the insurance company making the same 10-year commitment to your upside potential.
In our experience, Allianz has historically been willing to lower cap rates and participation rates on existing contracts. If you purchase an FIA in a favorable interest-rate environment and rates later fall, you need to be prepared for the possibility that your future upside potential may also decline.
We also do not love where much of the more attractive upside is located. Allianz offers a true S&P 500 strategy, which is good, but several of the other strategies use engineered, volatility-controlled, or excess-return indexes such as BlackRock, Bloomberg, PIMCO, and S&P risk-control indexes.
Those indexes are not necessarily bad, but we do not want a buyer choosing one simply because a large participation rate makes it look better on paper. A 100%, 150%, or 200% participation rate on an engineered excess-return index cannot be compared directly with a traditional S&P 500 cap.
Another feature that can be misunderstood is Index Lock. Index Lock lets you lock an index value during a current crediting period. It does not lock your cap rate or participation rate for the surrender period. Allianz can still change future renewal terms after the applicable crediting period ends.
That is an important distinction because we strongly prefer actual cap locks when accumulation is the goal.
For safe growth, two of our favorite alternatives are the Oceanview CapLock and the Sagicor Sage Accumulator. Both give the buyer more certainty about future upside potential because their guaranteed cap-lock features can prevent the insurer from simply lowering the locked cap every anniversary.
Oceanview is especially interesting because the cap lock can be used with the S&P 500, Nasdaq-100, or Russell 2000. Sagicor is another product we like because of its guaranteed S&P 500 cap structure.
The Allianz Accumulation Advantage is not a terrible annuity. It is just middle of the road for what we want an accumulation FIA to do. If we can get principal protection, competitive upside, and a multi-year cap lock from another A- or better-rated company, we would generally rather take the additional certainty.
What We Like
- Strong Insurance Company: Allianz comfortably exceeds our A- or better financial-strength requirement.
- Principal Protection: Negative stock-market performance does not directly reduce the accumulation value.
- Traditional S&P 500 Option: Buyers do have access to a recognizable traditional index rather than being forced exclusively into proprietary indexes.
- Index Lock: Certain strategies allow you to lock a positive index value during the crediting period.
- Auto Lock: The contract can automatically activate Index Lock when a predetermined target is reached.
- Fixed Interest Account: Buyers can allocate money to a declared fixed-rate strategy rather than using indexed allocations.
- 10% Free Withdrawal Feature: Provides annual access to a portion of the contract after the applicable waiting period.
- RMD Friendly: Applicable required minimum distributions from qualified contracts can generally qualify as penalty-free withdrawals.
- Flexible Premium Period: Additional premium can be added during the first 18 months.
What We Don’t Like
- No Multi-Year Cap Lock: The traditional annual strategies do not provide the type of surrender-period cap certainty we prefer for accumulation.
- Renewal Rate Risk: Caps and participation rates can change after the applicable crediting period.
- Heavy Use of Engineered Indexes: Much of the product menu relies on proprietary, volatility-controlled, or excess-return indexes.
- Index Lock Is Not a Rate Lock: Locking an index value during the year does not prevent Allianz from lowering future cap or participation rates.
- Long Surrender Period: The standard version requires a 10-year commitment.
- Multi-Year Crediting Periods: Some strategies use 2- or 5-year crediting terms. We generally prefer one-year crediting periods when competitive options are available.
- Allocation Charges Can Apply: Certain multi-year point-to-point strategies may include an allocation charge.
- No GLWB: This is not a product we would purchase when guaranteed lifetime income is the primary objective.
- No Return of Premium: There is no contractual return-of-premium feature if you decide to leave early.
How the Allianz Accumulation Advantage Works
The Allianz Accumulation Advantage protects principal from direct stock-market losses while allowing interest to be credited based on the performance of selected external indexes.
You are not directly investing in the S&P 500, Bloomberg, BlackRock, PIMCO, or any other index. The indexes are simply benchmarks used to calculate potential interest credits.
If an indexed strategy produces a positive result under the applicable crediting formula, interest may be credited to the annuity. If the result is negative, the indexed strategy generally credits 0% rather than passing the market loss through to the account.
Index Options
Allianz offers a mixture of traditional and engineered indexes.
- S&P 500: The primary traditional benchmark available in the product.
- BlackRock iBLD Claria ER Index: A volatility-controlled excess-return index using multiple asset classes.
- Bloomberg US Dynamic Balance II ER Index: An engineered index using equity and fixed-income futures exposures.
- PIMCO Tactical Balanced ER Index: A proprietary excess-return strategy combining equity and bond exposures.
- S&P 500 Futures Daily Risk Control 5% Index: A futures-based volatility-controlled strategy.
We generally favor traditional, transparent indexes when the economics are competitive. Engineered indexes can have attractive-looking participation rates, but the underlying index design can materially affect the actual interest credited.
Crediting Methods
The contract offers several ways to calculate indexed interest.
- Annual Point-to-Point: Compares the index value at the beginning and end of a one-year crediting period.
- Multi-Year Point-to-Point: Uses a 2- or 5-year crediting period with a participation rate.
- Monthly Sum: Adds monthly percentage changes together, with positive monthly results subject to a cap while negative months are not capped.
- Fixed Interest: Credits a declared fixed rate that can change at renewal.
Our preference is generally annual point-to-point. It is easier to understand, resets annually, and avoids tying the money to a 2- or 5-year index-crediting period.
Index Lock and Auto Lock
Index Lock allows you to lock an index value once during certain crediting periods when the strategy has generated a positive result.
Auto Lock allows you to set a target so the contract automatically activates the lock if the target is reached under Allianz’s rules.
Again, this feature locks the index value, not the future renewal rate. It should not be confused with the multi-year cap locks we prefer on accumulation-focused FIAs.
Liquidity and Withdrawal Rules
In the contract year following the most recent premium payment, Allianz generally allows up to 10% of total premium paid to be withdrawn without normal surrender charges or MVA, subject to the contract provisions.
Withdrawals exceeding the free amount during the surrender period can be subject to surrender charges and a Market Value Adjustment.
| Contract Year | Withdrawal Charge |
|---|---|
| 1 | 9.30% |
| 2 | 8.85% |
| 3 | 7.90% |
| 4 | 6.95% |
| 5 | 5.95% |
| 6 | 5.00% |
| 7 | 4.00% |
| 8 | 3.00% |
| 9 | 2.00% |
| 10 | 1.00% |
| 11+ | 0% |
After 10 contract years, the full accumulation value can generally be accessed without the contractual withdrawal charge or MVA.
Minimums and Funding Rules
- Minimum Premium: $20,000
- Maximum Without Prior Approval: $1,000,000
- Maximum Issue Age: 80
- Additional Premium: Allowed during the first 18 months
The annuity can generally be funded with qualified retirement money or non-qualified funds, subject to contract and state availability.
Death Benefit
If the owner dies before annuity payments begin, beneficiaries generally receive the greatest of the accumulation value, guaranteed minimum value, or applicable net-premium value under the contract provisions.
Spousal continuation may also be available when the surviving spouse qualifies under the contract.
Does Allianz Accumulation Advantage Provide Guaranteed Lifetime Income?
No. The current Allianz Accumulation Advantage does not include a guaranteed lifetime withdrawal benefit.
It can provide income through annuitization, including lifetime settlement options, but annuitization is different from a GLWB because it generally requires converting the contract value into an income stream.
If guaranteed lifetime income is your primary objective, we would compare dedicated income annuities instead of trying to use an accumulation product for a job it was not designed to do.
Who Should Consider the Allianz Accumulation Advantage?
- Someone Who Wants Principal Protection: You do not want direct stock-market losses reducing the annuity value.
- Someone Comfortable With a 10-Year Commitment: You have sufficient liquidity elsewhere and can leave the money in the contract.
- Someone Who Specifically Values Index Lock: You want the ability to lock a positive index result before the scheduled end of certain crediting periods.
- Someone Comfortable With Renewal-Rate Risk: You understand that future caps and participation rates can change.
Who Should Probably Buy Something Else?
If you want more certainty about your future accumulation potential, we would rather use an FIA with a competitive multi-year cap lock.
If you want guaranteed lifetime income, this is not the product we would use because it does not include a GLWB.
If you want a completely guaranteed interest rate rather than index-linked interest, compare current fixed annuity rates and MYGAs from A- or better-rated companies.
What We Recommend
For pure accumulation, Allianz Accumulation Advantage is just OK. Allianz is a great insurance company, but we think other products give the buyer more control over future growth potential.
We would generally rather use a competitive accumulation FIA with a multi-year cap lock, especially when the cap-lock product is issued by an A- or better-rated company and provides the liquidity features the buyer needs.
Do not confuse Index Lock with a cap lock. Index Lock can protect a positive index value during a crediting period. A cap lock protects the actual cap rate from being lowered during the guaranteed period. For long-term accumulation planning, we think the second feature is much more important.
Compare Before You Buy
Before purchasing the Allianz Accumulation Advantage, compare its current cap rates, participation rates, index choices, surrender period, and liquidity against other A- or better-rated accumulation annuities.
Contact The Annuity Expert for free quotes and a no-obligation side-by-side comparison. We can compare Allianz against cap-lock FIAs and other safe-growth annuities to determine which contract currently offers the strongest combination of growth potential, guarantees, and liquidity.
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