Our Professional Opinion on the MNL Income Planning Annuity
We recommend considering the MNL Income Planning Annuity when its actual guaranteed lifetime-income payout is competitive with the other A- or better-rated income annuities available for your age, state, premium, and desired income start date.
Midland National is generally competitive in the lifetime-income market, and the MNL Income Planning Annuity is a good product for the job it is designed to do. However, that does not mean it will always provide the highest payout for every buyer.
The actual guaranteed annual income is what matters. We would not choose this annuity because of a roll-up illustration, a withdrawal percentage, an index option, or the size of a benefit value. We would compare the guaranteed dollars Midland will pay against every other financially strong annuity company available at the time of purchase.
The product includes an embedded guaranteed lifetime withdrawal benefit. The lifetime payment amount is determined using factors that include the net premium, the buyer’s age when the contract is issued, and the age when lifetime income begins.
We like this design because the retirement-income calculation is not based entirely on how an engineered index performs over the next several years. That provides more certainty than a performance-based income rider where future retirement income can be hurt by poor index performance or future reductions in cap and participation rates.
However, the income rider is not free. An annual charge is deducted from the accumulation value while the benefit remains active. The current rider charge, calculation basis, and state-specific provisions should be confirmed in the illustration and contract before purchasing.
We are comfortable paying a reasonable rider fee when the annuity produces one of the strongest guaranteed payouts available. We are not comfortable paying the fee for a middle-of-the-road income amount that another insurer can beat.
The index-crediting menu provides several ways to earn interest, including fixed, annual, monthly, and multi-year strategies. That can help the remaining account value last longer, but we would not buy this annuity primarily for accumulation.
The current crediting rates still need to be reviewed when the contract is purchased. Income-focused annuities typically direct a meaningful portion of their product economics toward the lifetime-income guarantee, which can result in lower growth potential than an FIA designed strictly for accumulation.
The Lifetime Payment Amount multiplier is one of the more useful features. If the eligibility requirements are met, the level lifetime payment can temporarily increase after the owner becomes unable to perform at least two of the six activities of daily living.
The current feature material says the enhanced payment can continue for up to five years. No medical exam or traditional underwriting is required when purchasing the annuity, but the owner must be able to perform all six activities of daily living when the contract begins.
After the applicable waiting period, the owner must be unable to perform at least two activities of daily living for the required period, provide acceptable physician certification, and satisfy the contract’s other eligibility conditions.
This feature is good, but it is not actual long-term care insurance. It provides a temporary increase in the annuity payment rather than a separate pool of benefits that reimburses home care, assisted living, or nursing-home expenses.
The contract also has a long surrender period. Buyers should only use money they can leave in the annuity for the full term. Excess withdrawals may reduce the account value, create surrender charges or a Market Value Adjustment, and potentially affect future income benefits.
Our bottom line is that the MNL Income Planning Annuity is a good, generally competitive lifetime-income product. We like its contractual income design and the temporary ADL multiplier. We would recommend it when the guaranteed payout is among the strongest available, but we would choose another A- or better-rated annuity when that company guarantees materially more retirement income.
Compare the MNL Income Planning Annuity With the Entire Market
Income payouts change as insurance companies adjust their products. Your age, state, premium, income start date, and whether the payment covers one or two lives can materially change which annuity pays the most.
Contact The Annuity Expert for a free custom annuity income heat map based on your actual information. We will compare Midland National with current income annuities from A- or better-rated insurance companies.
What We Like
- Generally Competitive Lifetime Income: Midland National is frequently competitive for buyers seeking guaranteed retirement income.
- Embedded GLWB: The lifetime-income benefit is built into the product rather than requiring traditional annuitization.
- Contractual Income Design: The lifetime payment is determined using the premium and applicable ages rather than depending entirely on future index performance.
- Lifetime Payments: Scheduled payments can continue for life even if the accumulation value is eventually depleted, assuming the rider requirements are followed.
- ADL Multiplier: A qualifying health condition can temporarily increase the level lifetime payment.
- No Medical Underwriting at Purchase: The buyer does not complete the type of medical underwriting generally required for long-term care insurance.
- Multiple Crediting Strategies: The product offers several fixed and index-linked methods that may help support the remaining accumulation value.
- Principal Protection: Negative index performance does not directly reduce the accumulation value.
- Income Without Annuitization: The owner can receive lifetime withdrawals without permanently exchanging the entire account value for an irrevocable payment stream.
What We Don’t Like
- The Payout Still Has to Be Competitive: A good product design does not justify accepting less guaranteed income than another financially strong insurer will pay.
- Annual Rider Fee: The lifetime-income benefit charges an annual fee that reduces the accumulation value.
- Fee Terms Can Vary by Product Version: Buyers should verify the current fee, calculation basis, and state-specific rider provisions rather than relying on an older brochure.
- Not Designed for Maximum Accumulation: A growth-focused FIA may offer better accumulation potential when lifetime income is not needed.
- ADL Benefit Is Temporary: The increased payment is available only for the contract’s specified benefit period.
- ADL Eligibility Requirements: The owner must satisfy the waiting period, activities-of-daily-living requirements, duration requirement, physician certification, and other contract conditions.
- Not Long-Term Care Insurance: The multiplier does not create a separate pool of benefits for the actual cost of care.
- Long Surrender Period: The product requires a long-term commitment and may impose surrender charges and an MVA on excess withdrawals.
- Withdrawals Can Affect Benefits: Taking money beyond the permitted amounts can reduce the accumulation value and potentially reduce or terminate income guarantees.
Midland Income Planning Annuity Overview
The Midland Income Planning Annuity from Midland National Life is a fixed-indexed annuity that offers a secure and reliable option for individuals seeking retirement goals. This annuity provides the potential for growth based on positive changes in a market index while safeguarding against market downturns. It is especially suitable for conservative investors who prioritize the safety of their investments and prefer low-risk options such as bonds and bank CDs.
Key Takeaways:
- The Midland Income Planning Annuity offers potential growth linked to market index performance while protecting against market downturns.
- It is suitable for conservative investors who prioritize safety and security in their investment choices.
- The annuity has a term of 10 years, so investors should consider their long-term financial goals and commitments before investing.
- Excess withdrawals before the term ends may incur surrender charges, and early withdrawals may be subject to a market value adjustment.
- The annuity provides the option for guaranteed retirement income through annuitization or an income rider.
What To Consider Before Investing In The MNL Income Planning Annuity
Before making any investment decisions, it is crucial to carefully evaluate the MNL Income Planning Annuity from Midland National Life. This fixed-indexed annuity offers potential gains based on market index performance while providing protection against market downturns. However, there are several important factors to consider before committing to this annuity:
Surrender Charges
The MNL Income Planning Annuity has a term of 10 years, meaning your money will be locked in for this duration. Being comfortable with this long-term commitment is important, as early or excess withdrawals before the term’s end may result in surrender charges. These charges can vary based on the specific terms of the annuity contract.
Participation Rates And Spreads
Understanding the participation rates and spreads is crucial when investing in the MNL Income Planning Annuity. Participation rates determine how much of the market index’s gains will be credited to your annuity. Meanwhile, spreads represent the percentage deducted from the market index’s performance. Evaluating these factors is essential to ensure that the annuity’s potential returns align with your investment goals.
Caps
Caps refer to the maximum amount of interest that can be credited to your annuity based on the market index’s performance. This means that even if the market index performs exceptionally well, there is a capped limit on the gains you can receive. Consider the cap rate offered by the MNL Income Planning Annuity and determine if it aligns with your desired level of potential returns.
Income Riders And Custom Indexes
The MNL Income Planning Annuity offers additional features such as income riders and custom indexes. Income riders provide guaranteed lifetime income options, allowing you to create a stable income stream during retirement. Custom indexes allow you to choose specific indexes to track for potential gains. Depending on your retirement income needs and financial objectives, these features can enhance the annuity’s flexibility and usefulness.
By carefully considering surrender charges, participation rates, spreads, caps, income riders, and custom indexes, you can decide whether the MNL Income Planning Annuity aligns with your investment goals and risk tolerance. It’s essential to consult with a qualified financial advisor who can provide personalized guidance based on your specific financial situation.
Types Of Retirement Accounts Accepted
What We Like
- Historical Stability and High Ratings: Midland National stands out with its long history since being founded in 1906, reflecting a stable and reliable presence in the industry. This is further reinforced by receiving high ratings from prominent rating agencies: A+ from A.M. Best, A+ from Fitch, and A+ from Standard & Poor’s. Such ratings signify strong financial health and reliability.
- RMD-Friendly Policies: Their policies are designed to be friendly towards Required Minimum Distributions (RMDs), making them a viable option for retirement planning.
- Competitive Lifetime Income Rider: Midland National’s lifetime income rider is noteworthy for its competitive payouts. When compared to other income annuities, it stands out for offering potentially higher returns.
What We Don’t Like
- Compromise on Upside Potential: While the lifetime income rider offers competitive payouts, this comes at a cost. The higher income payouts potentially reduce the opportunity for interest crediting, limiting the upside potential.
- Complex Indexes and Limited Growth: The indexes chosen by Midland National for growth are complicated. This complexity might be challenging for some clients to understand. Additionally, these indexes offer limited upside potential, which could be a drawback for those seeking higher growth opportunities.
What We Recommend
We recommend the MNL Income Planning Annuity when its actual guaranteed lifetime-income payout is comparable with or better than the other A- or better-rated annuities available for your situation. Midland National is generally competitive, and we like the contractual lifetime-income design and temporary ADL multiplier. However, the rider fee, long surrender period, and health-benefit limitations still matter. Contact The Annuity Expert for a free, no-obligation income comparison based on your age, state, premium, desired income start date, and single- or joint-life needs before purchasing the contract.
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