Our Professional Opinion on the MNL IncomeVantage Pro Annuity
We would compare IncomeVantage Pro for lifetime income, but we would not choose it based on an illustrated roll-up. Its income benefit has a guaranteed 2% annual component, while additional income-base growth depends on the interest your account actually earns. If you are planning essential income years from now, we prefer a stronger guaranteed income offer over one that needs favorable index results to look attractive.
Midland National is a great insurance company. Midland National Life Insurance Company holds an A+ (Superior) financial strength rating from AM Best, comfortably above our A− minimum. The insurer is not our issue; the question is whether this particular income guarantee beats the alternatives for your retirement date.
We like that there is no separate annual charge for the lifetime income rider. The tradeoff is a ten-year surrender period and only a 5% ordinary free-withdrawal allowance after the first year. Some enhanced index strategies also have their own fees, so the whole contract is not necessarily free.
Compare the actual guaranteed payment against other guaranteed lifetime withdrawal benefit options using the same deposit, ages, state, start date, and single or joint coverage. Give special weight to the guaranteed payment—not a projection that assumes years of attractive index credits.
What We Like
- No annual income-rider fee: The lifetime withdrawal benefit is included without a separate annual rider charge.
- Some guaranteed growth: The income base receives a guaranteed 2% annual roll-up component during the applicable period.
- Lifetime income options: Eligible owners can choose level or potentially increasing payments for one person or eligible spouses.
- Traditional index option: The S&P 500 is available alongside managed indexes.
- Beneficiary choice: Eligible beneficiaries can choose the account value or a rider death benefit paid over five years, subject to its limits.
What We Don’t Like
- Most extra roll-up depends on performance: The 150% component depends on the weighted net interest credit, not a guaranteed index return.
- Only 5% ordinary access: There is no ordinary free allowance in year one and just 5% annually starting in year two.
- A ten-year commitment: Taking too much early can trigger surrender charges and an MVA.
- Increasing income starts lower: Future increases depend on credited interest and are not automatic inflation protection.
- Enhanced strategies can charge fees: A strategy charge can reduce the account even when no interest is credited.
MNL IncomeVantage Pro Overview
IncomeVantage Pro is a single-premium fixed indexed annuity with an included lifetime withdrawal benefit. The standard minimum is $20,000, and issue ages are generally 40 to 79, subject to state rules. The annuity has an account value and a separate income benefit base.
Key Features
- Lifetime income: Single or eligible joint lifetime withdrawals, available as early as age 50 under the benefit rules.
- Income base growth: A 2% annual component plus 150% of the weighted net interest credit percentage, during the applicable roll-up period.
- Roll-up period: Generally until lifetime income begins or 20 years have passed, whichever comes first.
- Income rider fee: No separate annual rider charge; optional enhanced index strategies may charge a fee.
- Free withdrawals: Generally 5% of beginning-of-year account value after the first anniversary.
- Surrender period: Ten years; schedules and availability vary by state.
- Death benefit: The account value or, if eligible, a rider benefit paid over five annual installments.
How the Income Base Grows
The income benefit base is a calculation used for lifetime income and the rider death benefit. It is not a lump-sum account you can cash out. The actual account earns interest under your selected fixed and index strategies and is reduced by withdrawals and any applicable strategy charges.
Before income begins, the annual roll-up combines a guaranteed 2% component with 150% of the weighted average net interest-credit percentage. That net percentage reflects applicable credits and strategy charges and is floored at zero for this calculation. The roll-up generally stops after 20 years or when lifetime income starts, whichever comes first.
For example, if the weighted net interest-credit percentage is hypothetically 4%, the performance component is 6%. Added to 2%, the income-base roll-up is 8% for that year. That is not an 8% return on your cash. If the net credit percentage is zero, the guaranteed component is 2%, not 8%. Withdrawals can proportionally reduce the income base.
This is why the illustrated number can be misleading. We would compare the guaranteed income using no assumed future index gains as well as any illustration. If another strong insurer guarantees a better payment on the date you need it, we would not choose IncomeVantage merely because its projected roll-up looks higher.
Level or Increasing Lifetime Income
The level option generally starts with a higher payment. The increasing option starts lower and may rise based on eligible net interest credits. Those increases are not guaranteed and are not automatically tied to inflation. If the credits never materialize, you can spend years receiving the lower starting amount.
Ask for the break-even point using the same start date and covered lives. An increasing option can be useful, but we would not sacrifice a substantial amount of guaranteed income today without understanding how long it could take to catch up. A joint election uses the younger eligible annuitant’s age.
Eligible lifetime payments can continue after the account and income base are depleted under the benefit rules. Excess withdrawals can reduce future guaranteed payments and may end the benefit if the account is exhausted outside its rules.
Index Choices and Strategy Charges
We would start by comparing a traditional S&P 500 annual strategy. A cap or participation rate determines how much of an index gain can be credited. Managed indexes can use volatility controls and deductions, so a larger participation rate on a different index is not automatically a better offer.
Some index strategies measure performance over two years. We generally prefer annual crediting: over ten years an annual strategy offers ten opportunities for an interest credit, versus five for a two-year strategy. More opportunities do not guarantee a better result, but they provide more chances to lock in a gain.
An enhanced participation strategy can charge a fee even when it credits no interest, reducing the account. A conditional true-up at the end of the surrender period may credit the difference if total strategy charges exceed total interest credited; excess withdrawals can make it unavailable. Compare the fee-free and charged strategies rather than choosing the biggest participation number.
Withdrawals, Surrender Charges, and RMDs
There is no ordinary penalty-free withdrawal in the first year. After the first anniversary, the allowance is generally 5% of the beginning-of-year account value. That is stingy compared with the 10% offered by many annuities. Lifetime payments are governed by the separate rider rules.
An excess withdrawal during the ten-year surrender period can incur surrender charges and a market value adjustment. Standard charges begin at 10% and decline during the term; schedules vary by state. Ask for the exact schedule and the account value and surrender value that apply to your contract.
Midland may waive the charges and MVA for a required minimum distribution calculated solely on the contract under its current company practice. The practice can change. Even a charge-free withdrawal can proportionally reduce the income base, so check the effect on your future paycheck before taking it.
Nursing Home Access and the Death Benefit
Where available, qualifying nursing-home confinement after the first anniversary may allow up to the account value to be withdrawn without surrender charges or an MVA. Conditions apply, and a full withdrawal ends the contract and rider. This medical waiver provides access to your money; it is not long-term care insurance.
An eligible beneficiary may receive the remaining account value or elect the rider death benefit, paid in five equal annual installments and subject to a maximum. Compare the five payments with the lump sum at their actual payment dates. The income base is not automatically a lump-sum inheritance.
An eligible joint lifetime-income election and spousal continuation are different features. Ask whether spousal continuation is available for your contract and how it affects the rider before making your beneficiary decisions.
Our Final Verdict on MNL IncomeVantage Pro
We like the absence of an annual income-rider charge, but the guaranteed 2% roll-up component and 5% ordinary withdrawal allowance leave us wanting a careful comparison. We would choose it only when its actual guaranteed lifetime payment and access fit better than the alternatives. Do not let an illustrated 150% performance component substitute for a guaranteed income quote.
Contact The Annuity Expert for free annuity quotes. We can compare guaranteed income, fees, withdrawal access, and beneficiary choices for your retirement date.
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