With the American Equity Guarantee Series 5, there is always access to money in the annuity. American Equity provides withdrawal flexibility and a variety of liquidity options.
About American Equity Annuities
American Equity Financial Strength
Understanding Fixed Annuities
What is a fixed annuity?
A fixed annuity is a contract backed by the financial strength and claims-paying ability of the issuing company.
This guarantees contract owners a retirement vehicle designed to protect assets while allowing for growth opportunities.
It does this through a combination of powerful benefits:
- Principal Protection
- Guaranteed Income
- Tax-Deferred Growth
- May Avoid Probate
How a fixed annuity works
This long-term retirement product is purchased with an insurance provider that, in turn, guarantees principal protection, Tax-Deferred Growth on assets, and a reliable income stream.
Throughout the course of the contract, the fixed annuity earns additional interest credits based on an established rate.
The Power of a Tax-Deferred Annuity
- Principal Protection: Fixed annuities are a safe money alternative, with guaranteed interest and guaranteed income backed by the financial strength of American Equity.
- Guaranteed Income: Flexible payout options available, including lifelong paychecks.
- Tax-Deferred Growth: Earn interest on money without paying taxes on it until any distribution occurs. It enables faster growth by allowing credited interest to compound over time.
- Liquidity: Each contract defines various opportunities to withdraw funds, such as Penalty-Free Withdrawals, Partial Withdrawals, qualified care, and lifetime income options. (Subject to applicable Surrender Charges.)
- May Avoid Probate: If applicable, beneficiaries receive any remaining value in the contract while avoiding the expense and time spent in probate.
Guarantee Period Continuation Options
Within 30 calendar days after the end of the guarantee period chosen, you can choose one of these options:
- Apply your Contract Value to a settlement option; Surrender Charges will not apply;
- Take a Partial Withdrawal, Surrender Charges will not apply, and apply the remaining Contract Value to another guarantee period;
- Surrender the Contract without Surrender Charges; or
- Renew your Contract for another guarantee period.
If no option is chosen, the Contract will be continued automatically for a new guarantee period the same length as the original guarantee period with a new Guaranteed Interest Rate.
If your Contract is continued for another guarantee period, the MVA, applicable Surrender Charges, and surrender period apply to the new guarantee period.
Surrender Values and Charges
The annuity’s Surrender Value will never be less than 90% of the premium received, less any withdrawals, accumulated at the minimum guaranteed interest rate.
If a partial withdrawal or Surrender is taken during the Surrender Charge period, a deduction will be taken out according to the Surrender Charge schedule.
Money Access Options
This is a once a year opportunity (after the first contract year) to take a Penalty-Free Withdrawal of any amount up to the interest credited during that Contract Year.
We also allow Systematic Withdrawals of interest only or amounts sufficient to satisfy IRS minimum distribution rules.
Market Value Adjustment (MVA)
This product offers an optional Market Value Adjustment (MVA) Rider.
An MVA may increase or decrease the amount of a withdrawal in excess of the Penalty-Free Withdrawal amount or the Surrender Value.
The MVA does not apply to Penalty-Free Withdrawals, any death benefit, the MGSV, or any distributions occurring after the Surrender Charge Period has ended.
In general, as the MVA Index increases, Cash Surrender Values decrease.
As the MVA Index decreases, Cash Surrender Values increase.
Interest Rates may be higher for contracts with an MVA Rider.
Qualified Care Needs
Available to annuitants under age 75 at issue.
Nursing Care Rider
If, after the third contract anniversary, the annuitant is confined to a qualified nursing care center for 90-plus consecutive days, a 100% Penalty-Free Withdrawal is available.
A 20% Penalty-Free Withdrawal is available if the confinement occurs in the second or third contract year.
Terminal Illness Rider
If, after the first contract year, the annuitant is diagnosed with a terminal illness, a 100% Penalty-Free Withdrawal of the Contract Value is available.
Death Benefit proceeds are paid to the named beneficiary(ies) with no Surrender Charges. Generally paid in a lump-sum, other income options are also available.
Life Insurance is also an inexpensive way to leave a death benefit for beneficiaries tax-free.
Generally, all distributions from deferred annuities are deemed to be the interest first and thus are subject to income tax.
Furthermore, distributions prior to age 59½ may be subject to additional IRS penalties.
Retirement Income Planning
If you’re spending the interest from a CD or a fixed annuity to supplement your retirement income, consider a deferred annuity with a lifetime income rider. These annuities would offer a guaranteed income for life (even if the annuity ran out of money), removing the concern of making your money last in retirement and running out of money.
Some lifetime income riders offer a retirement income that increases to keep up with inflation, help pay for long-term care expenses, and offer an enhanced death benefit to help your beneficiaries.