The Core Income 7 Annuity with the Core Income Benefit rider (Core Income Benefit) helps address both halves of the retirement equation. Together they can offer you a level of certainty in the retirement years ahead. Along with consistent, predictable income, you’ll have the increasing income potential to help you keep up with the cost of living.
- The potential for indexed interest based on changes in an external market index,
- Protection of your principal and credited interest from market losses,
- Increasing income withdrawal percentages with every year you hold your contract before starting income withdrawals, and
- Choices for receiving lifetime income withdrawals – including predictable income and income that can increase each year.
Solutions for income throughout retirement.
So many uncertainties. But there is a company you can turn to for help in creating a level of certainty in the retirement years ahead.
When it comes to retirement solutions, the one thing to know about Allianz Life Insurance Company of North America (Allianz) is that we’re more than one thing. We have a portfolio of annuities that offer different solutions to help you with many retirement concerns, including:
- Increasing income potential (available through built-in or optional riders at an additional cost) to help address inflation
- Asset protection to help preserve your retirement savings from market volatility
- Tax control to help manage your assets with more efficiency and flexibility using several distribution options of your choice
A fixed index annuity as part of your overall retirement strategy
Generally, an annuity can help you build your retirement assets by offering principal protection and potential interest. The money in your annuity can grow tax-deferred, which may help your savings accumulate faster. Annuities also offer valuable guarantees and death benefit protection.
Early Surrender and Deah Benefit
If you surrender your contract, you’ll receive at least a guaranteed minimum value. And because annuities are insurance products, they can give you the reassurance of knowing that your beneficiaries will get a death benefit if you pass away before you start receiving annuity payments.
When you’re ready for income, annuities give you several options. You can receive income as a single payment, as regular payments over a specific period of time, or even as income for the rest of your life.
Market Performance Growth
And when it’s a fixed index annuity, you also have the potential to earn interest based on changes in an external index. This differs from traditional fixed annuities, which credit interest calculated at a fixed rate set in the contract. Because the value of the index you choose may vary daily and is not predictable, the interest you earn can be more – or less – than the interest you’d receive from a traditional fixed annuity.
Many fixed index annuities also let you allocate premium to a traditional fixed interest option, where interest is credited at a fixed rate.
Planning for income in retirement
It’s no longer enough to simply save as much as you can for retirement. To help sustain the retirement lifestyle you want, you also need an income strategy, one designed to help with the income risks you’ll face in retirement:
Longer life expectancy
With health care advancements and healthier lifestyles, we’re now living longer than past generations. Today, men have a life expectancy of 77 years, while the life expectancy of women has reached 82. That means retirements could potentially last 25 or 30 years, or even longer – and that means you need to plan for more years of retirement income.
Years of inflation
When the cost of living rises, your purchasing power drops. So even though your income hasn’t changed, it will buy you less and less as the years go by. During your working years, inflation is less of an issue since you’re periodically getting cost-of-living increases in your salary. But if you have a fixed income during your retirement, you won’t be keeping pace with rising prices. (While we can’t know the inflation rate in the future, over the past 100 years it has averaged around 3% per year.)
Lifetime income with opportunities for increases
Core Income 7 and the Core Income Benefit rider can offer you a level of certainty in the retirement years ahead – through income withdrawals or annuity payments – plus the option for income withdrawals that can increase, even after retirement.
The Core Income Benefit rider provides this in two ways:
Beginning at age 45, it gives you a guaranteed increase in your lifetime income withdrawal percentage each year you wait before beginning lifetime withdrawals. In other words, with Core Income 7 Annuity, you’re rewarded for waiting.
The Core Income Benefit rider also lets you choose from two-lifetime income withdrawal options to suit your income needs:
Option 1: Predictable, dependable income for life.
This may be a good choice if you want the reassurance of knowing exactly how much income you’ll receive every month and if you want a guaranteed stream of income that you can’t outlive.
Starting with your second year of lifetime withdrawals, we multiply your accumulation value by your lifetime withdrawal percentage. If the result is greater than the previous contract year’s annual maximum, this becomes the new annual maximum.
Option 2: Income for life – plus an opportunity for payment increases.
This offers a smaller payment upfront, but it has the potential to increase each year by the interest rate credited to your chosen allocation options in your contract. On every contract anniversary, your annual maximum withdrawal amount (maximum income payment) will be recalculated to increase by that interest rate.
Your interest options
With Core Income 7, you can earn fixed interest – or choose to base potential indexed interest on changes in several external market indexes.
Fixed interest allocation
Core Income 7 lets you earn interest at a fixed rate, if you wish. Allianz calculates and credits fixed interest daily, based on the rate we establish at the beginning of each contract year. We can raise or lower the current credited rate annually, but it will never be less than 0.10% per year.
Indexed interest allocations
You can also choose to earn potential interest based on changes in an external market index. Any indexed interest your annuity earns is locked in each year. In addition, because of the annual reset feature, last year’s ending value becomes the following year’s starting value.
In other words, one year’s losses in the index do not affect the potential to earn indexed interest in future years.
We calculate and credit indexed interest annually based on changes in your choice of several indexes.
Choose from several options for flexibility
Core Income 7 lets you choose one or more allocations.
Change your allocation options
Shortly after your contract anniversary each year, we’ll notify you that you can change your allocations. If we receive your changes within 21 days after your contract anniversary, they’ll go into effect during that contract year.
But if we receive your allocation changes more than 21 days after your contract anniversary, they won’t take effect until the following contract year.
Accessing your money
Core Income 7 gives you several ways to access your money.
Core Income 7 is designed to help you accumulate savings for retirement. That’s why we give you the flexibility of making additional premium payments until the earliest of:
- The first contract anniversary
- The date annuity payments begin
- The date lifetime withdrawal payments begin
We credit additional payments made during the first contract year to your contract’s interim interest allocation until the contract anniversary. At that time, an additional premium applied to your accumulation value will be allocated based on your index and fixed interest allocations.
After the first contract year, you can take up to 10% of your contract’s paid premium each contract year in one or more withdrawals free of surrender charges, MVAs, and penalties.
Withdrawals reduce contract values and the value of any income and death benefits.
If the interest rate for an indexed allocation is positive at the end of any year, we will credit indexed interest to your contract for any free withdrawals you took from that index allocation earlier that year. The amount of interest will reflect the proportion of the contract year that your free withdrawal remained in the indexed allocations.
If, within the same contract year of a free withdrawal, you fully surrender your contract we will retroactively recalculate the free withdrawal as if it were a partial surrender. Surrendering your contract may result in a full or partial loss of interest and a partial loss of principal.
Taking a larger withdrawal (partial surrender)
During your first contract year, no penalty-free withdrawal is allowed.
After your first contract year, if you take out more than 10% of your contract’s paid premium in a contract year, we’ll apply a partial surrender charge and MVA to the amount above 10% (the excess partial withdrawal).
Withdrawals after the seven-year surrender charge period are penalty-free.
Choose to take less than your maximum withdrawal amount
We keep track of the amount that’s “leftover.” The amount that is left over is called the cumulative withdrawal amount.
This feature (available with both income options) allows you to take any or all of that remainder anytime after you have taken your maximum annual income payment in a contract year.
Note: The cumulative withdrawal amount does not increase with interest earned.
The cumulative withdrawal amount is not subtracted from the accumulation value until taken out.
The accumulation value will continue to earn index and interest credits, but the cumulative withdrawal amount will not increase with interest earned.
You can also annuitize your contract.
You can choose to receive annuity payments based on your choice of several annuity options. If you use a traditional annuitization option after five contract years, your annuity payments are based on your accumulation value.
These annuity options can have certain tax advantages; however, you would no longer receive the benefits of the Core Income Benefit rider, including the increasing withdrawal percentages.
Required minimum distributions
Required minimum distributions from your Allianz annuity held within a tax-qualified plan (IRA, SEP, etc.) will qualify as free withdrawals. Contract values and the amount available for free withdrawals at any time throughout the year will be reduced by the amount of the distribution(s).
Please keep in mind that purchasing an annuity within a retirement plan that provides tax deferral under sections of the Internal Revenue Code results in no additional tax benefit.
An annuity should be used to fund a qualified plan based upon the annuity’s features other than tax deferral.
Please consider all annuity features, risks, limitations, and costs before purchasing an annuity within a tax-qualified retirement plan.
The money you take out may be taxable.
Your contract values can grow tax-deferred. However, any money you take from your contract, including free withdrawals, other partial withdrawals, and required minimum distributions, may be taxable as ordinary income.
Because annuities are meant for long-term purposes, if you are under age 59½ when you take a distribution, it may be subject to a 10% federal additional tax.
Accessing all of your money
If you want to access all your money in a lump sum, Core Income 7 Annuity gives you that option. Anytime after your seventh contract year, you can take your annuity’s full accumulation value.
Prior to that time, you would receive your cash surrender value.
The death benefit
If you die before you start receiving annuity payments, your beneficiary(ies) will receive a death benefit. The death benefit will be the greatest of your annuity’s accumulation value, guaranteed minimum value, cumulative withdrawal amount, or your premium minus any withdrawals and corresponding surrender charges, adjusted by any MVAs (net premium).
Your beneficiary(ies) can choose to receive your contract’s death benefit either as a lump sum (a single payment) or as annuity payments.
Is Core Income 7 right for you?
If you’re concerned about saving enough for retirement – and you want lifetime income withdrawals with an opportunity for payment increases – Core Income 7 with the Core Income Benefit may be right for you.
Core Income 7 with the Core Income Benefit can be a valuable part of your overall retirement strategy by:
- offering the potential for indexed interest based on changes in an external market index,
- increasing your income withdrawal percentages with every year you accumulate after age 45,
- giving you several income options – including income withdrawals for life with the potential for increasing income, and
- protecting your principal from market loss while providing the opportunity for tax-deferred growth.