North American Strategic Design X Annuity is a single-premium, fixed index annuity, that combines accumulation potential, innovative liquidity features, and options to strategically plan for your retirement income.
The Strategic Design X Annuity accumulation value will grow at a rate based on the fixed and/or index accounts you choose.
Index accounts are tied to market performance, but they are not an actual investment in the stock market.
In other words, you’ll get credit for some of the market’s growth in up times.
In downtimes, when the market sees zero gains or actually loses value, your premium will never be at risk of decreasing due to those losses.
For one index account, market losses can actually trigger a positive interest credit. In fact, a larger index loss could result in a larger credit.
Key benefits of Strategic Design Annuity X
Custom-design your income plan
The Strategic Design Annuity X comes loaded with benefits from its growth potential to a generous roll-up rate that accelerates income potential to its enhanced liquidity.
All that with the end goal in mind — designing a custom income plan for your retirement with generous penalty-free withdrawals and a guaranteed lifetime withdrawal benefit (GLWB).
Income when you want it and income you can’t outlive.
Choose a strategy that suits you
Strategic Design Annuity X offers a selection of index strategies, allowing you to find a comfortable fit, no matter your personal financial approach.
Lock-in interest credits each contract anniversary
One advantage of fixed index annuities is an annual reset feature, which applies to this annuity no matter which crediting method you choose.
With the annual reset, any interest credits are added, or credited, to your accumulation value on each contract anniversary.
For the Two-year Point-to-Point option, this reset happens at the end of each two-year term.
Once credited, they are locked in.
That means they can’t be taken away due to negative index performance.
At that point, they are included in your accumulation value, giving you the advantage of compounding interest in subsequent years.
Also, by resetting your starting index value at the same time, this feature can help minimize your risk if the index experiences a severe downturn.
Without it, you’d have to wait for the index value to climb up to its original level before any interest credit could be realized.
Tax deferral improves growth potential
Your money grows on a tax-deferred basis, meaning more of it is working for you.
Growing your money tax-deferred means you don’t owe taxes until you access your money, allowing more time for growth potential.
Provide a lasting legacy
Your beneficiaries will get the remaining accumulation value of your annuity as a death benefit – either in an immediate lump sum or in installments.
And, because annuities may avoid the costs and delays of probate, they may not have to wait.
North American Life Insurance is also an inexpensive way to leave a death benefit to beneficiaries.
Take advantage of flexible payout options
Whether you need to start drawing income soon after purchasing your annuity or you’d prefer to wait and build your lifetime income potential, there’s an option for you.
Your Strategic Design Annuity X
To understand how your annuity works, it’s important to first understand a few basics about two values in your Strategic Design Annuity X.
Accumulation value
The accumulation value equals 100% of premium; plus interest credited if any; less withdrawals (including any rider charges).
Your accumulation value is the value used to determine your surrender value, which is the amount you would receive if you surrendered your contract early.
Additionally, any remaining accumulation value may be paid to your beneficiaries upon your passing.
Guaranteed lifetime withdrawal benefit (GLWB) value
Your GLWB value is used to determine your lifetime payment amount (LPA).
This value is never available as a lump sum withdrawal or death benefit.
How your annuity grows
The Strategic Design Annuity X fixed index annuity has growth opportunities that you can take advantage of as you build your retirement savings.
Accumulation value growth
The interest earned in the fixed and/or indexed accounts is applied to your contract’s accumulation value.
GLWB value roll-up
During the roll-up period, your GLWB grows at 150% of the weighted average rate of interest credited to your fixed and/or indexed accounts (based on account allocations at the beginning of the contract year).
Set your strategy
You choose how your initial premium is allocated between your fixed account and/or index accounts.
At the end of each crediting term, you have the option to transfer your money among the different options.
Fixed account
North American’s Strategic Design Annuity X provides a fixed account that offers a fixed interest rate that is guaranteed for the first contract year.
The rate for future contract years will be declared each year at the company’s discretion thereafter and will never be less than the minimum guaranteed rate listed in your contract.
Other crediting methods
While your premium is protected from downside market risk, Strategic Design Annuity X also provides the opportunity to take advantage of market growth with its index interest crediting options.
These crediting methods allow you to select from different indexes; each index account option may perform differently in various market scenarios.
- Annual Point-to-Point with Participation Rate
- Two-year Point-to-Point with Participation Rate
- Monthly Point-to-Point with Cap
- Annual Point-to-Point with Cap
- Inverse Edge Trigger
Interest is credited on each contract anniversary for each index account option except the Two-year Point-to-Point. For the Two-year Point-to-Point, interest is credited at the end of each two-year term.
Options for accessing your money
How withdrawals work
Like most annuities, the Strategic Design Annuity X contract limits when and how much you can withdraw from your annuity penalty-free.
However, it does allow you access to a portion of your money each year.
Taking out more money than what’s available penalty-free will incur a surrender charge.
A market value adjustment may also apply.
Withdrawals will also reduce your GLWB value.
Withdrawals may be treated by the government as ordinary income.
If taken prior to age 59½, a withdrawal could also be subject to a 10% IRS penalty.
Withdrawals will reduce your accumulation value accordingly.
Standard penalty-free withdrawals
After the first contract anniversary, you may choose to take a penalty-free withdrawal (also known as a penalty-free partial surrender) of up to 7% of the initial premium each year.
If you withdraw more than that, a surrender charge and market value adjustment may apply.
After the surrender charge period, surrender charges and a market value adjustment will no longer apply.
Embedded benefits rider offers two key benefits
The embedded benefits rider, included automatically with your Strategic Design Annuity X for an annual charge, makes two attractive additions to the base product:
- Enhanced penalty-free withdrawals
- An accumulation value step-up feature
The rider charge is calculated by multiplying the rider charge percentage, 1.15%, by the GLWB value on each contract anniversary.
This amount will be taken from your contract’s accumulation value on each contract anniversary as long as the rider is in effect.
How enhanced penalty-free withdrawals work
Thanks to the embedded rider, you’ll have enhanced access to your money after the first contract anniversary.
The longer you wait to take your first penalty-free withdrawal, the larger the annual percentage you’ll be able to take penalty-free going forward.
Once you take that first withdrawal, the annual enhancement and total amount up to which you can take penalty-free are locked in for the life of the rider.
Your annuitization options
As an alternative to the lifetime payment amount, Strategic Design Annuity X offers other payout options such as annuitization.
Taking an income is a benefit of deferred annuities, but it’s not required with the Strategic Design Annuity X.
Once an annuitization option is elected, it cannot be changed, and all other rights and benefits under the annuity end.
On non-qualified plans, a portion of each income payout represents a return of premium that is not taxable, thus reducing your tax liabilities.
In all states except Florida, by current company practice*, you may receive an income from the accumulation value after the first contract year (without surrender charges or market value adjustment) if you choose a life income option.
Converting your assets into income
Outliving income in retirement has become a concern for many retiring consumers.
The Strategic Design Annuity X can help improve confidence — providing income you can’t outlive or providing for the possibility of increased payments over time.
Taking income through LPAs, your contract and all its other features and benefits remain in force, unlike annuitization.
Once lifetime payments are available, they can be started or stopped at any time.
Lifetime payment amounts
After a waiting period of 10 contract years, the Strategic Design Annuity X provides you two choices for taking lifetime payments.
Your lifetime payment percentage is determined by the attained age of the annuitant and the lifetime payment amount option elected.
For joint annuitants, your lifetime payment percent is based on the attained age of the youngest annuitant.
Level lifetime payments
This option provides a level payment amount for either the rest of your lifetime or the joint lifetime of you and your spouse.
Increasing lifetime payments
This option provides a level payment amount for either the rest of your lifetime or the joint lifetime of you and your spouse.
This option starts at a lower initial payment amount than the level payment option but has the possibility of increasing each year, based on the weighted average rate of the interest credited to your fixed and index accounts.
Again, this option can apply for either the rest of your life or use the joint lifetime of you and your spouse.
LPA multiplier benefit
The lifetime payment amount will be doubled for up to five years of payments when a covered person is unable to perform two out of six activities of daily living.
This benefit is not available when the accumulation value equals zero.
Check out a Long Term Care Annuity to supplement your long term care insurance needs.
Accumulation value step-up to protect your premium
On the ninth and 10th contract anniversary, if interest credits are less than the total amount of rider charges incurred the accumulation value will increase by the accumulation value step-up amount.
The finer points of some other features
RMD-friendly withdrawals
The IRS currently requires you to begin drawing down your savings in certain tax-deferred retirement accounts upon reaching age 72.
These are called required minimum distributions (RMDs).
By current company practice*, we’ll waive surrender charges and market value adjustments on any portion of an IRS-required minimum distribution that goes beyond what’s available to you penalty-free.
Nursing home confinement waiver
After your first contract year, if you become confined to a qualified nursing care facility for 90 consecutive days, you can withdraw 100% of your accumulation value without a surrender charge and without application of an MVA.
You cannot be confined at the time your contract is issued.
This rider is automatically included with your annuity at no additional charge.
If joint annuitants are named on the annuity, the waiver will apply to the first annuitant who qualifies for the benefit.
Spousal continuance (before starting LPAs)
If your spouse is your sole beneficiary, then your spouse can continue the annuity until he/she is ready to start taking LPAs.
If your Strategic Design Annuity X is a joint contract with your spouse, your spouse can continue taking LPAs for the rest of his/her life. If not joint, LPAs can’t continue.
Activities of daily living (ADLs)
At the time the contract becomes effective, you’ll have to be able to perform all six activities of daily living to qualify for the LPA multiplier benefit.
The six ADLs include:
- Bathing – Washing yourself by sponge bath in a tub or shower, including getting in or out.
- Continence – Bowel and bladder control or, when unable to maintain control, the ability to perform associated personal hygiene.
- Dressing – Includes putting on and taking off clothing and any necessary braces, fasteners, or artificial limbs.
- Eating – Being able to feed yourself or manage a feeding tube or intravenous feeding.
- Toileting – Getting to and from the toilet, getting on and off it, and performing associated personal hygiene.
- Transferring – Moving into or out of a bed, chair, or wheelchair.
To take advantage of the benefit, additional conditions have to be met:
- The waiting period has to have expired (if applicable).
- You’ll have to notify us of your election to take the LPA multiplier benefit.
We will need to receive a written proof, acceptable to us, from a physician who has determined that you are unable to meet two of six ADLs with an expectation the condition(s) are permanent.
