What Should You Do with an American Equity Annuity That’s Been Discontinued?
If you’re holding on to an American Equity annuity such as Benefit Gold, Bonus 5, Millennium Platinum, Traditions Gold, or Guarantee Series, and it’s no longer available for new purchase, you’re managing a legacy product in a modern financial environment. Many of these discontinued contracts continue to earn interest even after the surrender period ends—but that doesn’t necessarily mean they’re still the right tool for your goals.
Whether your annuity has matured, is still accumulating interest under old crediting terms, or has been inherited, now is the time to ask: Does this annuity still serve my financial needs—or is it quietly costing me opportunities?
What Happens When a Discontinued Annuity Exits Its Surrender Period?
Annuities like Future Gold, Premier Eagle, Choice Series, or Heritage Gold generally continue to earn interest after the surrender period ends. The key issue is how they earn it and whether the interest rate is competitive or just a minimum contractual obligation.
Interest Crediting Doesn’t Stop—But It Might Slow Down
After the surrender schedule ends, American Equity declares renewal interest rates annually. Contracts like Guarantee Series or Foundation Gold might shift to a lower fixed rate or remain tied to legacy indexing methods. While these contracts may still earn interest, it’s often less than what modern contracts offer, and it’s subject to the insurer’s discretion.
Many owners assume they’re still in a “good” product just because it’s growing. But if that growth is limited to 1–2% annually while modern contracts offer structured index crediting and bonus enhancements, the opportunity cost can compound over time.
You Gain Liquidity—but May Still Have Maturity Provisions
Post-surrender, your funds are no longer subject to withdrawal penalties from the insurance company. That means you can take distributions, roll over the funds, or exchange the contract without surrender charges.
However, many of these legacy annuities—such as Security Gold, Destinations, and 10/10 Gold—still have maturity dates (often at age 85 or 90), at which point the contract may require annuitization. Annuitization is typically irrevocable and often pays less than income riders on newer contracts.
The Indexing Strategy Is Likely Outdated
Legacy annuities were built in a different era. For instance:
- Caps on contracts like RateShield or Retirement Gold were often in the 3%–5% range
- Participation rates were conservative
- Many used older S&P 500 structures without volatility controls or diversification
These strategies simply do not compete with today’s multi-index, volatility-controlled, and uncapped crediting options.
No Access to GLWB Riders
Most discontinued American Equity contracts—Benefit Gold, Bonus Gold, Advantage Gold, etc.—lack modern features like Guaranteed Lifetime Withdrawal Benefit (GLWB) riders, which provide:
- Lifetime income without annuitization
- Flexible withdrawals
- Spousal continuation
- Enhanced income values (income base roll-ups)
Without these, your only guaranteed income option is annuitization, which removes flexibility and is irrevocable.
What to Do with Your Discontinued American Equity Annuity
Keep It If It’s Still Competitive
Some legacy contracts still offer reasonable fixed rates or index credits, especially if they were issued during higher-rate environments. For example, if your Millennium Platinum contract is still earning 3–4% annually, you may choose to let it grow—especially if you’re not seeking income yet.
But even in this case, it’s worth reviewing whether newer products offer more compelling income, death benefit, or care planning options.
1035 Exchange to a Modern Fixed Index Annuity
If your current annuity lacks modern features, you can perform a 1035 tax-free exchange into a newer contract that aligns with your needs. For example:
- Roll a Benefit Gold into a fixed index annuity with a GLWB rider, giving you guaranteed lifetime income without annuitization
- Exchange a Choice Series contract earning low interest into a high-participation, volatility-controlled FIA with better growth potential
- Move a matured Guarantee Series into a new annuity with enhanced death benefits and liquidity features
These exchanges are tax-deferred and can be funded with:
- Non-qualified annuity contracts
- IRA rollovers
- 401(k) lump sums
- Inherited non-qualified annuities (subject to Secure Act distribution rules)
Use Proceeds to Fund a Hybrid Long-Term Care Policy
Long-term care planning is a major gap in older annuities. You can reposition a low-growth contract like Traditions Gold into a hybrid life + long-term care policy or an LTC annuity, providing:
- 2–3x leverage on your principal for qualified care expenses
- Tax-free withdrawals for long-term care
- Protection from Medicaid spend-down rules
This strategy is especially valuable if you’re in your 60s or 70s and want to avoid being a financial burden on your family during a long-term care event.
Use the Contract to Fund Permanent Life Insurance
Want to create a tax-free legacy? Contracts like Advantage Gold or Foundation Gold that are no longer aligned with your income needs can be repurposed to fund whole life or indexed universal life insurance. Benefits include:
- Tax-free death benefit to heirs
- Potential for long-term care riders
- Cash value accumulation (in IUL or whole life policies)
This is a strategic exit if your annuity has gains that would be taxable if surrendered but can be offset by properly structured life insurance.
Annuitize If There’s No Better Option
In some cases, especially with older inherited contracts, you may be forced to annuitize. If your 10/10 Gold contract mandates this at age 85, and you’re already there, your options may be limited. However, we recommend comparing annuitization payouts from your current contract to:
- A SPIA (Single Premium Immediate Annuity)
- A DIA (Deferred Income Annuity)
- Or a GLWB FIA
You may find that replacing the contract offers more income, better guarantees, or stronger spousal benefits.
Pros and Cons of Keeping a Discontinued Annuity
Pros
- Still earning interest post-surrender
- Full liquidity available
- No penalties for withdrawal
- Simplicity and familiarity
- Tax-deferral continues
Cons
- Renewal rates may be low or decline
- No income riders (GLWBs)
- May require forced annuitization
- Outdated index strategies with poor growth
- No LTC protection or legacy optimization
Who Should Reevaluate Their Annuity?
You should schedule a review if:
- Your annuity is earning less than 3% interest
- You’re nearing age 85 or contract maturity
- You want guaranteed income for life without annuitizing
- You’re planning for long-term care or estate transfers
- You inherited a contract with a 10-year distribution deadline
You may not need to act if:
- The contract is still earning competitive interest
- You don’t need income, care coverage, or death benefit enhancements
- You’re comfortable with the current guarantees and limited flexibility
Related Insurance Products That Can Help
- Fixed Index Annuities with GLWB Riders: Provide lifetime income with flexibility and spousal continuation.
- Long-Term Care Insurance: Protects against six-figure annual care expenses and Medicaid spend-down.
- Hybrid LTC Annuities: Use idle annuity funds to cover future care tax-free.
- Life Insurance: Transform taxable annuity gains into tax-free legacy assets.
Let Us Help You Make the Right Move Before It’s Too Late
Many owners of discontinued annuities like Benefit Gold, Bonus 5, Security Gold, and RateShield are unaware of better options. Whether your contract is fully liquid, underperforming, or nearing forced annuitization, you deserve a second opinion.
Contact The Annuity Expert for a free policy review and comparison quotes. We’ll help you evaluate whether to keep, exchange, or reposition your annuity based on your goals.
There’s no cost to you—only the potential to secure more income, better protection, and peace of mind.
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