What will be covered in this review?
In this annuity review, we will be covering the following information on the American Equity Foundation Gold Annuity with Income Rider LIBR 6%:
- Product Type
- Current Rates
- Realistic Long-Term Investment Expectations
- How It Is Used
- How It Is Most Poorly Used
Annuities can be complex. That’s where having an Annuity Investigator who loves math comes in. We make the complex, simple.
At first glance, you may feel that, like other annuities, the American Equity Foundation Gold annuity with an income rider, will perform quite well in certain instances. But, not all annuities will be the very best choice in all situations. This is especially the case, depending on what your goals may be for that annuity.
Annuity and Retirement Income Education That You Can Actually Trust
It may be that you have stumbled upon our website for the first time and that you are unsure of what exactly it is that we do here. But the good news is that you have landed in the right place.
That is because, if you have been searching for information on annuities – and possibly even “Googling” the term annuity – then it is likely that you have seen some of the annuity marketing
websites that make some fairly bold claims for the sole purpose of obtaining your contact information, such as:
- Highest Payouts
- 7-8% Annual Returns
- Lowest Fees
- Guaranteed Lifetime Income
- No Market Risk
Does this sound familiar to you?
What we have learned in our experience is that none of these potential “benefits” that are being touted will really even matter to you unless you already know why it is that you are purchasing the annuity in the first place. And, after going a bit deeper into our research, we also determined that many of these annuities can’t even provide the returns that are being claimed.
It is also possible that you have come across other websites that are adamantly opposed to annuities. But in many cases, these sites have absolutely no idea how annuities even work!
The truth is that both of the above approaches to annuities are inherently flawed – and neither of them benefit you in any way.
What you will find, however, is that the website that you are on right now is completely different. Here at AnnuityGator.com, we offer the most objective, thorough, and independent annuity reviews that can be found on the Internet. We have also been doing this for much longer than many of the “copycat” websites that are out there. We provide these reviews because we want you to be able to decide for yourself whether the annuity we are reviewing will truly make sense for you and your financial goals.
So, let’s get started!
American Equity Foundation Gold Annuity with Income Rider at a Glance
|Product Name||American Equity Foundation Gold Annuity with Income Rider|
|Type of Product||Fixed Indexed Annuity|
|Standard & Poor's Rating||A-|
|Phone Number||(888) 221-1234|
Opening Thoughts on the American Equity Foundation Gold Annuity with Income Rider
Throughout the past several years, the American Equity Foundation Gold fixed indexed annuity with income rider has been a very popular choice with financial advisors. One reason for this is likely the benefits that can be received via the annuity’s basic features – namely the opportunity for index-linked growth and safety of principal during the accumulation period, along with its guaranteed lifetime income benefit in the future.
There is also a lifetime benefit income rider provided as an optional feature on this annuity. The lifetime income benefit rider (LIBR) allows the annuity holder to take a lifetime income from the annuity without losing control of the retirement assets that are inside of the contract. This is because the income that is received is taken in the form of regular withdrawals from the contract, as versus as annuitized payments.
Because there are so many different benefits that are all rolled together in just this one single product, many annuity sales agents may refer to this type of product as a “hybrid” annuity. (For some reason, it just makes it sound really cool that way).
But regardless of the names that financial advisors have come up with to beef up the annuities that they’re offering, it is still just as important as ever to read through all of the contract details and disclosure documents prior to moving forward with a purchase, because in doing so, you may find that the annuity doesn’t work exactly as your advisor described it to you.
The good news is that we have tested this annuity – and our findings on it are included within this review.
Before we get into the nitty, gritty details, here is some legal information that we have to disclose…
This is an independent annuity review. It is not a recommendation to buy or sell an annuity. American Equity did not endorse this review in any way, nor have we received any compensation for presenting this review. It is solely meant to be an independent review so that readers may better determine whether or not this particular annuity will – or will not – fit in with their financial objectives. Prior to purchasing any type of financial product or service, it is important that you pursue your own due diligence. That way, you will be able to ask specific questions as they relate to your individual circumstances. All of the names, materials, and trademarks used in this review are the property of their respective owners.
How American Equity Describes the Foundation Gold Annuity with Income Rider
Based on the American Equity Foundation Gold brochure, some of the key points in marketing the Foundation Gold annuity include are:
- Safety of principal
- Index-linked growth opportunity
- Guaranteed income
- Liquidity – withdrawals up to 5% after the first contract anniversary
- Tax-deferral of growth
- Avoidance of probate
The annuity has some additional features that can be viewed in more detail in the product brochure.
In addition, American Equity also offers a lifetime income benefit income rider that can allow the annuity holder to choose an interest rate factor in determining the lifetime income amount, with either a level or an increasing payment option.
How a Financial Advisor Might “Pitch” this Annuity
When presenting fixed indexed annuities, there are certain words or phrases that may make these products seem better than they actually are. In this particular case, many financial sales agents have gravitated to the word “hybrid” annuity when pitching fixed indexed annuities that offer a variety of features that are all offered together in one single product, as is the case with the American Equity Foundation Gold annuity.
In this case, there are a number of features such as tax-deferred growth during the accumulation phase and guaranteed lifetime income during the income phase. You also have the ability to grow funds based upon the performance of an underlying index, as well as the protection of principal should the underlying index perform poorly.
However, it is also important to note, that even with all of these nice benefits, if a product seems too good to be true, it is definitely well worth checking out – because it probably is! In the case of fixed indexed annuities with income riders, many sales agents do not fully understand how these work, and in turn, do not explain them properly. Because of that, the annuity will not end up performing as well as it was explained to a client, and the client will end up being disappointed in the performance, and with the financial results that they ultimately receive in retirement.
For example, many fixed indexed annuity purchasers are under the initial impression that they will get returns in the range of 7 to 8%, when in fact, the annuity will not be able to provide them with anything even close to that amount.
If you’ve had a financial sales rep explain the American Equity Foundation Gold annuity to you properly, then you’ll know that it will actually get closer to 2-4% each year. If, however, your advisor is presenting you with potential returns of 7-8%, then he or she either is not really sure of what they’re offering, or they are just trying to make a quick sale. Either way, you should likely stop and run the other way.
What About the Fees?
On top of having a good understanding of an annuity’s true returns, you should also know about its fees, and where they will come from. In the case of the American Equity Foundation Gold annuity, the fees could make a difference in terms of your overall returns, as well as if or when you should withdraw your funds at a certain time.
For instance, this annuity has ten years of back-end surrender charges. These begin in Year 1 at 9%, and they gradually grade down to .50% in Year 10, until they reach 0% in Year 11 and thereafter.
The Annuity Gator’s Take on the American Equity Foundation Gold Annuity
Where it works best:
- For those who want their money to grow safely until transferred to heirs, and are not concerned with the generation of large returns
- For those who are worried about outliving savings and/or income in retirement
- For those who want to receive a guaranteed, lifetime retirement income
- For those who want to provide a guaranteed, lifetime income for a surviving spouse
Where it works the WORST:
- For those who are seeking high market returns (higher than 2-4%)
- For those who do not plan to use the lifetime income benefit
- For those who plan to just let the account grow and then turn on the lifetime income benefit rider
When trying to determine whether or not a particular fixed indexed annuity is the right product for you, it is important to understand how the features of that particular product work – especially as it relates to the reason or reasons why you are purchasing the annuity in the first place.
It is also essential that you review the disclosures and the fine print of the product prior to moving forward. This is because often, these products might initially sound great, but once you learn more about how they actually work, then you could learn that they do not actually perform the way that they were described to you.
For instance, an annuity sales rep might highlight the lifetime income benefit. But this is not the same thing as the annuity’s overall return. Blindly following the advice of a misleading sales person can oftentimes lead to disappointment – as well as to a lesser amount of income in your retirement.
If you are specifically looking for guaranteed lifetime income in retirement, without having to bear any market risk, then there are some better financial alternatives out there for you. However, if you are seeking an investment that does not go down, and you are happy with a lower single-digit return – and you also want it to be backed up by a good, solid insurance company – then this annuity could be a good option.
We still feel that there are a lot of annuity sales representatives who either don’t understand how to determine real annuity returns, or who are dramatically over-promising what fixed indexed annuities can do. With that in mind, it is important that you have a good understanding of what you are getting into with your retirement funds. You need to be wary of any annuity that is promised to perform much better than what we have illustrated here in this review. That is because the American Equity Foundation Gold annuity – even with the lifetime income benefit rider – will not likely produce much more than a 5% return overall.
In reality, the only true way to know for sure whether this particular annuity will be a good fit for your specific situation is to have it tested. We offer this testing at no charge at Annuity Gator. So, if you would like to get a better idea of how this product may fit in with your financial goals and objectives, then just contact us and we will test it for you.
Have Any Questions on the American Equity Foundation Gold Annuity? Notice Any Mistakes?
If you happen to have any additional questions on the American Equity Foundation Gold annuity, then please contact us.
We know that annuities can be fairly confusing products – and there are a lot of financial advisors who are pushing these products on their clients, regardless of whether or not the annuity even makes sense for those clients. This is due in large part to the guaranteed income that annuities can provide. But, before you go out and purchase an annuity, you still need to know all of the facts about it in order to be sure that the particular annuity you are considering will be the right one for you.
An annuity is a long-term financial endeavor, and as you saw from this review, it can also have some long-term surrender penalties – so you don’t want to get yourself locked into something that will be expensive to get out of if it is not the right thing for you. If, however, an annuity is right for you, it can be one of the best ways of ensuring that you have guaranteed, lifetime income that will last throughout your future.
If you happen to know anyone else who could benefit from an annuity, then please feel free to share this post with them. There are many people today who are getting conflicting information about annuities. Our goal is to educate people about annuities in an objective way. So, for instance, if you have a Facebook account, then you could just simply click on the little blue Facebook icon in order to share this article. That way, more people may find this information and hopefully benefit from it.
Also, because there is so much information out there about annuities, and because these products do tend to change frequently, if we have missed something or if you noticed a mistake, please contact us and let us know. We are happy to make any changes that are necessary in order to ensure that the information in these reviews is clear and understandable to readers.
The Annuity Gator