- Type of annuity
- How the annuity works
- Charges and fees
- Realistic performance expectations
- Where the annuity would work well
- Where the annuity may not be a good fit
Annuities can be complex. That’s where having an Annuity Investigator who loves math comes in. We make the complex, simple.If you’re approaching retirement and unsure of how to give your savings a boost, while at the same time keeping your principal safe from a stock market downturn, don’t worry – you’re not alone. As more Baby Boomers find themselves inching closer to that time in life, making important financial decisions can be a bit overwhelming – particularly in light of the multitude of marketing materials aimed at gaining your attention. For instance, you’ve likely run across anything from “I hate annuities” to “Generate a guaranteed income with an annuity” – and these conflicting messages can make you feel like a deer in the headlights. The reality is, though, a successful retirement has a lot more to do with income generation than it does with net worth. And, while there are countless financial advisors out there who would love to sell you on the next hot stock or mutual fund, there are few who know how to successfully convert what you’ve already saved into a lifetime stream of income that you can count on for the rest of your lifetime. That’s where we come in!
Annuity and Retirement Income Planning Information You Can TrustIf you have never been to our website before, please allow us to officially welcome you here to Annuity Gator. Who exactly are we? At Annuity Gator, we are a team of experienced financial and annuity professionals who focus on providing in-depth, and unbiased, annuity reviews on the Internet. We have been at this for quite a while now – far longer than our competitors have – even though there are now a number of “copycat” websites that are popping up all over the Internet. (Imitation is a form of flattery, though, isn’t it?!) It is our mission to provide in-depth information and reviews about annuities and retirement income strategies to consumers – as well as to financial professionals – so that they know exactly what they may (or may not!) be getting into when considering and/or selling an annuity. While annuities can help you to reach your goal of lifetime income in retirement, they can also be highly complex financial vehicles, so it helps to have someone who is adept in how annuities work, and who can pare down the massive amount of “fine print” into something that is more easily understood. Take, for instance, the newly-offered Destinations fixed indexed annuity from American Equity Investment Life Insurance Company. This annuity can provide you with growth, safety, and income – all rolled into one product. But, as enticing as this might sound, it may not necessarily be the right strategy for you. That being said, this review of the Destinations annuity can help you find the answer regarding whether or not it can help you achieve your short and long-term financial goals. So, if you’re ready to learn more, fasten your seatbelt and let’s go!
American Equity Destinations Fixed Index Annuity at a Glance
|American Equity Investment Life Insurance Company
|Type of Product
|Fixed Index Annuity
|A.M. Best Rating
Opening Thoughts on the Destinations AnnuityThrough its headquarters in Des Moines, Iowa, American Equity Investment Life Holding Company and its subsidiaries specialize in the sale of fixed index and fixed-rate annuities. In fact, American Equity Life Insurance Company’s mission is “to become the premier insurance company specializing in retirement savings and income products.” American Equity Investment Life actually offers a variety of different annuities, including:
- Fixed Index
Before we get into the gritty details, here are some necessary legal disclosures…This is an independent annuity product review. It is not a recommendation to purchase or to sell an annuity. American Equity Investment Life Insurance Company has not endorsed this review in any way, nor do we receive any type of compensation for providing this review. This annuity review is meant solely to be an independent review at the request of our readers so that they may see our perspective when breaking down the positives and the negatives of this particular annuity. Before purchasing any type of insurance and/or investment product, it is important that you do your own due diligence, and that you consult a properly licensed professional if you should have any specific questions that relate to your individual situation. All of the names, marks, and materials that were used for this annuity review are the property of their respective owners. For more information on how to compare annuities in order to determine which one may be the best for you and your financial circumstances, click here to obtain our free annuity report.
How American Equity Describes the Destinations Fixed Indexed AnnuityThe Destinations annuity is described as a first of its kind for American Equity Investment Life Insurance Company. It offers multiple allocation options – which includes a new volatility-controlled index that was developed with Bank of America. This index is referred to as the “BofA Destinations Index,” and it is exclusive to this particular annuity. On American Equity’s website, the Destinations annuity is referred to as a fixed indexed annuity that offers a 10 year fixed rate, as well as exclusive index-linked crediting strategy options. There is also a 9-year Destinations annuity option. To check out the full brochures on the Destinations 10 and the Destinations 9, go here. According to the head of Americas Insurance Solutions for Bank of America, “The BofA Destinations Index is a “rules-based” strategy that combines three assets using two time-tested investment principles – balanced risk and momentum.” By balancing risk and then seeking returns, the index aims to provide stable returns in many market environments. This can be beneficial since the stock market has been all over the map, particularly over the past decade or so. In addition to the traditional benefits that fixed indexed annuities provide – such as tax-deferred growth and protection of principal – the Destinations annuity also offers some new interest growth opportunities that are based in part on the performance of a selection of indices and also using a variety of different index crediting strategies. There are actually two index crediting strategies available that are linked to the exclusive BofA Destinations Index. These include a:
- Trackable Index. This combines U.S. equities, U.S. Treasuries, and the Gold Index.
- Volatility Management. This can deliver stability in many different market environments.
- Death Benefit. If the annuitant dies, the greater of the contract value or the minimum guaranteed surrender value will be paid to a named beneficiary.
- Waiver of surrender charges in the event of a terminal illness diagnosis or the need to reside in a nursing home for 90+ days.
- Rate Integrity Rider. This optional rider allows the surrender charges to be waived upon termination of the annuity contract if certain criteria have been met.
How an Insurance or Financial Advisor Might Present the Destinations AnnuityBecause people are living so much longer today than ever before, having enough income in retirement has become a top concern for many retirees, as well as those who are approaching retirement. With that in mind, the guaranteed income concept of the Destinations annuity from American Equity Investment Life Insurance Company is most likely where an insurance or financial advisor would focus when presenting this product to clients or prospects. Plus, given the exclusive interest crediting methods on this product, advisors may also highlight this feature. Unfortunately, because newer indices have little to no track record, it may not be wise to base the decision of whether or not to purchase this annuity on that feature alone. In addition, the tax-deferred growth of your money inside of the contract can also be a bonus – and it could even allow for an additional option for tax-advantaged accumulation, even if you have “maxed out” other alternatives like an IRA and/or employer-sponsored retirement plan. However, returns can also be limited – particularly if the underlying index performs poorly. So, it is important to be mindful of the difference between projected and actual performance. It is also important to keep the lengthy surrender period in mind.
What About the Fees on the Destinations Fixed Index Annuity?While the product literature for the American Equity Destinations annuity states that you have access to “free withdrawals,” the reality is that you can only take out up to 10% of the contract value per year during the 11-year surrender period. Otherwise, you can be hit with a surrender charge. (This is in addition to any tax that you may owe on the withdrawal.)
American Equity Destinations Annuity Surrender Charge Schedule
The Annuity Gator’s End Take on the American Equity Destinations Fixed Index AnnuityWhere it works the best: Although this fixed indexed annuity offers some unique crediting methods, it may or may not be attractive to everyone. But it will typically work the best for those who are seeking the following attributes:
- Safety of principal
- Tax-deferred growth
- The opportunity for additional, index-linked growth, which can provide a higher return than a regular fixed annuity
- Guaranteed income for life
- Will need access to their funds within the annuity’s 11-year surrender charge period
- Do not intend to use the lifetime income feature
In SummaryWhile there are many factors that need to be taken into consideration when you are buying an indexed annuity, one of the biggest concerns is making sure that the annuity is truly right for what you want – and need – it to do. With regard to the American Equity Destinations fixed index annuity, you can rest assured that you will have an income for life. But at the same time, depending on your other goals and needs, this product may still fall a bit short – and there quite frankly could very well be something else out there that is a better fit for you. If you have any additional questions on this or other income-related products, we are here to help. We can also run side by side annuity comparisons in order to determine how various annuities might perform. So please feel free to contact us directly via our secure online contact form here.
Do You Have Any Additional Questions About this Annuity? Did You Happen to Notice Any Mistakes in this Review?We realize that this annuity review may have run a bit long. But quite frankly, we would much rather that you have “too much” information on this annuity than to not have enough. So, if you found this information on the American Equity Destinations fixed index annuity to be beneficial, then please feel free to pass it on and to share it with other people who could also find value in it. (And, if you found it to be confusing, please also let us know that, too.) In addition, we are aware that information regarding annuities can, and often does, change. So, if you happened to notice anything in this review that should be updated or revised, let us know and we will be happy to make the necessary edits. Are there any other annuities that you would like to learn more about? If so, just give us a shout and let us know, and our team will get to working on them right away. Best, The Annuity Gator. P.S. If you would like to read more of our American Equity annuity reviews here are some links to check out:
- Independent Review of American Equity Investment Life Holding Company.
- Independent Review of the American Equity Investment Life Insurance Company IncomeShield 7 Fixed Indexed Annuity.
- Independent Review of the American Equity Guarantee 6 MYGA Annuity.
- Independent Review of the American Equity Foundation Gold Fixed Index Annuity.
- Independent Review of the American Equity Investment Life AssetShield Fixed Index Annuity.
- Independent Review of the American Equity Life Insurance Company IncomeShield 10 Fixed Indexed Annuity.
- Independent Review of the American Equity Choice 10 Fixed Index Annuity.
- Independent Review of the American Equity Investment Life Insurance Company’s RateShield 7 Fixed Annuity.
- Independent Review of the American Equity Guarantee 5 MYGA Annuity.
- Independent Review of the American Equity Investment Life RateShield 10+ Fixed Annuity with IncomeShield Rider.
- Independent Review of the American Equity Foundation Gold Annuity with Income Rider LIBR 6%.
- Independent Review of the American Equity Guarantee 7 MYGA Annuity.