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 TrustIt 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
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 RiderThroughout 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 RiderBased 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
How a Financial Advisor Might “Pitch” this AnnuityWhen 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 AnnuityWhere 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
- 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