What’s Covered in this ReviewIn this review, we’ll be covering the following information on the Allianz Vision Variable Annuity:
- Product Type
- Current rates
- Realistic long term investment expectations
- How it is used
- How it is most poorly used
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Annuity And Retirement Income Planning Information That You Can TrustYou will probably notice that the Allianz Vision Variable Annuity is somewhat similar to many other variable annuities in that it will perform well in some areas, while it will come up short in others – depending on your particular financial goals. If this is the first time that you have come to our website and you are not familiar with what I do, we are fee only financial planners. This means that we do not get paid to sell annuities to our clients. In fact, we actually do not even sell these products. However, we do feel that annuities can offer investors certain advantages, provided that they are used in the proper manner. Therefore, we provide reviews of annuities in order to help investors determine which ones may or may not fit in with their goals. Because our pay is not tied to the sale of any annuity, there is no real incentive either for or against them. With that in mind, our views in these reviews are completely unbiased and impartial. So, let’s dive in!
Allianz Vision at a Glance
|Product Name||Vision Variable Annuity|
|Type of Product||Variable Annuity|
|Standard & Poor's Rating||AA (Very Strong)|
|Phone Number||(800) 624-0197|
Opening Thoughts on the Allianz Vision Variable AnnuityOverall, a variable annuity should perform two functions for its holder. These include growing principal during the accumulation period, and then producing income, usually during the annuity holder’s retirement years. However, in reality, variable annuities are not all that good at producing income. The reason for this is due in large part to the risk that these annuities present – both to the investor, as well as to the offering insurance carrier. Because of the fact that the value of a variable annuity’s account can fluctuate so much, it is possible that these vehicles can actually guarantee less of an income stream than even the safer options such as fixed annuities that offer seemingly “low” rates of return. Therefore, for each dollar that is invested into a variable annuity, it can essentially provide you with less income than would a fixed annuity for the exact same amount of money that you deposit. So, if your main goal is to obtain an income stream from your investment, then a variable annuity may not be your best option. When looking at it from the investment angle, variable annuities can offer investors the opportunity for unlimited growth potential. However, along with that will also come downside risk. There are also a wide variety of fees that come with owning the variable annuity. For instance, within a variable annuity, there are mutual funds – which will typically have their own internal fees. But then the annuity itself will also charge a front-end sales charge. So in essence, you already start off with a loss. The Vision Variable Annuity also has an annual mortality and expense (M&E) risk charge of 1.40%, a six or eight-year withdrawal charge schedule (depending on the option that you choose), and a host of other fees (these will be discussed in more detail further in this review). For those who are already worried about the volatility in the stock market, the opportunity for growth in a variable annuity may not be enough to outweigh the risk of losing principal – especially if you are nearing your retirement years. The Allianz Vision Variable Annuity can offer optional protection benefits that provide certain accumulation, income, and beneficiary guarantees – however, these come at an additional cost to the annuity owner. So, if planning to move forward with this particular annuity, these additional costs should first be weighed against the annuity’s growth potential – which, with any market-related product, is never guaranteed.
Before we get into the gritty details, here are some legal disclosures…This is an independent annuity product review. This means that, while it offers information about the annuity, it does not constitute any type of recommendation to either purchase or sell an annuity. In addition, Allianz has not endorsed this review in any way – and I do not receive any compensation for offering this review. The information is solely meant to be an independent opinion so that readers can view my personal perspective when seeking out the potential advantages and/or drawbacks regarding this particular annuity, as well as how it may or may not fit into their personal portfolio.Before purchasing any type of investment or investment product, it is always important to do your own due diligence, as well as to consult with a competent and duly licensed financial professional prior to moving forward. In doing so, you will be able to more closely ensure that the investment product and/or service will fit in with your particular circumstances. All names, trademarks, and materials that have been used in this review are the sole property of their respective owners.
How Allianz Describes The Vision Variable AnnuityBased upon information from Allianz’s website, as well as from the Allianz Vision Variable Annuity Prospectus (dated April 25, 2016), the Allianz Vision Variable Annuity is described as a variable annuity that offers growth potential and a level of protection through the investment options and optional benefits that are available for an additional charge. The product’s accumulation benefit is stated as providing a level of protection for the principal that is invested, with the potential to lock in a percentage of the highest annual contract value for a specific date ten or more years in the future. The income benefit is described as offering guaranteed income for as long as the annuity holder lives, in the form of withdrawals, with access to the contract value for a period of time. Yet, while both of these might sound appealing, neither come without a cost. For example, although variable annuities may have been appealing several years ago when the market appeared more “predictable,” over the past decade or so, the volatility of the stock market has essentially provided many variable annuity holders with lower overall returns in their accounts than those of fixed annuity holders – yet with a lot more sleepless nights of enduring the unknown.
How Financial Advisors Might “Pitch” This AnnuityAlthough it is a variable annuity, the Allianz Vision product may be pitched by advisors by highlighting its protection benefits, as well as the variety of different investment options that the annuity offers. For example, with this annuity, there are more than 50 different investment options that investors can choose from, coming from a list of over ten highly respected money managers. And, if you choose an optional living benefit rider, then the allocation rules will apply and the assets in the annuity account will automatically be rebalanced each quarter. The Vision Variable Annuity also offers an accumulation benefit, which provides a certain level of protection for the principal that is invested. This essentially locks in a percentage of the investor’s highest annual contract value for a specific date ten or more years in the future. This benefit, however, also comes at an additional fee. As with other types of annuities, the Allianz Vision Variable Annuity also offers a lifetime income benefit. This can provide a guaranteed lifetime income for as long as the investor lives, with continued access to the contract value. However, for anyone who is planning to use this annuity as a source of income, it is important to consider that the income will be determined in large part by the contract’s accumulation value – and, should there be a market downturn, your income amount could be significantly impacted going forward. With that in mind, if your primary objective with this annuity is to produce income, then it may be wise to consider other products that can offer you a higher level of guaranteed income – along with greater protection from downturns in the market. This is because, even though the Vision Variable Annuity provides certain downside protection (at an additional cost), this product can still be exposed to downturns in the market – which can, in turn, result in a loss of principal (and depending on the situation, it could result in a substantial loss).
What About the Allianz Vision Annuity’s Fees?Across the board, variable annuities tend to have a reputation for charging high fees. One reason for this is because these financial vehicles include investments within the annuities themselves – which charge management fees. Then, the annuities also charge fees for management and administration, as well as if you withdraw your funds within the first few years. The Vision annuity is no different. In this case, there is a 6% fee on the front end if you go with the bonus option – meaning that you start off with a loss right away. With that in mind, you will already be “down” 6% as soon as you enter into the annuity and you will need to make up for that just to break even. There are a plethora of other fees as well. For instance, the base contract without any optional benefits will incur an annual mortality and expense risk (M&E) charge of 1.40%; the base contract with quarterly death benefit will incur an M&E charge of 1.70%, as well the base contract with the bonus option; the base contract with the bonus option and the quarterly value death benefit will incur a 2.00% annual M&E charge. In order to protect the investment value (as a percentage of the target value), there is a rider charge of between 1.30% and 2.50%. And, the income protector charge will range between 1.40% and 2.50% for single lifetime payments, and 1.40% and 2.75% for joint lifetime payments. In addition, the annuity also has an annual operating expense of between 0.49% and 1.86%. Like most annuities, the Allianz Vision includes a surrender charge. For those who own the Base Contract, these charges run for six years and grade down from 8.5%. If you opt for the Bonus Option, surrender charges also start at 8.5% and run for eight years. So, while the Allianz Vision Variable Annuity can offer you a lot of choices in terms of investment options, the reality is that it can also cost a lot in fees to own this annuity – for not much in terms of guarantees. In other words, you could likely go out and find similar investment options and cut out the middle man – and the additional fees.
The Annuity Gator’s End Take on the Allianz Vision Variable AnnuityWhere it works best:
- When considering the Allianz Vision Variable Annuity, it can generally work best in situations where an investor wants to be invested in a variety of different options, but still, wants to have at least some downside protection from market downturns. This is because the Vision Variable Annuity offers 50+ different investment options, along with a certain amount of downside protection – at an added cost.
- It can also be good for those who may have already “maxed out” their employer-sponsored retirement plan and/or IRA account, and still wants to obtain tax-deferred savings/investment options.
- This annuity can also be a good choice for those investors who want to be sure that they will not outlive their income in retirement. This is because it offers a guaranteed lifetime income option.
- However, it is important to be aware that because this annuity has surrender charges (either six years or eight years, depending on the option that is chosen), the Allianz Vision Variable Annuity should be considered as a long-term financial investment.
- In addition, this annuity also offers an optional death benefit. This means that a named beneficiary can receive the remaining funds from the annuity (minus any fees or withdrawals). This can help the investor to leave a legacy to their heirs.
- For those who are not planning on using the annuity’s income benefit, then this product can be an expensive way to simply invest in equities. With this in mind, there are likely other more suitable alternatives to go with that can offer lower fees when investing in equities that can provide the same or similar opportunity for growth.
- It is also important to keep in mind that variable annuities are not very suitable when it comes to offering retirement income. This is because of the potential volatility of their accumulation account. Given that, if income is the primary goal, then there may be other, more suitable products for this.
Ferdinand Augustus Anderson
I have an Allianz High Five deferred variable annuity that I got about ten years ago. The contract value is now twice the purchase price. I want it for possible income in the later years of retirement and for life insurance. What do you think? I have substantial other assets.
Hi Ferdinand – Thank you for your message. It sounds like the High Five annuity from Allianz has done well. You could consider it for future income. However, everything really depends on your anticipated income needs, time frame for retirement, and other assets. We would be happy to chat with you regarding your options. Please feel free to contact us directly at 888-440-2468. You could also set up a time to talk by going to our secure online contact form at http://annuitygator.com/contact/. We look forward to talking with you. Best! Annuity Gator