What’s Covered In This ReviewIn this annuity review, we will be going over the details regarding the American General Life Insurance Company’s Power 10 Protector fixed indexed annuity, such as:
- Product type
- Current rates
- Realistic long-term return 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.
It’s no secret that today, people are living much longer life spans than we have in the past. Yet, while a nice long life can be positive in a number of ways, it also means that you will need enough income to support your everyday living expenses – as well as other items like travel and fun – for a longer period of time. For this reason, many people have turned to annuities. An annuity can provide a set amount of ongoing income in retirement, so it can alleviate the worry about running out of money before “running out of time.” But, before running out and purchasing an annuity, it is essential that you know how these products work, as well as how an annuity may – or may not – end up working for you and your specific long-term financial goals. Over the past several years, fixed indexed annuities have become quite popular – particularly with those who are seeking higher returns than what a regular fixed annuity can provide, yet who also want the principal protection of their hard-earned savings. Fixed indexed annuities can provide all of this – as well as a guaranteed lifetime income in retirement. However, because these types of annuities have become so in demand lately, many insurance carriers have expanded their product lines and have added all kinds of “bells and whistles” to them. And, while this can be beneficial in many ways, it can also make an already confusing product even more so – and, many of these product add-ons will cost you an additional amount of premium, in turn, negatively impacting the ultimate benefit that you may end up with. Even though this might not be a bad thing in all instances, it is still really important that you at least now the “inner workings” of the annuity (or annuities) you’re considering, as well as what the annuity could cost you. That way, you can be in a better position to determine whether you want to move forward.
Annuity and Retirement Income Planning Information You Can TrustIf this is the first time that you have been to our website, then please allow us to formally welcome you to Annuity Gator. We make up a team of annuity pros who have a key focus on offering very comprehensive – yet unbiased – annuity reviews. We’ve been at this for quite some time now – much longer than most of our competitors have – and because of that, we’ve come to be known as a trusted source of annuity information online (as versus the many “copycat” websites that are also vying for your attention). If you have been doing any amount of research about annuities via the Internet, it is likely that you have come across some highly conflicting details about these financial vehicles. This really is not all that surprising, though, as there are a lot of annuities available in the market today, and there are many opinions, both positive and negative, about them. It could also be that you have recently attended an annuity seminar where the presenter gave you a free lunch or dinner, and during your mean, he or she provided information about the American General Life Insurance Company’s Power 10 Protector fixed indexed annuity or some other similar annuity product. However, although there are many websites out there that are focused on providing annuity details, many of these are much more interested in “luring” you in by stating some pretty bold claims, such as having the lowest fees, and/or providing the highest annuity income payouts. As enticing as these claims might be, the reality is that prior to you making a commitment on an annuity, it is important for you to find out whether or not these claims are really true, just as you would do prior to purchasing any other high-dollar item. This is where the Annuity Gator comes in! If your intent is to learn more about the Power 10 Protector fixed indexed annuity from American General Life Insurance Company, then you are in the right place. In fact, we dare state that our website is the only place online where you can find all of the in-depth details about this annuity – which includes the good, and the bad. That’s because we feel that knowing the whole story about an annuity is the only way for consumers to make a truly well-informed decision about whether or not it is the right product for them. Oftentimes, when a financial or insurance advisor is presenting a fixed indexed annuity to his or her clients, they will provide a nice rosy picture of how the annuity can offer the best of all world, meaning that the product has the ability to offer a nice return, along with safety of principal – as well as income for life. But in doing so, the advisor may neglect to provide details about areas that could be considered drawbacks. With that in mind, if you are seriously thinking about purchasing the Power 10 Protector annuity, you need to know exactly what you are getting into. One of the key reasons for this is because getting out of an annuity can be somewhat difficult. It can also be quite costly, as you will typically incur early withdrawal fees. Just to be perfectly clear here, we do want it to be known that we believe annuities are good financial tools for many investors – but this is the case only if the annuity fits in well with your short- and long-term financial goals. So, if you are ready to begin this review, let’s dive in!
The American General Life Insurance Company Power 10 Protector Fixed Indexed Annuity at a Glance
|Power 10 Protector
|Type of Product
|Fixed Indexed Annuity
Opening Thoughts on the American General Power 10 Protector Fixed Indexed AnnuityAmerican General Life Insurance Company has been offering its products for more than 160 years. The company has a mission of being the premier provider of protection, investment, and income solutions that are needed for both financial and retirement security. Today, the company is a part of AIG. As of year-end 2017, AIG held total assets of more than $208 billion. The company serves in excess of 10 million customers around the globe. Considered strong and stable financially, AIG has very high ratings from the insurer rating agencies, including an A+ from S&P, an A2 from Moody’s, an A from A.M. Best, and an A+ from Fitch Ratings. Due in large part to the volatility in the stock market, the demand for fixed indexed annuities over the past few years has risen substantially, as these products allow their owners a way to secure a positive return in good times and to hang on to their principal value during market downturns. But it is essential to know all of the in-depth details about a fixed indexed annuity you are considering before you move ahead with depositing a large chunk of your money into one – as it can be difficult, and costly, for you to get out if you later realize that it really isn’t the best option for you.
Before we get into the gritty details, here are some legal disclosures we need to provide…This is an independent product review, not a recommendation to buy or sell an annuity. American General has not endorsed this review in any way, nor do we receive any type of compensation for providing this review. This review is meant to be an independent review at the request of readers so that they may see our perspective when breaking down the positives and negatives of this particular annuity. Prior to purchasing any type of investment or insurance 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 circumstances. All names, marks, and materials that were used for this review are the property of their respective owners. For more details on how you can compare annuities so that you can determine which one may be right for you, click here to instantly download our free annuity report.
How American General Describes the Power 10 Protector AnnuityAccording to the product brochure, the Power 10 Protector index annuity offers “a valuable combination of growth potential, tax deferral and principal protection from market downturns. This blend of accumulation and protection features may be the solution to achieving the retirement you envision.” As a fixed indexed annuity, this product can provide both accumulation and income. For instance, in exchange for your premium payment(s), the annuity provides you with the opportunity to earn interest that is based in part on the performance of an underlying market index (such as the S&P 500), and/or based on a fixed rate. There are actually five different interest crediting options that can help you to grow your money. These include: As with other annuities, your money will accumulate in the annuity tax-deferred. This means that you can potentially earn interest in three different ways: 1) by earning interest on your principal, 2) by earning interest on the interest that is credited to your account, and 3) by earning interest on money that would otherwise have gone to pay taxes. When you need income in the future, the annuity – backed by American General – can make regular payments to you. These payments can last for a certain amount of time, such as 10 years, or even for the remainder of your lifetime, regardless of how long that may be. In addition, the Power 10 Protector fixed indexed annuity will offer your principal protection – even in the event of a market downturn. So, there is no need to worry about losing your hard-earned savings. There are some other features included with the Power 10 Protector. For instance, death benefit proceeds can pass directly to a designated beneficiary (or beneficiaries), without having to go through probate. In this case, the beneficiary will receive the greater of the contract value – including applicable interest – or the minimum withdrawal value, upon death. To read more of the in-depth details regarding the American General Life Insurance Company Power 10 Protector annuity, check out the product guide HERE.
How an Insurance Agent Might Pitch this Annuity to Clients and ProspectsGiven that those who are approaching retirement are concerned with both growing and protecting their savings, an insurance or financial services professional who is presenting the American General Power 10 Protector fixed indexed annuity will likely highlight this product’s “best of all worlds” capabilities. As an extra added bonus, this product can also help to ensure an ongoing income in retirement. But if you are considering moving forward with this financial vehicle, then you really need to make sure that you take a good look at all of the “fine print,” so that you know what some of the “tradeoffs” are that you might have to make. Here, for example, it is absolutely crucial that you have an understanding of terms like “cap” and “spread” because these can have an impact on the actual return you end up with every year. For instance, the Power 10 Protector uses both caps and spread. A “cap” is the maximum percentage of the underlying index’s performance that will be credited over a given time frame. So, if the index performance is 6%, and the index rate cap on the annuity is 4%, then you would only be credited with 4% interest. With that in mind, a low cat could limit your upside potential. The spread is the minimum percentage or threshold that the index’s performance must exceed in order to even be credited with the interest. So, hypothetically, if the spread is 3%, and the performance of the underlying index was 7% for a given time period, then the interest credited to the account would be 4%. There may also be a “participation rate” associated with this annuity. The participation rate is defined as the percentage of the year-to-year index return that is used to calculate the interest. So, for example, if the participation rate on the annuity is 80%, it means that you would really only be credited with 80% of the index’s return for a given time period. Also, even though American General (and most other annuity carriers) touts that their annuity is “liquid,” the reality is that you are only really allowed to withdraw up to 10% of the contract’s value penalty-free during the first ten years of purchasing the annuity. Otherwise, you could incur a surrender charge – and, if you make such withdrawals before you turn age 59 1/2, you could also run into an additional 10% “early withdrawal” penalty from the IRS. With that in mind, it is really important to understand that the purchase of an annuity should always be considered as a long-term financial commitment and that the dollars you put into an annuity should not also be earmarked for emergencies or other short-term needs.
What About the Fees on this AnnuityJust like with most other annuities in the market, there are certain fees that you need to be mindful of with regard to the American General Life Insurance Company’s Power 10 Protector product…one of the biggest of which is the surrender penalty. As mentioned previously, if you withdraw more than 10% of the annuity’s value within the surrender period – which in this case is an entire decade – then you will be hit with a surrender penalty. These start at 10% in Year 1, and gradually grade downward as follows:
The Annuity Gator’s End Take on the American General Life Insurance Company’s Power 10 Protector Fixed Indexed AnnuityWhere it works the best: This annuity could work for you if you are looking for:
- Safety of your principal – regardless of what occurs in the stock market
- The opportunity for index-linked growth, as versus just a set (low) rate of return
- Guaranteed lifetime income in retirement
- Want penalty-free access to most or all of your money within the first ten full years of purchasing the annuity
- Do not intend to use the lifetime income feature of the annuity
In SummaryThere are many different factors that you should consider prior to making a long-term commitment to purchasing an annuity. For instance, in addition to knowing that it can be costly to change your mind once you have purchased it, you should also consider why you may be choosing one fixed indexed annuity over a long list of other products that may also suit your particular financial needs. In terms of the American General Life Insurance Company’s Power 10 Protector, you can be sure that the principal you have in the account is safe, regardless of what happens in the market – or even in the economy overall. You can also be sure that you will have an income in retirement for as long as you (and your spouse, if applicable) need it. However, that being said, this annuity could also fall somewhat short – and there could be some other, better alternatives that are available to you. Even so, though, the only way to really know whether or not this annuity is right for you is to have it tested. We can assist you with that – at no charge or obligation – by running it through our annuity calculator, using your particular financial figures. If this is something that would be of interest to you, then please contact us.
Do You Have Any Additional Questions About the Power 10 Protector from American General? Did You Happen to Notice Any Mistakes in this Review?We realize that this annuity review was a tad lengthy. So we want to thank you for sticking with us through to the end here. But, when we provide our annuity reviews, we would much rather provide our readers with “too much” information about an annuity than not provide enough. With that in mind, if you found that this annuity review was beneficial to you, then please feel free to pass it along and forward it to anybody else who you think may also benefit from it. Likewise, if this review caused you to have even more questions, then please let us know that, too! Are there any other annuities you would like us to review? No problem! Just let us know the name of the annuity (or annuities), and our team of highly trained annuity “geeks” will get on it. Then, be sure to check back soon to AnnuityGator.com to view the new (and updated) reviews. Best, The Annuity Gator P.S If you would like to read more of our AIG annuity reviews here are some links to check out:
- AIG – Polaris Choice IV Variable Annuity
- AIG – Polaris Platinum III Variable Annuity
- AIG – Power Index Plus Annuity
- AIG – Power Index Plus Income Annuity
- AIG – American Pathway 7 Fixed Annuity
- AIG – Choice Index 10 Annuity
- AIG – American Pathway 5 Fixed Annuity
- AIG – Assured Edge Income Builder Fixed Annuity
- AIG – American Pathway Solutions MYG Fixed Annuity
- AIG – American General Power Advantage 10 Fixed Index Annuity
- AIG – American General Power Select Fixed Index Annuity
- AIG – American General Life Insurance Company QLAC
- AIG – American Pathway Annuity
- AIG – Pathway SolutionsMYG Annuity
- AIG – American General Power Select Plus Income Annuity – April 2018 Update