What Will We Be Covering in this Annuity Review?In this review, we will be covering the following details on the Variable Annuity Life Power Index Elite fixed indexed annuity:
- Type of product
- 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.If you’ve been considering the purchase of a financial product that can provide you with principal protection, as well as the opportunity for increased returns – along with one that can provide you with a lifetime stream of income in the future – then the Variable Annuity Life Power Index Elite fixed indexed annuity could be a viable option for you. But, before you go out and plunk down what could be a significant portion of your retirement savings into this contract, it can really be beneficial for you to first obtain a more in-depth understanding of how this annuity may (or may not) fit in with your overall financial goals and needs. Throughout the past several years, annuities have become much more popular with investors as a way of getting a guaranteed, ongoing income stream in retirement – particularly because stock market performance can be so unreliable. Yet, this may not necessarily be a good thing because, even though most financial advisors work hard to do what is right for their clients, some of these sales agents may not be providing the best or most knowledgeable advice regarding these products. Plus, because of annuities’ rise in popularity with investors, there are many insurance companies that have expanded their product lines with products that feature a lot of “bells and whistles.” So, this has had the effect of making these products – which are already somewhat confusing – even more, difficult to understand…even for well-educated consumers. As a result, it’s important that you know just exactly what it is that you are getting into, as locking yourself into one of these products and then trying to get out at a later time could cost you in “surrender” penalties.
Annuity and Retirement Income Planning Information That You Can Be TrustedIf this is the first time that you have come to our website, then please allow us personally to welcome you here to AnnuityGator.com. We are a team of experienced financial experts who are focused on providing the most comprehensive, and unbiased, reviews of annuities. We’ve been at this for many years – much longer than our competitors, and so we have become a well-known and trusted source of annuity information. With that in mind, if you’ve been in the process of looking for more information about annuities via the Internet, then it’s a good possibility that you have noticed there’s a lot of conflicting information out there about these products. This, however, isn’t really a surprise, because there is also a great deal of confusion about how they work, and which type may be best for certain circumstances. It’s possible that you may also have attended an annuity seminar or workshop recently where, in return for a free dinner or lunch, you were provided with details about the Variable Annuity Life Power Index Elite fixed indexed annuity, or some other similar product. Your attending this annuity event may even be the catalyst that has ultimately led you right here to our website. But even though there are a plethora of websites that market their annuities to consumers, there are a fair number of these sites that will attempt to “lure” you in by making very enticing claims like:
- High-income payments
- Lowest annuity fees
- Guaranteed lifetime income
- 7 – 8% Rate of Return
The Variable Annuity Life Power Index Elite Fixed Indexed Annuity at a Glance
|Product Name||Power Index Elite|
|Issuer||Variable Annuity Life Insurance Company (VALIC)|
|Type of Product||Fixed Indexed Annuity|
|S&P Rating||A+ (Strong)|
|Phone Number||(800) 448-2542|
Opening Thoughts on the VALIC Power Index EliteWith more than six decades in the insurance and annuity arena, the Variable Annuity Life Insurance Company – also referred to simply as VALIC – has helped millions of people to plan and save for their futures. If fact, VALIC is well-known for being a pioneer and a leader in the industry in terms of both marketing and administering tax-favored retirement programs – and because of their success, VALIC has earned numerous awards and accolades, including being recognized as exemplary by DALBAR for the company’s communication efforts regarding the Department of Labor’s Fiduciary Rule, and being a recipient of the Insured Retirement Institute’s 2017 Marketing Innovation Award. The company has earned high ratings from all of the major insurer rating agencies, including a(n):
- A+ (Strong) from Standard & Poor’s
- A2 (Good) from Moody’s
- A (Excellent) from A.M. Best Company
- A+ (Strong) from Fitch
Before we get into the gritty details, here are some legal disclosures…This is an independent product review, not a recommendation to buy or sell an annuity. The Variable Annuity Life Insurance Company (VALIC) 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 information on how to compare annuities in order to determine which one may be right for you, click here to obtain our free annuity report.
How VALIC Describes the Power Index Elite Fixed Indexed AnnuityVALIC describes its Power Index Annuity products as single premium, index-linked fixed annuities which can offer you the chance to earn better returns than a traditional fixed annuity when equity values are increasing, yet without the risk that is typically associated with investing in the stock market. With this annuity, any of the interest that is earned each policy year will be locked in – which can protect each years’ gains from future index losses. In addition, by linking your interest earnings to an external stock-price index that is subject to the interest rate cap, you have the potential to outpace the rate of inflation. This, in turn, can help you to keep up your future purchasing power so that you can continue to purchase the items and services that you need in retirement. In addition, because people are (on average) living longer lifespans today, one of the key concerns on the minds of many retirees (as well as those who are planning for retirement) is that of outliving their income. But with the VALIC Power Index Elite fixed indexed annuity, if you choose the lifetime income payout option, you will receive a stream of income for the remainder of your lifetime – regardless of how long that may be. This can help to alleviate the concern about running out of income at a time when you may need it the most. This annuity also has some additional features such as a death benefit, which can provide income payments to a named beneficiary should the annuitant pass away. This death benefit can help to avoid the costs and the time delays that are oftentimes associated with the probate process. There is also the ability to waive early withdrawal/surrender charges if you need to reside in a nursing home and/or if you have been diagnosed with a terminal illness. You can find more detailed information on VALIC’s Power Index Annuities by going to the company’s brochure HERE.
How an Insurance or Financial Advisor Might “Pitch” this AnnuityIf you were offered the Variable Annuity Life Power Index Elite fixed indexed annuity by a commissioned financial or insurance advisor, then it is likely that he or she placed a key focus on the positive features about this annuity. These include the opportunity for index-linked growth, the safety of principal, and its ability to provide a stream of lifetime income in the future. But, they may or may not have placed a focus on items that could be considered potential drawbacks. For example, even though some indexed annuities in some cases may be able to provide a higher return than other “safe” alternatives like CDs or money market accounts, it is more likely – especially in our current low interest rate environment, that even the money that is in an indexed annuity will provide a return that’s closer to 2 or 3%. Case in point, the information in the product brochure even states that “the annuity’s interest rate cap places a maximum limit on the amount of growth applied to the annuity each year regardless of the performance of the index. With that, no additional interest is credited if the change in the index exceeds the interest rate cap.” What exactly does this mean? Well for starters, it means that even if the underlying index returns 10 or 15% (or more) if the stated cap on the annuity is only 3 or 4%, then your return will be capped at that lower amount. Given this, it doesn’t really sound like you’ll be gaining an annual 7 or 8 percent return now, does it? Plus, while the interest rate cap is guaranteed for the first year of ownership of this annuity, on each of the subsequent anniversaries, a new interest rate cap will be declared, which will then apply during the next contract year. This doesn’t really sound the same as some of the annuity marketing websites! Plus, there are various fees that could also hinder how much money you come out with, depending on what you decide to do with this annuity.
What About the Fees on the VALIC Power Index Elite Annuity?It can be extremely difficult today to find any type of financial or insurance product that doesn’t charge at least some fees in order to put your money to work. The Variable Annuity Life Power Index Elite fixed indexed annuity is no different. In this case, many of the optional features on the annuity will cost an additional amount of premium. For example, the early withdrawal charge waivers for a nursing home stay and/or a terminal illness. As with most other annuities, the VALIC Power Index Elite annuity will also charge a surrender fee if you withdraw more than 10% of the annuity’s contract value within the surrender period. The amount and duration of these charges will be dependent on what you choose – either a 7-year or a 9-year early withdrawal period. (The shorter 7-year period will be offset by a lower potential for earning interest on your money in this annuity).
7-Year Withdrawal Charge Period
9-Year Withdrawal Charge Period
The Annuity Gator’s End Take on the VALIC Power Index Elite Fixed Indexed AnnuityWhere it works the best: As an index-linked deferred fixed annuity, the VALIC Power Index Elite annuity could be a good fit for those who:
- Have taken early retirement and received a lump sum distribution
- Want to lock in their stock market profits from other investment vehicles
- Are concerned about protecting their principal
- Want the ability to earn a higher return than that of a regular fixed annuity
- Want to count on a future income that cannot be outlived
- Want access to more than 10% of your contract value within the first several years (depending on the length of the interest rate guarantee/surrender charge chosen)
- Do not plan to use the guaranteed lifetime income feature