Independent Review of the American Equity Investment Life RateShield 10+ Fixed Annuity with IncomeShield Rider
What’s Covered In This Review
In this review, we’ll cover the following information on the American Equity Investment Life RateShield 10+ Fixed Annuity with IncomeShield Rider:
- 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.
If you are thinking about the purchase of a financial vehicle that can provide you with a guaranteed rate of growth and protection of principal, along with a lifetime income in retirement, then the American Equity Investment Life RateShield 10+ Fixed Annuity with IncomeShield Rider could be a good option for you.
That’s because, with a fixed annuity, you get a set amount of growth in your account – along with protection of your principal – even in the event of a market downturn. These annuities can also offer you a lifetime income option so that you can rid yourself of the worry that you’ll run out of income in retirement.
However, prior to running out and signing on the dotted line to buy this – or any other – annuity, it is imperative that you first have a good understanding of just exactly how the product works, as well as how it may or may not fit in with your overall financial needs and goals.
Over the past few years, the purchase of fixed annuities has increased dramatically. One reason for this is because of the many benefits these vehicles can offer during their “accumulation” period, as well as when the time comes to convert the annuity to an income stream.
Yet, due to the increased demand for annuities these days, there have been many insurance carriers that are coming up with new products that provide a long list of features and benefits on them. Sadly, this can make a product that is already fairly confusing even more so. This is the case for both consumers and many insurance / financial advisors alike.
With that in mind, unless your current insurance or financial representative has a primary focus on annuities, you might want to spend some time learning more about how these financial vehicles work – especially as you could be placing a substantial portion of your hard earned savings into it.
You could also just keep reading on right here, as this annuity review will point out to you not just the good but also the bad and the ugly. This is because we feel that knowing the entire story about financial products is really the only way to make a good decision on one.
Annuity and Retirement Income Planning Information You Can Actually Trust
If this is the first time that you’ve visited the AnnuityGator.com website, please allow us to officially welcome you here. At Annuity Gator, we make up a team of annuity experts who focus on providing highly comprehensive, yet unbiased, annuity reviews. We have been doing this for many years now – far longer than our competitors have – and because of that, we’ve become a trusted source of annuity information.
Recently, though, there have been numerous “copycat” websites that have been popping up all over the Internet. And, while some of these may be able to give you some basic information regarding annuities, what you are likely going to find is that these sites are often just simply reiterating what our information here already shows.
If you have spent time on the Internet seeking more annuity information, it is probable that you have run across some highly conflicting details about these products. This is not really all that surprising though, as there is a myriad of different options about them.
It is also possible that you have attended a seminar about annuities where, in return for a dinner or a lunch, the presenter offered you information about the American Equity Investment Life RateShield 10 Plus or some other similar annuity.
It may even have been your attendance at that seminar that has led you here to our website in search of additional information. Likewise, in your quest for information about annuities via the Internet, you may also have seen some annuity marketing websites that focus on luring visitors in for the purpose of obtaining their contact details. These sites will oftentimes do so by making some fairly bold claims about the annuities they offer, such as:
- High Annuity Income Payouts
- Guaranteed Income for Life
- Top-Rated Annuity Carriers
- Low Fees
Does this look at all familiar?
Unfortunately, as nice as these claims may sound, it is absolutely essential that you first verify their validity before you move forward with a long-term financial commitment, just like you would likely do before purchasing any other type of “high ticket” item.
The good news is that, if you are in fact looking for more details about the American Equity Investment Life RateShield 10+ fixed annuity, then you are definitely in the right place. In fact, dare we say that this website is the only place online where you will find all of the pertinent details that you require for making a well-informed decision about whether this annuity is right for you (or if you should instead move on to something else).
Just to be clear here before we move on – we do want to state that we fully believe that annuities can be wonderful products for some people, provided that they fit in with both your short- and your long-term financial goals.
So, if you are ready to begin this annuity review, let’s go ahead and dive in!
American Equity Investment Life RateShield 10+ Fixed Annuity at a Glance
|Product Name||RateShield 10+|
|Issuer||American Equity Investment Life|
|Type of Product||Fixed Annuity|
|Phone Number||(888) 221-1234|
Opening Thoughts on the American Equity Investment Life RateShield 10+ Annuity
American Equity Investment Life is considered to be a specialist in the area of annuities. The company was founded in 1995, and while that may not seem like a very long time as compared to other insurance companies, this insurer has definitely made its mark in the annuity arena – especially fixed and fixed indexed annuities.
The company is strong and stable from a financial perspective, and it has earned high ratings from the insurer rating agencies, including an A- (Excellent) from A.M. Best Company, and an A- from Standard & Poor’s.
Over the past few years, fixed annuities in have become much more popular with investors. One of the key reasons for this is because these products can provide the opportunity for a guaranteed rate of growth, while also keeping the account value safe and sound, no matter what occurs in the stock market. And, like other types of annuities, a fixed annuity will also be able to pay out a lifetime income in retirement so that you don’t have to worry about your income stream running out. In this case, you can count on a specific amount of income in the future.
However, while this may sound like a win-win-win scenario, the truth is that whenever something sounds too good to be true, it very well may be. In any case, it can be beneficial to at least check the information further, in order to ensure that you know all of the advantages, as well as any potential drawbacks.
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 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 out 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 Investment Life Describes the RateShield 10+ Annuity
American Equity Investment Life describes the RateShield 10+ annuity as a “fixed annuity designed to help generate a guaranteed income source through an established rate while protecting hard-earned dollars.”
The RateShield annuity includes a premium bonus feature that is based on the premium payments received in the first year. Here, the premium bonus will be applied to the annuity’s contract value immediately, and then it vests over time. This can help to provide a proverbial “jump start” for the annuity’s contract value, and in turn, increase interest growth over time as well.
Also, the “vested” amount of the premium bonus is guaranteed, and it can’t be forfeited as a result of an early partial withdrawal or a surrender. Also, in the event of the annuitant’s death, 100% of the premium bonus is immediately vested and the beneficiary will receive the entire amount of the contract value – including the premium bonus amount.
There are also some additional features on this annuity, including a death benefit, a nursing care rider, and a terminal illness rider. With the death benefit rider, the contract’s proceeds will be paid out to a named beneficiary (or beneficiaries), without the worry of surrender charges.
The nursing home rider allows for 100% penalty-free withdrawals if the annuitant is confined to a qualified nursing care center, and likewise, 100% penalty-free withdrawals can also occur if the annuitant is diagnosed with a terminal illness. (Note that for these benefits to be available, the annuitant must first meet certain parameters).
As with other fixed annuities, the American Equity Investment Life RateShield 10+ provides the opportunity to get guaranteed income for life. And, for those who wish to secure a revenue stream that cannot be outlived, American Equity Investment Life also offers an optional IncomeShield rider that provides flexible income payments through a guaranteed income source. Here, the annuity and the income rider work in conjunction with one another to provide a lifetime of benefits.
According to the company brochure, this rider offers “a set IAV rate, which is declared at issue and guaranteed for 20 years.” The company states that this IAV rate is 8.5% simple interest. The income payments are allowed to begin at any time after the first contract anniversary of the annuity, and either single life or joint life may be chosen.
How a Financial Advisor Might Pitch this Product
With the RateShield 10+ being a fixed annuity, it is likely that a financial or insurance advisor will pitch this using the safety of principal feature, as well as the lifetime income benefit that this annuity can provide.
With so much volatility in the market today, guarantees can be comforting – especially for those who are at or nearing retirement (and even more so if market losses are still fresh in your mind from the 2008 economic and market downturn).
But as with most anything else in life, in order to get something, you need to give something – and this holds true for the RateShield 10+ annuity from American Equity Investment Life. For example, first off, returns that are offered on fixed annuities today are extremely low. So, your chances of meeting – much less beating – future inflation are extremely small. This means that you may not be able to keep up your purchasing power with the rising cost of goods and services, which could make it quite difficult to buy the things you need in the future.
Also, even though the annuitant is allowed to keep the vested portion of the premium bonus upon surrender, it can take a while for 100% of that bonus to become vested. In fact, all of it won’t be 100% vested until after the 11th year.
There are also some stipulations that you’ll need to meet in order to take advantage of the additional features such as the nursing care and/or the terminal illness riders. In this case, the annuitant must have surpassed the third contract anniversary, and have been in a skilled nursing facility for at least 90 days, before being able to access the 100% penalty-free withdrawals. (If nursing home confinement occurs in the second or the third contract year, the penalty-free withdrawal amount is only 20% of the annuity’s contract value as versus 100%). Likewise, the annuity must be beyond its first contract year in order to take advantage of the penalty-free withdrawals that are associated with the terminal illness rider.
In addition, when it comes to the additional IncomeShield rider, any partial withdrawals that are taken from the annuity’s contract value after income payments have started will be considered excess withdrawals, and in turn, will reduce the future income payment amounts on a pro-rata basis. For example, an additional withdrawal of 5% of the contract value will reduce your future income payments by 5%. And, if an excess withdrawal plus income payment exceeds the free withdrawal amount that is allowed in any contract year, then withdrawal/surrender charges will be applied.
Taking it one step further, if excess withdrawals reduce the contract value to zero, the IAV will also be reduced to zero – and the IncomeShield rider will be considered to be surrendered, and the contract and the rider will both end. With that in mind, this annuity that was likely purchased for income purposes may or may not actually be around for the remainder of your life, depending on how you structure your income payouts in the early years.
Premium Bonus Vesting Schedule
Fees Associated with the RateShield 10+ Fixed Annuity from American Equity
There are also some fees to look out for with the RateShield 10+ annuity from American Equity Investment Life. One area is the long-lasting (ten years) surrender period, which starts with a withdrawal charge that is in excess of 9%.
With this in mind, it is always important to consider that annuities are long-term financial commitments. So, be sure that if you are leaning towards purchasing one, that you do so with money that you won’t likely need in the near future.
In addition, if you opt to add the IncomeShield rider to the annuity, you’ll incur an additional fee of 1% of the contract value each year. This, then, can actually impact returns, and in turn, the amount that you ultimately receive as income in the future.
The Annuity Gator’s End Take on the American Equity Investment Life RateShield 10+ Annuity
Where it works the best:
As a fixed annuity, the RateShield 10+ can work well for those who are seeking the following benefits:
- The opportunity for a set amount of return
- Protection of principal, regardless of what happens in the stock market
- Guaranteed lifetime income benefits (for an individual, or an individual and a joint income recipient)
Where it works the worst:
It is also important to consider the potential drawbacks of this annuity. This particular product will not likely be a good option if you:
- Don’t want your potential return to be held back by a cap
- Need access to more than just 10% of your contract value within the first ten years of owning the annuity
- Do not plan on utilizing the lifetime income benefits
There can be a long list of factors to consider if you are looking for the ideal annuity for your short- and long-term financial goals. These criteria should include how the annuity earns a return, as well as what you plan to do with it when you are ready to convert the contract to an income stream. Certainly, any additional fees and charges should also be considered, as these can have an effect on how much you are able to earn, and in turn, the amount of income you may receive.
If you are still considering the American Equity Investment Life RateShield 10+ fixed annuity, then you are definitely be assured that your money will be safe – regardless of what happens in the market. In addition, there is also the plus of having an ongoing income in retirement, for as long as you may need it.
Yet, even with all of these nice advantages, the American Equity Investment Life RateShield 10+ fixed annuity may still fall somewhat short, and there could quite frankly be some better options out there for you. The only way to really be able to tell how this product could perform based on your specific situation is to have it tested.
We can help you with this by running the appropriate figures through our annuity calculator and then coming up with a personalized spreadsheet for you. If you are interested in obtaining this information, then just simply contact us through our secure online form here.
Have Any Additional Questions? Did You Happen to See Any Mistakes in this Annuity Review?
We realize that this annuity review was a bit on the long side. So for that, we thank you for staying with us thus far. Our feeling is, though, that we would much rather provide you with “too much” detail than not nearly enough. So, if you found this annuity review to be helpful, please feel free to pass it along and forward it to anybody else who you think may also benefit from it.
Are there any other annuities that 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.
The Annuity Gator