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Allianz Annuities Review

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Allianz Life Insurance Company has its hands in many different sects of the retirement sphere, including annuities. The company originated in Berlin in 1890 but has grown to a worldwide enterprise since then, with offerings in more than 50 nations around the globe. In the U.S., its life insurance and annuity business is centrally located in Minneapolis, Minnesota.

Annuity Fees Annuity Type Minimum Initial Premium More Information
Allianz 222® Annuity Find an Advisor

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  • No annual fees
Fixed indexed annuity $20,000

Annuity Type

Fixed indexed annuity

Minimum Initial Premium

$20,000
Core Income 7® Annuity Find an Advisor

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  • No annual fees
  • 1.05% rider charge
Fixed indexed annuity $10,000

Annuity Type

Fixed indexed annuity

Minimum Initial Premium

$10,000
Allianz Vision Variable Annuity Find an Advisor

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  • $50 annual contract maintenance charge
  • 1.4% - 2% mortality and expense risk charge
  • 0.48% - 1.85% investment option annual fee
  • Various optional benefit fees
Variable annuity $10,000

Annuity Type

Variable annuity

Minimum Initial Premium

$10,000
Allianz Connections Variable Annuity Find an Advisor

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  • $50 annual contract maintenance charge
  • 1.15% - 1.45% mortality and expense risk charge
  • 0.48% - 1.85% investment option annual fee
  • Various optional benefit fees
Variable annuity $10,000

Annuity Type

Variable annuity

Minimum Initial Premium

$10,000
Allianz Index Advantage® Variable Annuity Find an Advisor

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  • 1.25% annual product fee
  • $50 annual contract maintenance charge
  • 0.67% - 0.87% variable option annual fee
  • 0.2% death benefit rider fee
Index variable annuity $10,000

Annuity Type

Index variable annuity

Minimum Initial Premium

$10,000

Many prospective customers may find it hard to trust an annuity firm, but the industry has put in place guidelines to evaluate these companies. Standard and Poor’s (S&P), Moody’s and A.M. Best are three such authorities, and each member of the trio has rated Allianz within the top 25% of their rankings.

Allianz 222® Annuity

The Allianz 222® Annuity is a fixed indexed annuity that offers tax-deferred growth and a maximum issue age of 80. This is great for those interested in saving for retirement as it allows as much appreciation as possible before income taxes are taken out upon withdrawals. Other than this, the main draw of this contract is a set of two bonuses: one you can earn during your retirement saving phase and another once you begin receiving payments.

These are attributed to your account’s protected income value (PIC), which can only be earned once you’ve been a contract holder for longer than 10 years. The first bonus affords customers a 22% boost to any premium payments that are made within the opening year of the contract’s life. On the other hand, the second could provide even more financial gain with a 50% bonus on any interest your indexed assets earn.

For a fixed indexed annuity, the types of indexes and styles of asset allocations that customers are offered is integral to how beneficial it can be in the long run. For this contract, there are four main options that include the S&P 500® Index, the Nasdaq-100® Index, the Russell 2000® Index and other notable choices.

Fees

Like most fixed indexed annuities, the Allianz 222® Annuity has essentially no fees. However, there is a 10-year window when any withdrawals past the 10% fee-free amount are accompanied by excess charges. Every year after the first three years, these fees will decline. They open at 10%, and starting the fourth year onward, move to 8.75%, 7.50%, 6.25%, 5.00%, 3.75%, 2.50% and 1.25%. Once you reach the 11th anniversary of your contract, you’ll be able to make any size withdrawal for free.

Unfortunately for most annuitants, a federal income tax is unavoidable when it comes to annuity distributions. To avoid higher charges you can wait until you are older than 59.5 to begin taking withdrawals from your account. If you cannot wait for that time to come, the IRS may impose a 10% tax hike on any money you take out.

Realistic Return Expectations

As things currently stand with this annuity, its fixed interest rate is 1.90%. When it comes to your PIV bonus and interest bonus, respectively, it offers 22% and 50% rates. You can only count on these percentages for a year at a time though, as Allianz reserves the right to alter them on an annual basis.

There are a number of index allocations you can choose to invest your assets in. The rates associated with these are available on Allianz’s website, with most hovering around the 3% mark.

Core Income 7® Annuity

The Core Income 7® Annuity takes aim at altering the options individuals receive when it comes to income withdrawals and how they’re paid out. The Core Income Benefit rider is the most noteworthy perk of this policy, though it still provides tax-deference, a death benefit so your contract is paid to your beneficiaries and the ability to invest in market indices through Allianz. There is a max issue age of 80 for this annuity.

Account holders begin receiving annual increases in the size of their income withdrawal percentages once they reach age 45. So the longer you wait to begin taking annuity payments, the more Allianz will reward you and your income. You can, however, be no younger than 50 years old to start withdrawals.

When the time comes, your money can be paid to you in two distinctly different styles, courtesy of the aforementioned Core Income Benefit rider. For those that feel they’d rather have consistent payments in retirement, “Payout option 1” is the better choice. But “Payout option 2” has more upside if you’re comfortable with smaller distributions early on, followed by the opportunity to increase them annually.

Fees

Typically riders are optional, but the Core Income 7® Annuity comes automatically paired with the Core Income Benefit rider. That means that its corresponding 1.05% annual fee is mandatory.

This annuity charges extra fees for early withdrawals past the 10% fee-free amount. For this particular account, these will stick around for the first seven years of your contract’s life, though the fee will decrease annually. These rates go as follows: 8.5%, 8.0%, 7.0%, 6.0%, 5.0%, 4.0% and 3.0%. After this period passes, all withdrawals can be made fee-free.

The IRS may add a 10% surcharge onto your existing income taxes if you make any withdrawals prior to turning 59.5 years old. So if you’re not concerned about Allianz’ withdrawal charges, at least try to avoid this.

Realistic Return Expectations

The interest rates associated with this annuity are solid, as Allianz currently provides a 2.80% rate to all new account holders. Unfortunately, these rates are only locked in for a year at a time, as a new one is declared on every one of your contract anniversaries.

When it comes to index-based earnings, you can invest in the Nasdaq-100® Index, the S&P 500® Index, the Russell 2000® Index or the Bloomberg US Dynamic Balance Index II. All four are reporting solid returns, on top of the fact that because your money is indexed, you won’t experience as much of a loss if there’s a downturn in the market.

Allianz Vision Variable Annuity

The Vision Variable Annuity allows annuitants to invest in the open market to help grow their retirement funds. There are around 50 different portfolios, investment strategies and asset allocations that you can invest in via a number of different financial advisor firms that are partnered with Allianz. Some are riskier, some are safer and other find a middle ground, so consult your financial professional to figure out what works best for your plans.

There are two numbers to keep an eye on regarding this variable annuity: your contract value and your benefit base. A contract value is quite literally how much your account is worth, investments and all. On the other hand, the benefit base is what your eventual retirement payments will be calculated based on, making it much more important. The Income Protector rider from Allianz is an optional choice for this annuity, and costs a fee, but it provides constant increases to your benefit base, regardless of how your investments are performing.

Allianz provides a maximum issue age of 80 years old for this annuity.

Fees

As morbid as it may sound, most annuity companies charge a mortality and expense risk charge to protect themselves. For this particular contract, this fee will be either 1.4%, 1.7% or 2% depending on if you add on a death benefit or bonus option. The investment options you select as part of this portfolio do charge a fee as well, and it can range anywhere from 0.48% to 1.85%.

Withdrawal charges are an integral part of any annuity’s fee structure, and the Allianz Vision Variable Annuity is no exception. While you’re allowed to take up to 10% withdrawals free of charge, any amount past that is subject to a seven-year fee schedule starting at 8.5% for the first year and ending at 3%. But should you take the bonus option, these withdrawals charges will last for nine years. In either case, after these time frames pass, all withdrawals are free.

The IRS may use a 10% surtax on anyone that begins receiving retirement account payments before turning 59.5 years old. This does apply to annuities, so make sure you wait an ample amount of time before withdrawing.

Realistic Return Expectations

Because the returns associated with variable annuities like this one are based on investment performance, it’s hard to gauge exactly what you can expect to earn. There a number of investments the company allows you choose from including cash equivalents, intermediate-term bonds and more. Over five-year periods, these typically show 2% to 10% growth, but nothing is guaranteed.

Allianz Connections Variable Annuity

Customers of the Connections Variable Annuity are also presented the chance to choose the the optional Income Protector benefit. This is done in an effort to make you feel safer about your investment decisions, as your benefit base, and not your contract’s value, dictates what your retirement payments will be. Allianz will expand your benefit fit base on a quarterly basis, helping it to steadily increase in the long run. 80 years old is the max issue age for this variable annuity.

Unfortunately, because of the inherent value of this rider, Allianz does state that it will limit which investment options you can select when fleshing out your portfolio. But if it still manages to surpass the value of your benefit base, the company will match it and start increases from there.

Although it’s not unusual for an annuity to feature a death benefit, having two to pick from is a bit unique. The Connections Variable Annuity’s “Traditional Death Benefit” affords your beneficiaries your contract value when you pass, but the optional Quarterly Value Death Benefit takes things a step further. If you choose this, your beneficiaries are entitled to the highest quarterly contract value of your policy (minus withdrawals).

Fees

For every year that your contract is active, a $50 contract maintenance charge will be assessed. If you can manage to hold a value over $100,000, though, you can avoid this fee. The Allianz Connections Variable Annuity also offers a slightly lower mortality and expense risk charge than the Allianz Vision Variable Annuity, as it currently stands at 1.15% or 1.45%, with the higher fee reserved for those who choose to add on the death benefit.

The Income Protector benefit comes with its own fee should you choose to add it on. The rate stands at 1.40% as of right now, though it could get as high as 2.50% for single account holders or 2.75% for joint annuitants.

Make sure you don’t forget about the operating expenses of the investment options that this variable annuity extends to clients. These go as low as 0.48%, with a ceiling of 1.85%.

59.5 is the cutoff age that the IRS imposes for taking distributions from a retirement account such as an annuity. If you do not abide by this rule, you may face an income tax surcharge of 10%.

Realistic Return Expectations

Returns for variable annuities are extremely unpredictable, as they’re dependent on the investment decisions you and your financial advisor make. You can choose from equities, fixed income and other asset allocations with differing levels of associated risk. Most of these investments show growth potential between 2% and 12%, although you may be barred from selecting some of the higher reward options if you add the Income Protector.

Allianz Index Advantage® Variable Annuity

Index Advantage® Variable Annuity is unlike most of the other variable annuities at Allianz, although it maintains a maximum issue age of 80. Rather than solely building your portfolio with securities, indexes and investment strategies, you’ll be able to subscribe to a specific type of index strategy through the company. These have multiple variations, including options geared for performance-minded annuitants, as well as a protection-based strategy, along with others.

The “Index PERFORMANCE Strategy” affords customers who achieve positive index returns an annual performance credit for their contract value, although this is capped. However, if you experience index losses, you are partially protected from losing money, up to a pre-specified buffer.

If you’re looking to take a chance on riskier investments, the “Index GUARD Strategy” is probably best for you. Its positive index return policy is the same as the performance strategy above, but how it handles losses is drastically different. The guard strategy includes a 10% loss floor, meaning that your contract can only lose up to 10% in returns. 

The “Index PROTECTION Strategy” is the most heavily sheltered of all, as anyone who selects this strategy is immune to negative index returns. You can’t get the best of both worlds though, so all positive returns are forcibly held to a prespecified limit called the Declared Protection Strategy Credit (DPSC). This applies even if the index performs above that mark, which could obviously be rather frustrating. The DPSC is given to you by Allianz when your contract goes into effect, although it can change.

Fees

There are three separate annual fees associated with the Allianz Index Advantage Variable Annuity: a 1.25% product fee, a $50 contract maintenance charge and a 0.67% to 0.87% variable option fee. These charges are unavoidable, aside from the $50 fee which is waivable by maintaining a contract value of no less than $100,000. Should you annex the optional death benefit onto your contract, an additional 0.2% fee will join it.

Allianz institutes a number of stipulations when it comes to withdrawing funds early from your account. First off, you are allowed 10% in free withdrawals each year, so long as each payment is $100 or more and the value of your contract remains higher than $2,000. Any annuitant that ventures beyond that initial 10%, though, will be subject to withdrawal charges of 8.5%, 8%, 7%, 6%, 5% or 4%. Rates drop every year your account is active, and after six years, the fees disappear.

Because an annuity is a type of retirement fund, you should not start taking distributions from it until you’ve reached 59.5years old. Breaking this rule could be expensive, as the IRS has the option to tack on a 10% income tax hike.

Realistic Return Expectations

With this annuity, there are three different investment options to choose from. While one is a cash equivalent money market fund, the other two are index strategy funds. The latter selections have performed admirably over a five-year window to the tune of 4% to 6%. On the other hand, the cash equivalent has negative returns over the last 10 years.

Tips for Choosing an Annuity

  • Retirement is an extremely complicated venture to save for, and annuities can be a welcome addition to anyone’s plan. There are many different styles of annuities, though, so intensive research is incredibly key to selecting the one you want to invest in. In other words, as soon as you think you’ve found the annuity for you, look around some more.
  • Consulting a retirement-minded financial advisor can be a great way to both learn about annuities and maybe have a professional take a deeper look at some of the options that you think fit your plans. The SmartAsset financial advisor matching tool makes it very easy to find an advisor in your area, as it pairs you with as many as three fitting matches.

Best Places for Small Business Owners

SmartAsset analyzed data to find the best places for small business owners in the country. This interactive map allows you to see the best counties for small business owners in the country and in each state. Zoom between states and the national map to see the top spots in each region. Also, scroll over any county to learn about that region's small business statistics.

Least
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Rank County Small Business Returns Small Business Income Income Taxes

Methodology Which places are best for owners of small businesses? To answer this question, we considered three factors: the proportion of people in a county with small business income, how much business income those people reported and the amount of tax a potential resident must pay on their income.

To determine how attractive a region is for small business owners, we compared the number of people reporting small business income compared to the total tax-filing population of the region. Next we compared the total amount of small business income to the total amount of income reported in each region.

Small businesses are typically incorporated as pass-through entities, meaning that the businesses' owners pay income taxes on the company profits rather than the company itself paying income tax. Because of this, income taxes can have a large effect on a small business's success. To determine income tax burdens across counties, we used the national median household income. We then applied relevant deductions and exemptions before calculating federal, state and local income taxes for each location.

These three factors were then indexed and equally weighted to yield our small business index. Places with a higher small business index are better for small business owners.

Sources: Internal Revenue Service (IRS), US Census Bureau 2017 American Community Survey, Government Sources, SmartAsset