American National Review

If you’re concerned that market swings could erode your hard-earned savings, you may be interested in a fixed annuity. This type of annuity guarantees a fixed interest rate for the life of the contract, like a certificate of deposit (CD). 

Working with American National, you’d have access to Century Plus. This is a single premium fixed deferred annuity. So you buy a contract with a lump sum and earn interest until you retire and begin taking payments. Unlike a CD, earnings grow tax deferred - both if you use qualified funds from an individual retirement account (IRA) or 401(k) or non-qualified money. You’ll owe taxes once you start receiving payments (or if you make an early withdrawal).

The minimum initial premium for the Century Plus annuity is $5,000. The maximum issue age is 80. This annuity offers an interest rate enhancement of 5% for the first year. At the end of each contract year, the interest rate resets, but will never be lower than the guaranteed minimum interest rate, which is based on the National Association of Insurance Commissioners (NAIC) Index and in effect for the life of the contract. We provide current interest rate details below. 

You have access to up to 10% of your annuity value at the beginning of each contract year without incurring a withdrawal or surrender charge.  

For additional fees, you can add special features to your annuity contract. In the industry, these are known as riders. American National offers the Lifetime Income Rider (LIR), which must be elected at the time of purchasing the annuity. The rider guarantees an enhanced interest rate (declared at the time that your contract is issued) for up to 10 years. This results in your income base being larger than your annuity value without the enhanced rate for a number of years. This is important because if you annuitize during those years, you will have a higher income base on which your lifetime payments are calculated.

The Century Plus fixed annuity also comes with a death benefit that ensures that your beneficiary will receive the greater of your annuity value or surrender value of your account. 

Fees 

The Century Plus annuity has no front-end sales charges or annual contract fees. But if you withdraw more than the allowed 10% of your account value, you’ll face a surrender charge. We provide a schedule of these withdrawal fees below. 

Also, If you take any money out before reaching age 59.5, the IRS may levy a 10% tax penalty in addition to your ordinary income taxes. 

The optional Lifetime Income Rider has a 0.90% annual premium charge. At times, the company may provide a Lifetime Income Rider Enhancement. 

Realistic Return Expectations 

You would need an interest rate of 2% to 3% to keep up with inflation. Add another 1% if you add the Lifetime Income Rider. If there’s any chance you may need to access your money during the contract, you should consider a CD instead. Top CD interest rates are slightly lower, but the early withdrawal fee is much lower, too. Often CDs require only the forfeiture of 90 days of interest - as opposed to annuities that take a percentage of your principal.

The Palladium Multi-Year Guarantee Annuity (MYGA) provides a guaranteed fixed interest rate for periods of 5 to 10 years. Current base interest rates range from 1.85% to 2.20%. The more you invest and the longer your contract, the higher your interest rate. In some cases, American National may provide a 5% interest bump for the first year of your contract.

You can buy an annuity with a minimum initial premium of $5,000. The maximum issue age is 85. While your money remains invested, it grows tax deferred. This means you won’t owe taxes on your earnings until you take payments (or make an early withdrawal). 

Within 30 days after the end of the guaranteed period, you can withdraw all your money without incurring surrender charges from American National. Or if you’re not ready to annuitize, you can extend the annuity contract at a new interest rate, which is good for a year, and minimum guaranteed interest rate, which will remain in place for the life of the contract. 

This annuity comes with confinement and disability benefits at no additional cost. This means that should you need to be confined to, say, a nursing home for more than 30 consecutive days or become disabled, as defined by the contract, the company would waive the surrender charge on an early withdrawal.  

The Palladium MYGA also has a standard death benefit. In the event of your death, American National would pass the full value of your annuity to your designated beneficiary without taking surrender charges or additional expenses. 

Take note that some free features work differently in New York. 

Fees 

As with most fixed annuities, the Palladium MYG doesn’t require annual contract fees. However, American National would levy a surrender charge for early withdrawals, based on the following schedule:   

(NP: Not permitted)

Additionally, the IRS may impose ordinary income taxes and a 10% penalty tax if you withdraw funds before age 59.5. 

Realistic Return Expectations 

Earning 1.85% to 2.20%, you may keep pace with inflation (especially if you don’t add an optional rider at extra annual cost). You may want to consider a certificate of deposit (CD) instead if there’s even a minute chance you’ll need to withdraw your money early. Top CD rates are comparable, plus CD penalities for early withdrawals only affect your earned interest - and don’t touch your principal.

The ANICO Strategy Indexed Annuity (ASIA) PLUS gives you the opportunity for additional growth in line with the movement of the S&P 500 Index. Your crediting interest rate (your money isn’t actually in the stock market) then reflects the overall performance of some of the largest companies in the country. The annuity also provides a 0% interest floor. This means you won't lose money in the event the index goes down (you just won’t earn anything that year).

American National offers two types of indexed annuities. They are the ASIA PLUS 10 and the ASIA PLUS 7. The components of both are very similar. But, as you probably guessed from their names, the former has a 10-year surrender charge period and the latter has a seven-year surrender charge period. The surrender charge period is basically the length of the contract and the time frame before you can begin taking withdrawals without incurring any withdrawal fees (surrender charges). 

These annuities do offer different interest crediting strategies though. To understand the differences, you should be aware of the following terms:

Declared rate: American National allows you to allocate a portion of your initial premium toward a set interest rate basket, in which interest is compounded and credited daily. 

Specified rate: This is a guaranteed minimum rate that would stay put during a one-year segment term. If the index goes up or remains the same at the end of that term, the interest earnings equal the specified rate multiplied by the annuity value. In any other case, the company credits interest at the minimum guaranteed interest rate for indexed strategies (currently 1%). 

One-year total sum performance with a monthly cap (monthly sum): This strategy credits annual interest based on a comparison of the monthly movements in the S&P 500. American National records the changes in the index each month. The interest credited at the end of the year is ultimately the sum of all these differences. American National puts a cap on positive differences or upticks but there’s no bottom limit for downturns. However, the company would credit 1% if the result is negative, as that is the minimum guaranteed interest rate for indexed strategies. 

Cap: The maximum interest rate you can be credited.

Participation rate: A percentage that insurance companies set, which is multiplied by the actual return on the index to calculate the interest rate credited to your account. So if the index goes up by 8% and the participation rate is 70%, your annuity would earn 5.6% (70% of 8%). 

Point-to-point performance with a cap strategy: This strategy credits interest based on the change in the index from its closing value at the end of the segment term to its value on the first day of the second segment term. So a “one-year-point-to-point” means the segment spans a year or the closing index value at the end of one year and the opening value of the next. The company would credit you the difference, up to a cap or 1% if the difference is negative. 

The table below provides current interest rates and crediting strategies: 

Asia Plus 7

You can open a qualified account with a minimum initial premium of $5,000 and a non-qualified account with a minimum of $10,000. Qualified accounts are funded with pre-tax money such as that from individual retirement accounts (IRAs) and 401(k)s. 

With either the ANICO PLUS 7 or 10 annuity, you have free access to up to 10% of your annuity value each year. Both annuities also offer a lifetime income rider that increases your income base faster so you can lock in a higher payout amount sooner than people who don’t have the rider. (The income base determines your payment amount when you annuitize).  

This rider can be added until the annuitant is at least 50 and the contract has been open for at least a year. At times, the company may provide an enhancement. 

Both annuities also offer death benefits that pass on the greater of the annuity value or surrender value to your beneficiary should you die before you start receiving payments. 

Fees 

The ANICO PLUS 7 and 10 do not have any annual contract fees. However, American National would impose an early withdrawal penalty if you take out more than the allowed 10% during your guaranteed period. The IRS may also impose a 10% penalty on any withdrawals before the age of 59.5, on top of ordinary income taxes. 

Below is the withdrawal fee or surrender charge schedule for the ANICO PLUS 7 and 10 annuities: 

Realistic Return Expectations 

How your investment performs depends on the markets, of course. Generally, you have more potential for growth with an indexed annuity than with a fixed one. But you should consider it a long-term investment. If you can’t decide between the different crediting interest rate options, consider getting a financial advisor who can help you by doing the math for different scenarios.

The WealthQuest Citadel Seven Diamond Annuity is a flexible premium fixed deferred annuity. This means you can make additional payments after your initial premium to increase your account value. The interest rate at the time that you buy the annuity is guaranteed for two years, though the annuity can be for seven years. Here are the current interest rate terms below. 

Note that the first year includes a 1% interest rate enhancement. So the base rate would be what the company would lock in for two years. Afterward, the rate is declared annually and guaranteed for a year. 

You can sign up for this annuity with a minimum initial premium of $2,000 for a qualified account or $5,000 for a non-qualified account. You can access up to 10% of your annuity value at the beginning of each contract year without incurring a surrender charge. It also comes with a standard death benefit that provides your beneficiary with the account value on the date that proof of death is received by American National. This annuity does not have disability or confinement waivers. 

You can annuitize or start receiving payments as of the 10th contract anniversary or on your 90th birthday. 

Fees 

The WealthQuest Citadel Seven Diamond Annuity doesn’t require any front-end sales fees or annual administrative fees. But you’d face a surrender charge if you take out more than the allowed 10%, according to the following schedule:

Additionally, the IRS may levy a 10% penalty tax if you take money out before turning 59.5. You will also income taxes on any pretax money or tax-deferred earnings. 

Realistic Return Expectations 

As with any fixed deferred annuity, your return depends on the interest rate. You should seek at least 2% or 3% to keep pace with inflation. But if there’s any chance you may need the money during the guaranteed period, you may want to look into a certificate of deposit (CD). Top CDs may be slightly lower than fixed annuity rates, but their penalities for early withdrawals are significantly lower, too. Typically, fees affect only your earned interest - and not your principal.

The WealthQuest Citadel Five Diamond is a fixed deferred annuity. You can sign up for an account with a minimum annual premium of $5,000 for qualified accounts and $2,000 for non-qualified accounts. You have 12 months to make any additional contributions. 

All premiums made within the first year would receive the current accumulation interest rate guaranteed for two years. That rate is based on the National Association of Insurance Commissioners (NAIC) Index. You can view current interest rates below. The first year includes a 1% enhancement provided by American National. 

As with most fixed annuities, your principal is guaranteed by American National to the extent of its claims-paying ability. The maximum issue age is 85. You can begin receiving payments at the end of your contract or when you turn 90. This annuity comes with a standard death benefit at no extra cost. It provides that should you die before you annuitize, your beneficiary will receive the account value at the time proof of death is received. It also has confinement and disability waivers, which allow you to withdraw money penalty-free, should you become confined or disabled, as defined by the contract.

Fees 

The WealthQuest Citadel Five Diamond doesn’t have any upfront sales or annual contract fees. But American National will levy a surrender charge if you withdraw more than the allowed 10% any year before the end of the 10-year contract period. You may also get hit by a 10% penalty from the IRS if you access your funds before the age of 59.5. 

Below is the surrender schedule for the WealthQuest Citadel Five Diamond annuity.

Realistic Return Expectations 

To keep even with inflation, you would need to earn at least 2% to 3% in interest. Generally, annuity rates are a bit higher than CD rates, but CDs have lower penalities for early withdrawals. So if there’s any chance you may need to touch your principal during the guaranteed period, you may be better off with a CD. You cannot withdraw your money once you annuitize. 

Retirement Planning Tips

• As you can see, annuities have a lot of rules and contingencies. So you may want to carefully review your annuity contract with a qualified financial advisor. Our interactive advisor matching tool recommends up to three advisors based on your needs and preferences.
• How much do you need to save in order to retire comfortably? For a better than ballpark figure, use our retirement calculator. It takes into account such factors as your state taxes and expected Social Security benefits.