Great American Insurance Company is a life insurance and annuity business that can trace its roots back to 1872, when its predecessor, the German American Insurance Company, was founded. The company is based out of Cincinnati, Ohio.
If you’re trying to decide which annuity best fits your financial plan, it’s a good idea to consult with a financial advisor in your area.
| Annuity | Fees | Annuity Type | Minimum Initial Premium | More Information |
|---|---|---|---|---|
| Index Protector 7 Find an Advisor |
|
Fixed indexed annuity | $100,000 |
Annuity TypeFixed indexed annuityMinimum Initial Premium$100,000 |
| American Landmark 5 Find an Advisor |
|
Fixed indexed annuity | $10,000 |
Annuity TypeFixed indexed annuityMinimum Initial Premium$10,000 |
| Index Summit 6 Find an Advisor |
|
Index-linked annuity | $25,000 |
Annuity TypeIndex-linked annuityMinimum Initial Premium$25,000 |
Great American’s financial strength has received solid ratings from the top rating entities. A.M. Best has the company at an “A+,” Standard and Poor’s (S&P) has it at an “A+” and Moody’s has it at an “A2”. These ratings correspond to “Superior,” “Strong” and “Good,” respectively.
Index Protector 7
The Index Protector 7 fixed indexed annuity has a $100,000 minimum initial investment with a maximum issue age of 85 years old. The contract comes with both a fixed-rate account and an indexed account that allows you to choose between two iShares and three S&P indexes.
There are two riders associated with this annuity. Here’s a brief explanation of each:
- IncomeDefender: This is a guaranteed income rider that offers annuity payments immediately after issue for contract holders 55 and older. Your income payments will increase in size annually with this rider.
- Income Keeper (temporarily suspended as of 2/21): As long as you’re 55 or older, this rider allows you to begin receiving annuity payments five years after your contract’s start date. This is as opposed to the traditional seven-year schedule this annuity follows.
Fees
If you decide to go with a standard contract, the Index Protector 7 annuity comes with no annual fees. However, there are two benefit riders available to add onto it: the Income Keeper rider and the IncomeDefender rider. These come with 0.50% and 0.85% annual charges, respectively.
Feel free to withdraw as much as 10% of your contract value annually. Any distributions beyond that initial limit are subject to withdrawal fees.
| Withdrawal Fee Schedule | |||||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Year 7 | Year 8+ |
| 7% | 7% | 7% | 6% | 5% | 4% | 3% | 0% |
There is a 10% income tax penalty on withdrawals that anyone under 59.5 years old takes from their annuity contract. You will still need to pay the standard income tax rate.
Realistic Return Expectations
The rates associated with this annuity will vary depending on a few factors. These include when you open the account, how much money you invest in it and what payout option you select. As of Feb. 2021, Great American is offering the following fixed interest rates in addition to its index-linked strategies:
- $250,000 or less: 2.40%
- $250,000 or more: 2.50%
American Landmark 5
As its name indicates, the American Landmark 5 contract is a fixed indexed annuity that operates on a five-year withdrawal schedule. Prospective annuitants must have at least $10,000 to invest and be no older than 89 years old. The payout options associated with his annuity include fixed period payout, life payout, life payout with payments for at least a fixed period and joint and one-half survivor payout.
When you sign up for this annuity, Great American will tell you the rate at which your fixed account will earn interest. For the indexed part of the contract, you can pick from three S&P 500 indexes and one iShares U.S. Real Estate index.
Fees
Annual fees are nonexistent with this annuity, but there are withdrawal fees. These charges only apply if you withdraw more than the annual allotted amount of 10%.
| Withdrawal Fee Schedule | |||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6+ |
| 9% | 8% | 7% | 6% | 5% | 0% |
Don’t forget that if you begin taking withdrawals from your account before you turn 59.5, you’ll not only need to pay income taxes, but also a 10% income surtax.
Realistic Return Expectations
As of Feb. 2021, contracts with purchase payments below $100,000 receive a fixed interest rate of 1.40%. But if your contract is worth more than that, your rate will jump to 1.50%. When it comes to the returns associated with the indexed part of this contract, rates will vary depending on which investment you choose.
Index Summit 6
The Index Summit 6 variable indexed annuity is limited to prospective contract holders who are 80 years old or younger and can afford to invest at least $25,000. This contract works on a six-year distribution schedule, meaning any annual withdrawals over 10% made before your seventh year of ownership are accompanied by a fee.
There are four S&P and four iShares exchange-traded fund (ETF) index investments that Great American offers for your annuity. You are free to pick whichever one you feel is best. Each of these indexes come in one- and two-year terms.
This annuity comes paired with a 50% downside participation rate on two of the aforementioned S&P indexes and all four iShares indexes. What this means is that only half of an index’s negative change will be used to determine your losses at the end of the one- or two-year term. This can help to protect your assets if the market turns downward.
The return of premium (ROP) death benefit payout for this annuity is fairly standard. Depending on your personal situation, your beneficiary’s payout will be equal to the greater of your account value or purchase payments, adjusted for any applicable withdrawals.
Fees
Annuitants who own this contract will not have to pay any annual or recurring fees. There are withdrawal charges, though, if you take out more than 10% of your contract value over any contract year.
| Withdrawal Fee Schedule | ||||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Year 7+ |
| 8% | 7% | 6% | 5% | 4% | 3% | 0% |
If you take a distribution from your annuity contract before you turn 59.5 years old, not only will you have to pay the standard income tax, but you’ll also likely pay a 10% tax penalty.
Realistic Return Expectations
As of Feb. 2021, the declared strategy interest rate for the Index Summit 6 annuity ranges from 1.00% to 1.10%, depending on the size of your initial purchase payment. For the indexed portion of the contract, rates will vary based on the length of your term and what index you go with.
Investing Tips
- If you’d like help with annuity and investment strategies, you should consider working with a financial advisor. Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in 5 minutes. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.
- When you’re making money on investments, it’s easy to forget about the taxes you’ll have to pay on your earnings. Use our capital gains tax calculator to see how much you’ll owe come tax time.
All information is accurate as of the writing of this article.
