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Allianz Life’s Essential Income 7 Indexed Annuity Included in Wells Fargo’s Platform

Allianz Life is the latest insurer to join Wells Fargo’s new indexed annuity platform.  The purpose of this platform is to highlight simpler indexed annuities that have lower commissions.  Darla Mercado of Investment News wrote about this new addition to the platform in the article “Allianz joins Wells Fargo’s new indexed annuity platform.”  The other insurers already involved in Wells Fargo’s platform include AIG, Pacific Life, Symetra, Great American and Nationwide.  A few weeks ago, Allianz Life added their Essential Income 7 indexed annuity to Wells Fargo’s platform.  In addition to the annuity, they also brought their Essential Income Benefit feature as well.

Wells Fargo has been pushing for lower commissions on indexed annuity products throughout the life insurance industry.  They created this platform to help carry out that goal.  There are strict specifications for indexed annuities to be included in the platform.  Commissions have to be 4% or lower and minimum cap rates are set at 3%.  Surrender periods can be no longer than 8 years.  There are also some limits on how the indexed annuities are designed.  Each product can only use two indexes and two index crediting strategies.  The crediting strategies include monthly averaging and point-to-point.

Allianz made some changes to their Essential Income 7 indexed annuity so that it will fit Wells Fargo’s standards.  The Core Income 7 indexed annuity that was released last year through broker-dealers and wirehouses is the base for the Essential Income 7, but it is a little different.  Allianz designed the Core Income 7 to be simple and have fewer moving parts than traditional indexed annuities.  One difference they had to make when creating the Essential Income 7 was to eliminate the spread.  Since spreads are not permitted in Wells Fargo’s platform, Allianz uses a cap instead.  The Essential Income 7 uses fee levers during the surrender period, which is not the case with the Core Income 7 product from Allianz.  Fees can be adjusted anywhere from the initial fee structure up to 2.5% if the markets make it difficult for the insurer to meet the 3% cap.  The current fee is .85%.

It has been less than 2 months since Wells Fargo introduced their new platform aimed at providing simpler, lower cost indexed annuity products.  With a lot of big names on board already, we expect many more to join the platform in the months to come.  Allianz Life’s Essential Income 7 with an Essential Income Benefit feature is the latest indexed annuity to join Wells Fargo’s platform.  If you have any questions about indexed annuity products, an expert at Annuity FYI would be happy to help.

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