Home / Blog / New Fixed Annuity Product from AIG

New Fixed Annuity Product from AIG

money-549161_640After a stellar 2016, American International Group (AIG) has just introduced a new seven-year fixed annuity with a lifetime income rider. According to a recent Retirement Income Journal article, Assured Edge Income Builder is issued by American General Life Insurance Company and is currently available in over 20 banks and broker-dealers, with more distribution coming in the near future.

This new product, as with other fixed-rate annuities, does not require sellers to satisfy the Best Interest Contract requirement under the new DOL fiduciary rule. The conflict-of-interest rule, which is set to go into effect in April, will apply to sellers of variable or indexed annuities.

In the first three quarters of 2016, AIG sold $6.1 billion worth of variable annuities, $2.8 billion worth of indexed annuities, and $4.7 billion in fixed-rate annuities, according to the LIMRA Secure Retirement Index. No other issuer has shown as much diversification across all three types of annuities.

While Assured Edge Income Builder offers a low guaranteed annual return, at 1.50%, for the first seven years, a 7.5% simple-interest annual deferral bonus on the benefit base of the living benefit is added.

“The initial crediting rate for Assured Edge is currently set at 1.50% per year for a 7-year guarantee term. After that initial 7-year period we will declare renewal crediting rates annually,” said Brian Pinsky, senior vice president, individual retirement products at AIG, in a release.

There is a market-value adjustment, according to product literature, which may penalize surrenders when interest rates have risen. Additionally, there’s a surrender charge during the seven-year contract period. The initial minimum premium is $25,000.

At age 65, the payout rate is 5.6% for single life contracts. The rate ranges from 4.1% at age 50 to 6.35% at age 80, with a .5% drop in each for joint life. The payout rate is based on the owner’s age at the time of purchase, not at the time when income begins.

While a fixed annuity product like Assured Edge would produce less guaranteed annual income than a deferred income annuity, it does offer liquidity during the income period. For example, if purchased at age 65 with a $100,000 premium, annual income produced would be $9,800 after a 10-year deferral for a single person. On the other hand,  DIA would produce significantly more monthly income. According to immediateannuities.com, a single-male-life-with-cash-refund DIA with a $100,000 premium would pay out approximately $12,000 a year after a 10-year deferral period. And Death of the contract owner, before or after the income start date, would result in the return of unpaid premium.

Written by

Follow Rachel, aka Finance Mama, on Twitter and Google+

Share Button
Comments are closed.

 

Copyright © 2018 AFYI Holdings Group, LLC. All Rights Reserved. No part of this article may be reproduced without the express written consent of AFYI Holdings Group, LLC.

Annuityfyi.com - Prefooter

× Popup Banner

FIA GUIDE

5 keys to making the right decision

Not Today
× Popup Banner

Discover How to Control Your Financial Future

FREE Download and Newsletter

FIA Guide: 5 Keys to Making the Right Decision

Not Today
× Popup Banner

Avoid Costly Mistakes When Picking Your Annuity

FREE Download and Newsletter

FIA Guide: 5 Keys to Making the Right Decision

Not Today
Share On Facebook
Share On Twitter
Share On Google Plus
Share On Linkedin
Share On Pinterest