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Product Review:
Midland National IncomeVantage Pro


By , with Annuity FYI

The Midland National IncomeVantage Pro is the best of both worlds, combining both growth and income in one package.

A Hybrid FIA That Combines the Best of Growth and Income FIAs

A lot can be said for fixed income annuities (FIAs) long among the most popular retirement products, and the biggest reason is that they offer exposure to the financial markets while guaranteeing no losses in a down market. For a fee, income-oriented FIAs also offer guaranteed income riders with respectable payouts no matter what the markets do, which come in handy in a down market like 2022.

FIAs also offer an alternative for investors who place a higher priority on growth potential. This is the no-fee growth-oriented FIA, which not only is less expensive than an income FIA but provides the potential for more attractive returns in the financial markets.  

No question, options are always good. But is there yet something better out there, say, for instance, a hybrid annuity that combines both growth and income in one package and doesn’t even charge for the income feature? In fact, there is – Midland National IncomeVantage Pro – and it’s worth a good look for prospective annuity buyers who have no problem deferring guaranteed income for a number of years.

“A lifetime income benefit is built into this annuity without an additional fee, and that is enticing,” says an annuity broker familiar with the product.

Probably the best part of all about IncomeVantage Pro is that supplementary gains accrue to the income benefit base – the figure that determines how much you receive once you start taking payments – as well as standard gains in the account value of the annuity, which is important mostly for the benefit of beneficiaries. As long as an owner of IncomeVantage Pro continues to reap gains in the financial markets, he or she receives, in addition to the annual performance of their underlying index, a 50 percent index bonus in their index base, plus an additional two percent.

So say, for instance, that your index of choice rises 10 percent over a 12-month period. In addition to this, the investor gets an additional 5 percent (the 50 percent bonus) in their income base and, also, the two percent bonus. This is a total gain of 17 percent, not 10 percent. (While the bonuses accrue to the income base, they aren’t added to the account value.)

The Midland National product also boasts some other better-than-average features, such as a so-called inverse performance trigger in some cases. For prospective buyers who choose to invest in the S&P 500 index, they receive an extra 8 percent on their account value if the S&P 500 turns out to be negative at the end of each 12-month investment period. This is also an uncommon annuity industry feature.

Here are additional key details about IncomeVantage Pro.

The minimum investment is $20,000. For most investors, the best deal is an investment in the Fidelity Multi-Factor Yield 5 Percent index, a low-volatility index available with a 200 percent index participation rate. An attractive alternative is the S&P MARC 5% index, another low-volatility index, which is offered with a 190 percent index participation rate. (For investors interested in paying a supplementary 1.5 percent annual strategy fee for higher potential returns, they can get a 300 percent participation rate on the Fidelity index and 275 percent participation rate on the S&P 500 MARC 5% index.)

At some point down the line, of course, investors in IncomeVantage Pro are likely to want to start taking regular payouts. They should not do this for years, however, because the aforementioned annual bonuses will then cease. What investors who start taking payments will still get, however, is an increase in payouts each year in which the underlying index rises.

Here are the pros and cons of this annuity:

Pros

  • No required fees.
  • Gains accrue to the income benefit base beyond the amount added to the account value.
  • Strong growth mechanics.
  • An A+ rating by carrier A.M. Best.
  • A death benefit more flexible than average. If the income base exceeds the value of the account value, often the case, beneficiaries get the full benefit of the income base if they parcel out payments over five years. (If they take the account value instead, they take the full payment at one time.) Most FIAs offer a death benefit based on the annuity’s account value only.

Cons

  • Investors in IncomeVantage Pro should defer taking payouts for some number of years, and not only because they lose substantial bonuses if they do not do so. In addition, annuity payouts, which kick in in this case, are somewhat lower than most FIAs offering a guaranteed level income rider.

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