Allianz Financial Ratings
|5701 Golden Hills Dr., Minneapolis, MN 55416|
|A.M. Best Rating||A+|
|Moody's (21 rankings)||A1 (5)|
|Comdex (percentile of all rated companies)||94|
|Standard & Poor's (20 Possible Ratings)||AA (3)|
What is a Fixed Index Annuity?
Annuity Sales in the United States have continued to rise the past few years. However, they still get a lot of criticism in the media and even by some financial advisors as for being complicated. In reality, annuities are much less complicated than most other investment products.
However, there are many different types of annuities, each of which is designed to achieve a certain goal. Once you’ve learned which types of annuities are best suited for a particular goal they are much easier to understand. We’ll try to our best to make the Allianz 222 as easy to understand as possible today.
Fixed index annuities are a type of fixed annuity. Being a fixed annuity means that it can not lose money due to market performance. Fixed Index annuities differ from fixed annuities in the way they credit interest.
Rather than guarantee an interest rate for a set period of years like a fixed annuity, a fixed index annuity guarantees a floor of zero percent. Each year it has the potential to earn index based on the performance of an external market index. Our Ultimate Guide to Fixed Index Annuities may be helpful if you are not very familiar with fixed index annuities.
Allianz 222 Annuity Review: Product Highlights
The Allianz 222 is a ten year fixed index annuity with an included guaranteed lifetime withdrawal benefit rider (GLWB) included. This means there are two separate values; an account value and a protected income value.
The account value is real money and what you could withdraw as a lump sum at the end of the contract. The protected income value is only used to determine annual lifetime income.
The Allianz 222 offers a premium bonus and an interest bonus credited to the protected income value. It also offers lifetime income payments that can increase and double to help pay for long term care.
- Minimum Premium: $20,000
- Issue ages: 0-80
- Crediting Methods:
- Monthly Sum with a cap
- Annual Point to Point with a cap
- Annual Point to Point with a spread
- Annual Point to Point with a participation
- 2-year point to point with a participation rate
- Free Withdrawals: Beginning the 2nd contract year, up to 10% of the contract’s premium can be withdrawn annually without any surrender charges.
- Death Benefit: Upon death the beneficiary will recieve the full account value or the protected income value if taken over 5 years.
- Fees: There are no fees
- The Allianz Income Multiplier (AIM) Benefit allows your client to double their annual maximum income withdrawal if confined to an eligible nursing home, hospital, or assisted living facility for at least 90 days in a consecutive 120-day period, or if they are unable to perform at least two of the six activities of daily living (ADLs)
The ADLs are bathing, continence, dressing, eating, toileting, and transferring. Confinement must occur after the first contract year and either during the contract year before the start of lifetime income withdrawals or at any time thereafter.
To be eligible via ADLs, a physician must certify that they are unable to perform at least two of the six ADLs. Diagnosis must occur during the contract year prior to lifetime income withdrawals beginning or anytime thereafter.
- Nursing home benefit and Flexible Annuity Option Rider
• RMD available for this contract (no penalty to client)
• Rider available for an additional cost: Flexible Withdrawal Rider
- PIV Bonuses (Protected Income Value): 15% Premium Bonus paid initially, only credited towards protected income value not account value. In addition, an interest bonus equal to 50% of any earned interest will be credited for the life of the contract. Again, this is only credited towards the PIV value which is for income calculation purposes only.
Allianz 222 has no fees.
Allianz 222 Annuity Rates
Annual Point to Point with a Spread:
- BlackRock iBLD Claria Index, Ticker: IBLDCLRA: 4.35%
- Bloomberg US Dynamic Balanced Index II: 4.60%
- PIMCO Tactical Balanced Index: 4.60%
Annual Point to Point with a Cap
- BlackRock iBLD ER Index, Ticker: IBLDCLRA: 1.65%
- Bloomberg US Dynamic Balanced Index II: 2.00%
- Nasdaq 100 Index: 2.00%
- PIMCO Tactical Balanced Index: 1.90%
- Russell 2000 Index: 2.00%
- S&P 500 Index: 2.00%
Annual Point to Point participation rate:
- BlackRock iBLD Claria Index, Ticker: IBLDCLRA: 45%
- Bloomberg US Dynamic Balanced Index II: 40%
- PIMCO Tactical Balanced Index: 40%
About the Bloomberg US Dynamic Balanced Index II:
The Index Return reflects the performance of an allocation strategy across the Equities and Bond asset classes, allocating weights in accordance with a quantitative model. On each index business day, the index determines the realized volatilities of the two index constituents and based on that, allocates the respective weights to the index constituents.
Allianz 222 Historical Rate of Returns
Below is a chart showing hypothetical returns for the Allianz 222 using:
- PIMCO Tactical Balanced ER Index Annual Point to Point with participation rate: 40%
This table lists the hypothetical annualized credited rate for the highest 10 year period, the lowest 10 year period and the most recent.
The annualized rate of return for the most recent period was 2.46% and 2.45% for the highest annualized period. The lowest 10 year period had an annualized rate of return of 1.75%.
The following table shows hypothetical returns for the highest 10 year period, the lowest 10 year period and the most recent 10 year period using the:
Bloomberg Dynamic Balanced Index II with Annual Point to Point with a Participation Rate: 40%.
The annualized rate of return for the most recent period, which also happens to be the highest period was 2.70% The lowest 10 year period had an annualized rate of return of 1.75%.
If you noticed there wasn’t much difference in the rate of return for the two separate methods used and the worst 10 year period was the same for both (1.75%).
Allianz 222 Protected Income Value Explained
Example: 55 Year old deposits $100,000 and starts Lifetime Income Withdrawals based on Protected Income Value (PIV) at age 65 beginning contract year 11.
Below is a hypothetical table generated using Allianz Life’s Illustration Software on their website. In this example we deposited $100,000 for a 55 year old and are planning to begin our lifetime income withdrawals at age 65 ( beginning year 11). As noted earlier, you will see that the Protected Income Value is credited with a 15% bonus at issue and then an interest bonus of 50% on any interest earned (paid to PIV only).
For example, take a look at contract year 4. In the 4th column over you’ll see end of year credited interest is 3.15% to the account value. Now if you slide over to the 3rd from last column (End of Year PIV Credit) you can see that 4.73% was credited. That is 1.50% x 3.15% = 4.73%.
This is a hypothetical example based on what would have happened had someone purchased this annuity contract 10 years ago from today and is not a guarantee; however, it is meant to provide an idea of what could happen. In this case a $100K was deposited into the Allianz 222 at age 55 and 10 years later began generating a Lifetime Income Withdrawal of $7,976.
Each year the lifetime withdrawal amount increases by whatever interest is earned in the account value multiplied by 1.50%. You can see in the chart below that when the account value does not earn any interest there are no increases to the lifetime withdrawal amount.
Pros & Cons of Allianz 222
- Income Rider Included at no cost
- Income can increase annually. Your income will increase by 150% of interest credited in any given year.
- Single life or joint life income can be decided at the time income is started and does not have to be decided at contract issue.
- 6 different market indexes to choose from
- 5 different crediting methods and a fixed interest account
- Allianz Income Multiplier doubles the annaul maximum income withdrawal amount if owner becomes confined to a nursing home facility for 90 days in a consecutive 120 day period. Or if they are unable to perform 2 out of the 6 ADL’s.
- Flexible withdrawal amount – owner can elect to take a potion of lifetime withdrawal amount or none of it in any given year. If they do, the portion of the lifetime income withdrawal amount not taken is added to a cumulative withdrawal amount that can be taken in a future year above the normal income withdrawal amount.
- Rate of return on the account value isn’t great
- Lifetime income payments can not begin until after the 10th contract year
- 10 year surrender period which is a long duration if you are not using it for lifetime income
Allianz 222 Annuity Review Final Thoughts
The Allianz 222 is probably not the right annuity for you if you are looking for an accumulation vehicle. The rates on the various crediting methods are not great. As you saw in the hypothetical returns above the historical returns were less than 3.00%. If you are looking for a vehicle to grow your retirement savings
However, if you want an annuity that can grow and be turned into a lifetime income stream in the future – the Allianz 222 is a great annuity. The fact that it doesn’t have a fee, offers increasing income, and allows you to choose between single and joint lifetime income at the time the income is turned on are all great and somewhat unique features.
In addition, the Allianz Income Multiplier (AIM) will double the income based on owner not being able to perform 2 of the 6 activities of daily living which means it could potentially be used to pay for In Home Health Care. Typically, these types of enhancements require the owner to be confined to a nursing home facility.
The Allianz Income Multiplier (AIM) Benefit allows you to double their annual maximum income withdrawal if confined to an eligible nursing home, hospital, or assisted living facility for at least 90 days in a consecutive 120-day period, or if they are unable to perform at least two of the six activities of daily living (ADL). The ADL’are bathing, continence, dressing, eating, toileting, and transferring.
BOTTOM LINE: Not a good annuity for accumulation but one of the top, if not the best, fixed index annuities for lifetime income. You can compare rates for other indexed annuities at our Online Annuity Store.
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Have a specific Question?
This is an independent annuity product review , not a recommendation or solicitation to buy or sell an annuity. Allianz Life has not endorsed this review in any fashion and we don’t receive any compensation it. Be sure to do your own due diligence, we recommend consulting with a properly licensed professional regarding any questions you may have. Values shown are not guaranteed unless specifically stated otherwise. Rates and annuity payout rates are subject to change. Actual values may be higher lower than the values shown. The illustration is not valid without all 18 pages and the statement of understanding.
Annuities are distributed by My Annuity Store, Inc. Guarantees are subject to the claims-paying ability of the insurer. My Annuity Store, Inc. does not advise clients on the purchase of non-fixed annuity products. The information presented here is not of tax or legal nature and is not intended to be a recommendation to purchase a fixed annuity, fixed index annuity, variable annuity contract, registered index linked annuity (RILA), immediate annuity (SPIA), longevity annuity, or Qualified Longevity Annuity Contract (QLAC).
The contract features described may not be current and may not apply in the state in which you reside. Annuities are issued by Insurance companies and contracts are ‘state-specific’. Insurance companies also change their products and information often and without notice. Annuities are subject to the terms and conditions of the specific contract issued by the insurer, are not FDIC or NCUA insured, are not bank guaranteed, may lose value, and are not a deposit. Please call (855) 583-1104 if you have any questions or concerns.
The information presented here is not a representation regarding the suitability of any concept or product(s) for an individual and it does not provide tax, accounting or legal advice. It is important to read the prospectus carefully and consider your objectives, risks, fees and charges associated with the contract. You should always consult your own financial planning, tax, and legal counsel to determine if a fixed annuity, immediate annuity, longevity annuity, or Qualified Longevity Annuity Contract are suitable in your financial situation.