Allianz Core Income 7 Review
In this Allianz Core Income 7 Review we will look at:
- Allianz Financial Ratings
- Allianz Core Income 7 Income Features
- Allianz Core Income 7 Crediting Methods
- Allianz Core Income 7 Product Specifics
- Allianz Core Income 7 Pros and Cons
The Allianz Core Income 7 is a 7 year fixed index annuity with a Guaranteed Lifetime Withdrawal Benefit ( for a fee). Most indexed annuities have an optional income rider that can be added; however. A key point to consider when considering the Allianz Core Income 7 is that the Core Income Benefit Rider is not optional, it is included in the product.
The cost of the Core Income Benefit Rider is 1.25% and is charged annually and deducted from the account value. The rider cost will begin at age 45 and is charged until the point lifetime income begins.
All indexed annuities provide principal protection – meaning your account value can never decrease due to market performance. However, if your account is credited with zero interest in year, your account value would decrease (by 1.25%)
Allianz Financial Ratings
An annuity’s guarantees are only as good as the insurance company backing them which is why it is always important to consider an insurance companies financial ratings when shopping an annuity. The below chart lists Allianz Life’s Financial ratings from every major rating agency. As you can see Allianz Life has very strong financial ratings. They have been a leader in the fixed index annuity market for more than a decade and were the #1 on our Top Ten Fixed Index Annuity Companies of 2019.
|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)|
Watch an Allianz Video: What is a Fixed Index Annuity?
Allianz Core Income 7 Increasing Lifetime Income Options
Core Income 7 and the Core Benefit Rider can help you reduce uncertaintity in the years ahead with lifetime income you can not outlive. You can begin your lifetime payments immediately.
If you are still for retirement and not ready to begin lifetime income, Core Income 7 provides increasing income percentages every year you wait, beginning at age 45. The higher your withdrawal percentage, the higher your income will be.
And when you are ready to start receiving income you can choose from two lifetime withdrawal options:
Level Income: Predictable, dependable income for life. This may be a good option if you want the re-assurance of knowing exactly how much income you will receive every month and want a guaranteed income you can’t outlive.
Increasing Income – Income for life, plus an opportunity for payment increases. This begins with a smaller payment up front but has the potential to increase each year by the interest credited to your chosen allocation options in your contract.
This chart compares both options available through the Core Income Benefit rider. It shows the lifetime withdrawal percentages and the annual increases to a contract’s lifetime withdrawal percentage, based on the payment option and on the age at which you purchase the contract.
NOTE: Lifetime income withdrawals can begin on your next contract anniversary between age 50 and 100. If joint lifetime withdrawals are chosen, the age of the younger person will be used.
Allianz Core Income 7 Index Allocation Options
External Market Indexes Options:
- S&P 500 Index
- Russell 2000 Index
- Nasdaq 100 Interest
- Bloomberg US Dynamic Balance Index II
- Bloomberg US Dynamic Balance ER Index II
- Declared Rate Strategy
- Annual point to point
- 2-year point to point
With Core Income 7 you can earn fixed interest or choose to base potential indexed interest on several external market indexes.
Allianz Core Income 7: How to Calculate Credited Interest
These crediting methods use the index value from only two points in time. So they may be a good choice if you want to minimize the effects of market volatility between these two points in time.
How these crediting methods work:
- On your applicable contract anniversary, the index value from the beginning of the crediting period is compared to the index value at the end of the crediting period.
- The percentage of the change is calculated
- If the ending value is higher than the beginning index value, a cap, spread or participation rate is applied.
- If the index value is lower, your contract won’t receive interest.
Interest Crediting Components
- Cap – is the maximum interest the annuity can earn in a crediting period.
- Spread – is the amount subtracted from an index’s gain during the crediting period.
- Participation Rate – determines what percent of the index’s gain will be used to calculate your indexed interest.
|Index Performance||Cap||Interest Earned|
|Index Performance||PAR Rate||Interest Earned|
Allianz Core Income 7 Contract Specifics
Flexible Premium: Core Income 7 annuity is not a true flexible premium, but you are allowed to add additional premium to your policy in the first contract year.
Free Withdrawal Percentages: After the first contract year prior to starting lifetime income withdrawals, you can withdrawal 10% of the original purchase premium annually without a surrender charge.
Surrender Charge Schedule: If you withdrawal more than 10% of your original purchase premium in a year during the 7 surrender charge period a surrender charge will be charged.
Required Minimum Distributions (RMDs): RMDs taken from your Allianz index annuity are held within a tax-qualified plan (IRA, SEP, etc.) will qualify as free withdrawals.
Death Benefit: The Core Income 7 has a death benefit for your beneficiaries. You can elect for them to receive it as either a lump some or as annuity payments.
Surrender Charge Schedule: 8.50%, 8%,7%, 6%, 5%, 4%, 3%, 0%
Cumulative Withdrawal Amount: Once you begin taking lifetime withdrawals under the Core Income Benefits Rider, you can choose to take less than your maximum lifetime withdrawal amount. Allianz keeps track of the amount that is “left over”. This is amount is considered the cumulative withdrawal benefit. This feature allows you to withdrawal any or all of that remainder in a future year. The full account value remaining will be issued as the death benefit.
Allianz Core Income 7 Hypothetical Rate of Return
Below is a chart showing hypothetical returns for the Core Income 7 during two separate 10 year periods.
- The highest and most recent 10 year period (12/31/2010 to 12/31/2019) in which the annualized rate of return was 6.70%
- The lowest 10 year period (12/31/2007 to 12/31/2016) had an annualized rate of return of 4.37%.
- For the purposes of this illustration 100% of the premium was allocated to the Bloomberg US Dynamic Dynamic II ER Index using the current participation rate of 50%.
Allianz Core Income 7 Pros and Cons
The Core Income 7 is a very good annuity and has a lot of good features but would not be the right choice for everyone.
If you are looking for a safe accumulation vehicle and don’t plan to turn your annuity into a lifetime income stream then the Core Income 7 is not a great choice. This is because the Core Income Benefit Rider is required and comes with a cost of 1.25% annually.
Allianz Core Income 7 PROS
- Not required to elect single or joint lifetime income until turning income on
- Not required to choose increasing income option or level income option until turning income on
- Accumulation product with an option to turn into a guaranteed lifetime income
- Flexible Premium in the first year
- Multiple External Market Index Options including uncapped credit method options
- Separate Crediting Components: Spread, Cap and Participation
- Cumulative Withdrawal Benefit
- Lifetime Income Percentages that are very competitive within the industry.
- Increasing Lifetime Withdrawal Option
Allianz Core Income 7 CONS
- An income rider with a cost of 1.25% is mandatory
The increasing income option and cumulative withdrawal benefit are only available on very few annuity products.
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.