In this annuity review we’ll be we’ll cover everything you need to know about he Versa Choice 10 . Below is a list of some of the main points we’ll hit on.
It is very important to consider the financial ratings of the issuing insurance company when shopping for an annuity because it is a representation of it’s ability to fulfill it’s contractual obligations to it’s policy holders.
When it comes to financial strength and stability it doesn’t get much better than North American. They were founded in 1866, are privately held and have over 615,000 life insurance and annuity policies in place.
|North American Company for Life and Health Insurance||Rating|
|Mailing Address||P.O. Box 79905, Des Moines, IA 50325-0905|
|A.M. Best Rating (15 Possible Ratings)||A+|
|Fitch Ratings (Financial Strength, 21 Ratings)||A+ (5)|
|Comdex Score (Percentile of All Rated Companies)||89|
|Standard & Poor's (Financial Strength, 20 Ratings)||A+ (5)|
The Versa Choice 10 is a fixed index annuity designed to be a long-term retirement savings vehicle. A fixed index annuity is a type of fixed annuity that provides principal protection, meaning your account value will never decrease due to market performance.
Unlike a traditional fixed annuity, it does not guarantee a specified rate of return. Instead, the interest you earn on an annual basis is tied to the performance of an external stock market index.
When purchasing this annuity it is important to note that you are making a 10 year commitment. During the 10 year contract period the owner is able to take an annual withdrawal of up to 10% of the previous years account value.
|North American Company||Versa Choice 10|
|Product Type||Fixed Index Annuity|
|Free Look Period||20 Days|
|Maximum Issue Age||79|
|Minimum Purchase Premium||$20,000|
|Free Withdrawal Provisions||10% annually beginning year 1|
The Versa Choice 10 does not come with any fees attached “out of the box”. There is one optional benefit rider that can be purchased for an annual fee of 60 basis points which is calculated using the account value.
Assuming account value of $100,000: $100,000 X .60% = $600 annual fee.
The optional enhanced liquidity benefit (ELB) rider provides you with the following additional liquidity features:
The Versa Choice 10 has quite the abundance of different indexes and crediting options to choose from. Below are alist of the available indexes along with the crediting method and rates for each.
We ran a hypothetical illustration using the software provided by North American on their website to get an idea of what type of performance one could expect. The below table shows what the hypothetical returns would have been for the best, worst and most recent 10 year periods.
The most recent 10 year period in this case also happened to be the best 10 year period. As you can see the most recent and best 10 year periods annual effective yield was 11.40% and the lowest 10 year period had an annual effective yield of 5.98%.
For the purposes of this illustration we placed 50% of the premium in the Fidelity Multifactor Yield 5% ER annual point to point with participation strategy and the other 50% in the Fidelity Multifactor Yield 5% ER two year point to point with participation strategy.
These returns are unusually high for an index annuity, but quite impressive. If the policy could deliver even the lowest shown effective annual yield of 5.98% over the next 10 years we would consider this to be a very good return for an investment product with zero downside risk.
Market fluctuations seem to be the only constant these days. And you may be searching for new ways to help manage this volatility, while also growing your assets for retirement.
One option is to harness the power of factors with the Fidelity Multifactor Yield Index 5% ER.
This rules-based index blends six equity factor indices with U.S. Treasuries and cash, using a dynamic allocation approach that seeks to reduce volatility to deliver more consistent returns over time.
• Nearly 100 quantitative investment professionals across equity, fixed income, and asset allocation
• Provides expertise to retail, intermediary and, institutional strategies
3,000+ equity and fixed income characteristics in the research library
• Style factors
• Macro factors
• Custom, proprietary risk-management tools
The North American Versa 10 is a great annuity option for anyone who has money they’d like to invest for a 10 year time horizon. In our mind it would be a great option for someone 10-15 years from retirement with a 401k that could be rolled over from a previous employer.
The amount of options and the impressive hypothetical performance of the brand new FIDMY Index would be hard to beat anywhere in the annuity marketplace. Couple the strength of the product with an insurance company with more than 150 years under their belt and an A+ AM Best rating and you have an attractive offer. That is, if you have a 10 year time horizon.
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This is an independent annuity product review , not a recommendation or solicitation to buy or sell an annuity. North American Company 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.