Case Study: North American Income Pay Pro Annuity
North American Income Pay Pro 10 Reviewed
Sherri's Case Study
Sherri is 49 years old and isn’t exactly sure when she will retire; I guess who really is? Her plan is to retire between the ages of 60 and 65. Her goal was the most guaranteed lifetime income at retirement but without an exact date, we couldn’t solve that.
We ran calculations and recorded the top 3 payouts at each age in hopes that one annuity would be at or near the top for each age. The table below our data and the North American Income Pay Pro was the clear winner coming in each year other except age 65 ($9.00 shy annually).
North American Annuity Company
North American is rated A+ AM Best (the second-highest financial rating assigned by AM Best). The below table also lists their Standard & Poor’s rating, Moody’s rating, and Comdex Score.
| 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) |
| Weiss | B(5) |
| Comdex Score (Percentile of All Rated Companies) | 89 |
| Standard & Poor's (Financial Strength, 20 Ratings) | A+ (5) |
Quick Intro to Index Annuities
Annuity Sales in the United States have continued to rise over the past few years. However, they still get a lot of criticism in the media and even from some financial advisors for being overly complicated. In reality, annuities are much less complicated than most other investment products.
With that said, there are many different types of annuities and each type is designed to achieve a certain goal; all of which fall into one of these categories.
- Accumulation
- Distribution
- Wealth Transfer
The Income Pay Pro would not be the best choice if accumulation was Sherri’s goal; lifetime income (Distribution) was the primary strength of the Income Pay Pro. We’ll try our best to make this case study as easy to understand as possible today.
You can not lose money in a fixed index annuity as you are not directly investing in the stock market.
Rather than provide a guaranteed annuity rate like a fixed annuity, a fixed index annuity guarantees a floor of zero percent. As the marketing slogan goes “zero is your hero.” Each year an index annuity has the potential to earn interest based on the performance of an external market index.
This is a case study for the North American Income Pay Pro Annuity so we won’t get into the weeds regarding fixed index annuities in general; however, you may find our Ultimate Guide to Fixed Index Annuities to be helpful if this is your first time shopping for a fixed index annuity.
Annuity Research Results
| ANNUITY/ AGE | 60 | 61 | 62 | 63 | 64 | 65 |
|---|---|---|---|---|---|---|
| North American Income Pay Pro Rider | $1,088 | $1,106 | $1,124 | $1,142 | $1,160 | $1,178 |
| Nationwide High Point 365 Select rider | $974 | $1,004 | $1,034 | $1,084 | $1,133 | $1,187 |
| Athene Ascent Pro 10 | $901 | $940 | $980 | $1,021 | $1,063 | $1,105 |
North American Income Pay Pro Annuity Contract Specifics
- Spousal Continuation is Available
- 6 Index Annuity Crediting Methods Avaialble
- Contract Term: 10 Years
- Fees: 1.15% Annually
- Minimum Deposit: $20,000
- Free Withdrawals: 10% of Account Value Beginning Year 1
- Issue Ages: 40-79
- Premium Type: Single Premium
Income Pay Pro is a modified single premium fixed index annuity with an embedded
guaranteed lifetime withdrawal benefit (GLWB) rider1 offering competitive, guaranteed
lifetime income.
Lifetime payment amounts (LPAs): are made to you as long as you live or, if applicable, joint annuitant lives. It’s a retirement “paycheck” you can count on.
Retirement income: Income Pay Pro provides multiple options for taking retirement income. So you’re in the driver’s seat in determining how and when you start receiving payments.
Growth: Fixed and index account options offer upside potential without downside market risk. Your premium is protected from market downturns.
Liquidity options: If you need access to funds, Income Pay Pro has different liquidity provisions that can help you when you need them most.
Tax deferral improves growth potential. Your annuity’s value grows on a tax-deferred basis, meaning more of it is working for you. Tax-deferred growth means you don’t owe taxes until you access funds, allowing more time for growth potential. Work with your tax advisor to
find out how this might work for you.
Under current law, annuities grow tax deferred. An annuity is not required for tax deferral in qualified plans. Annuities may be subject to taxation during the income or withdrawal phase. Please note that neither North American nor any financial professionals acting on its behalf should be viewed as providing legal, tax, or investment advice. Consult with and rely on your own qualified advisor.
May avoid probate By naming a beneficiary, you typically minimize the delays, expenses, and publicity often associated with probate. Please consult with and rely on your own legal or tax advisor.
Annuitization payout options By annuitizing your contract (electing an annuity payout option) or by turning on lifetime payment amounts (LPAs), you have access to a guaranteed income stream that will last as long as you live or, if applicable, joint annuitant lives.
Income Pay Pro Rate of Return & Projections
The North American Income Pay Pro 10 is a 10-year fixed index annuity with a guaranteed lifetime withdrawal benefit rider (GLWB) included. This means there are two separate values; an account value and an income value.
The account value is real money and what you could withdraw as a lump sum at the end of the contract. The income value is only used to determine annual lifetime income.
Morgan Stanley Dynamic Global PTP Hypothetical Historical Performance
Free North American Annuity Quote
Fill out the form below to receive a free annuity quote within 4 business hours, or use one of our annuity calculators.
Sammons Financial® is the marketing name for Sammons® Financial Group, Inc.’s member companies, including North American Company for Life and Health Insurance®. Annuities and life insurance are issued by, and product guarantees are solely the responsibility of, North American Company for Life and Health Insurance.
Fixed index annuities are not a direct investment in the stock market. They are long term insurance products with guarantees backed by the issuing company. They provide thepotential for interest to be credited based in part on the performance of specific indices, without the risk of loss of premium due to market downturns or fluctuation.
Although fixed index annuities guarantee no loss of premium due to market downturns, deductions from the accumulation value for additional optional benefit riders or strategy fees associated with allocations to enhanced crediting methods could exceed interest credited to the accumulation value, which would result in loss of premium. They may not be appropriate for all clients. Interest credits to a fixed index annuity will not mirror the actual performance of the relevant index.
Insurance products issued by North American Company for Life and Health Insurance®, West Des Moines, Iowa. Product and features/options may not be available in all states or appropriate for all clients. See product materials and state availability chart for further details, specific features/options, and limitations by product and state.
The Income Pay ProSM is issued on base contract form NA1012A / ICC17-NA1012A.MVA or appropriate state variation, including all applicable endorsements and riders.
Withdrawals taken prior to age 59 1/2 may be subject to IRS penalties.
Goal:
Purchase an annuity that will pay guarantee a lifetime income in retirement.
Client Details
A 49-year-old female with a $100K IRA.
Project Timeline
Plans to retire between ages of 60 and 65 (defer for 11 to 16 years)
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