New Allianz Summit II Annuity Protects Against Blended Index Fluctuation |
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Written by U. S. Insurance News
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Monday, 23 June 2008 |
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Whether the blended index is performing well or not, owners of a new Allianz Summit IISM annuity will earn positive indexed interest.
“Given recent fluctuations in the financial markets, consumers are increasingly looking for lower risk options to strengthen their financial positions and plan for the future,” explained Tom Burns, chief distribution officer for Allianz Life Insurance Company of North America. “With Summit II, Allianz offers them an opportunity to increase the value of their annuity even when the blended index is down.”
The amount of indexed interest a Summit II annuity earns during the first 10 contract years is determined through five-year point-to-point crediting. To calculate this, Allianz takes the value of the blended index the day before the first day in the five-year period and on the last day during that same period.
If the index change during the five year crediting period is positive, then it is multiplied by the upside participation rate to calculate the indexed interest rate. For example, if the blended index gains 20 percent and the participation rate is 100 percent, then the indexed interest credited to the annuity would be 20 percent.
The same holds true in a period of negative change in the blended index—the consumer still earns positive indexed interest. For instance, if the blended index change is -20 percent and the downside participation is 10 percent, the blended index change is treated as a positive 20 percent and the accumulation value would increase by 2 percent.
The only time there wouldn’t be an indexed interest credit is if the blended index change was exactly 0.
After 10 years of owning the annuity, consumers can choose from other options, such as annuitization, moving to a fixed interest account, or taking their full accumulation value as a lump sum with no surrender charges.
The Summit II Fixed Index Annuity has no caps or upfront fees; gives immediate access of 10 percent of premium paid available in free withdrawals; offers fixed interest crediting after the surrender charge period;is guaranteed not to go below 1.5 percent; and features a 10-year decreasing surrender charge schedule.
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