Monday, 1 November 2021

Does the Allianz 222 Annuity Really Provide Growth, Safety AND Retirement Income?

If you’ve spent any amount of time researching annuities online, it is likely that at some point, you have run across information and in-depth annuity reviews on the Allianz 222 fixed indexed annuity. Oftentimes people end up researching the Allianz 222 because they were sold this annuity after attending a dinner seminar or retirement workshop hosted by a financial salesperson.

Depending on where those details came from, you might think that the 222 annuity from Allianz is the best retirement income generator you’ve ever seen, or alternatively, you may now believe that the Allianz 222 is just an over-hyped insurance contract with way too many “bells and whistles.”
So, let’s take a closer look at this annuity to see if it helps you make a more informed decision.

Allianz 222 Annuity Overview

Throughout the years, Allianz annuities have garnered a good reputation for being reliable and dependable. Founded in 1896, this insurance company is strong and stable financially, and has earned high ratings from the insurer rating agencies.

Just like any other fixed indexed annuity, the Allianz 222 offers the ability to generate growth, based on the performance of an underlying market index. In this case, though, there are several index allocation options, including the:
  • S&P 500
  • Nasdaq 100
  • Russell 2000
  • BlackRock iBLD Claria 
  • Bloomberg US Dynamic Balance Index ll
  • PIMCO Tactical Balanced Index

There is also a fixed interest allocation available, which can help you to further diversify your holdings. (Although, with no losses to be concerned with, it could make sense for you to give it a go with alternatives for higher growth potential).

How the Allianz 222 Bonus Works

One factor that helps the Allianz 222 to stand out is the 15% bonus you can receive on any premium you put into the annuity within the first 18 months. Plus, you can also attain an interest bonus that is equal to 50% of any interest you earn from the index allocations that you’ve chosen.
Not bad! But is there a catch?

Actually, yes…and no.

One of the parameters is that both the premium bonus and the interest bonus are only credited to the protected income value, not the entire account value. So, there’s a big difference between these two components.

In addition, in order to receive the protected income value – including the bonus – you need to hold the contract for a minimum of 10 years, and you must also opt for the lifetime income withdrawals.
In other words, if you decide down the road that you don’t want to keep the annuity anymore, and you cash out, you won’t receive the bonus. Nor will you qualify for it if you go the route of “traditional annuitization.”

The surrender period on the Allianz 222 is somewhat steep, too, starting with a 10% surrender penalty in Years 1 through 3, and then gradually grading down to 0% in Year 11. If you surrender only part of the contract (over and above the penalty-free withdrawals of up to 10% of the contract value each year) during the surrender period, you could also face a market value adjustment.

This, however, may or may not be a bad thing for you. For instance, if interest rates have risen since you initially purchased the 222 annuity, then it may face an adjustment to a lower rate. However, just the opposite is true, as well. So, if rates have fallen since you got into the annuity, you may find that you’re rewarded with a higher interest rate going forward.

Further “fine print” states that because the Allianz 222 is a bonus annuity, the surrender charges you are subject to could be higher, and they could also last for a longer period of time than on other, more traditional annuities.

Pros and Cons of Allianz 222 Annuity

Benjamin Franklin was known for sitting down and going over “pro and con” lists before making important decisions. So, why not follow in his footsteps and compare the benefits and the drawbacks of the Allianz 222 annuity before making a commitment or walking away?

First, take a look at the advantages. These include:

  • Opportunity for growth that exceeds that of other “safe” investments like CDs, bonds, or even regular fixed annuities
  • A premium bonus (provided you meet all the parameters)
  • No downside risk, even if the market tanks like it did in 2008
  • The option to receive a guaranteed stream of income for the rest of your life

Of course, there are a few tradeoffs, too, such as:

  • An 11-year surrender period
  • A market value adjustment if you withdraw “too much” money during the first 11 years

So, is the Allianz 222 annuity a good investment?

That depends.

If you plan to hang on to it for the duration, then yes, this annuity could provide you with a good opportunity to grow your savings on a tax-deferred basis, while at the same time keeping your principal safe from any market downturns.

It could also provide you with a nice, steady income in retirement – something that many investors fear they won’t have, particularly if they live a nice long life.

Need More Information on Generating Lifetime Retirement Income?

Feeling more confused than ever about whether or not the Allianz 222 annuity makes sense for you?
It’s ok, we understand.

We’re annuity “geeks.” At Annuity Gator, we love tinkering around with various projections and “what if” scenarios. Head over to Annuity Gator and we’ll walk you through an Allianz annuity calculator that can help to narrow down what you can anticipate, based on your specific situation, timeframe, and objectives.

So, before you slam the door on the Allianz 222 annuity for being “too confusing” or having too many moving parts, sit down, take a deep breath, and consider the possibilities.

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