American Equity’s Choice 8 fixed index annuity is very similar to its Choice 6 product. The only major difference is that this has an 8-year surrender charge period while the Choice 6 has a 6-year surrender charge schedule.
Features of the Choice8 Annuity from American Equity
Penalty-free withdrawals
Once every year, annuitants can make a penalty-free withdrawal. If they selected the MVA (Market Value Adjustment) at issue, then the effective penalty-free withdrawal rate is 5%. If MVA was however not elected, the applicable penalty-free withdrawal rate stands at 10%.
Market Value Adjustment (MVA)
Just like the Choice 6 product, American Equity’s Choice 8 offers an optional MVA rider. This rider might decrease or increase the amount of a withdrawal above the penalty-free threshold, or the surrender value. Increase in the MVA index triggers a decrease in the cash surrender value, and vice-versa.
Qualified Care Needs
The two qualified care needs riders are automatically available to all annuitants who’re below 75 years at issue.
Nursing Care Rider
The nursing care rider, also referred to as the NCR-100, makes it possible for the annuitant to receive 100% of their Contract Value if at all they’re confined in a nursing home for more than 90 consecutive days after the third contract anniversary. If confinement happens within the second or third contract year, a 20% penalty-free withdrawal is allowed.
Terminal Illness Rider
The Terminal Illness Rider (TIR-100) kicks in whenever an annuitant is diagnosed with any terminal illness after the first Contract Anniversary. It gives them access to a 100% penalty-free withdrawal of their entire Contract Value.
Death Benefit
With the Choice 6 from American Equity, the death benefit is given to the annuitant’s beneficiaries without any surrender charges.
Choice 8 American Equity Surrender Charge Schedule for issue ages 18-85
| Contract Year | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9+ |
| Surrender Charge Percentage | 9.2 | 8.25 | 7.25 | 6.5 | 5.5 | 4.5 | 3.5 | 2.5 | 0 |
Annuity Advantages
- Principal protection – any interest that’s credited to the contract is locked in and protected from index volatility.
- Guaranteed income – with flexible payouts.
- Tax-deferred growth – you earn interest on your investment without paying any taxes till you make a withdrawal, or when the distribution begins.
- Liquidity – each contract presents ample opportunities to withdrawal your funds.
- Avoidance of probate – your beneficiaries may avoid the expenses and time usually spent in probate.
