A couple days ago I received the following email looking for an annuity review:
Could you please review the Allianz Vision Variable Annuity – for four (4) years. I am a senior (age 69) and am thinking about the above annuity but after reading your review I am not sure it is best for me. I am a non risk taker and hopefully intend to work for about 5 more years. This amount of $ represents a major part of my retirement $. I am thinking of investing 50000. Thank you.
I’ve actually gotten a few requests regarding the Allianz Vision annuity, specifically around the “Income Protector” rider. Alas, the review you’re reading today!
Here’s some quick bits on this annuity:
- Allianz Vision is a variable annuity issued by Allianz Life Insurance Company of North America
- Vision has a slew of different options regarding bonuses, riders, surrender periods, etc – so carefully reading the prospectus and knowing which options you really need is important
- Via the Income Protector rider this annuity allows owners a guaranteed income for life element in addition to the upside of a diversified portfolio
- Like many annuities the costs can be quite high – over 4% depending on the riders chosen – ouch!
Like most of my reviews I used video to break it down extensively. You can watch that video here:
My conclusions on the Allianz Vision Variable Annuity:
As a pure investments (without the guarantees) this annuity is much like all variable annuities – which means because of the high costs investors will always get inferior returns. With that being the case the only reasons this should be purchased are due to the guaranteed elements such as the Income Protector rider. The downside to that rider is more so the way many advisors try to sell it than the rider itself. So let me make this really clear.
With the Income Protector Rider you WILL NOT ever make 8%, 0r 5%, or probably even 4%.
Any financial advisor that tells you otherwise clearly doesn’t understand how the rider works. Instead, what it does is allows peace of mind that you have a modest income guaranteed for life in the event your investments fail to grow at a sufficient rate. That’s not entirely bad, it’s just how it really works. As for what that rate of return is likely to be – well that depends on how old you are when you start the annuity and how many years you wait for income to start. After I ran about 20 different scenarios I think a fair estimate is between 2% and 4% depending on how long the account owner lives.
It is important to note that the Income Protector rider doesn’t provide any return ON the investment until it pays back your original amount. In most circumstances this will take 20+ years from the original investment date. Given you need to wait 20 years for the guarantee to be worth much I would think most investors are better off just using a well diversified, conservative portfolio – but if having an absolute guarantee of principal and income is desired the Allianz Vision Annuity with Income Protector rider can do the job.
If you have questions or comments just let me know. You can use the contact form on the site or just use the comment box below.
Regards,
Jason Wenk
I just meant with a financial advisor and he wanted to put my money in an annuity from Allianz Vision..he told me that his other clients are getting a 9-12% return. I have a benefiary IRA that would have to be rolled into this account. This sounds to good to be true, specially in this economic environment.
I have to take a certain amount over my lifetime from my IRA he was telling me to get a 10 year annuity. I would love your thoughts.
Thank you
PS My bad…we never talked about fees.
Hi Lori,
First, never believer anyone who says “my clients have been averaging 9-12%” – that’s just play non-sense and highly illegal. Truth is, using an annuity with fees 2-4% per year means that advisor would have to generate 11-16% returns before fees, which just isn’t happening.
Sorry to be the bearer of bad news, but I’d run (not walk) away from whoever made those suggestions. As for the suitability of the product, that depends greatly on your individual goals and financial circumstances. To help with that you’ll want to find a good, honest financial advisor who can help.
Thanks for comment and checking out my blog – and best of luck!
– Jason
I just watched your review of the Allianz Vision VA and it was very helpful for me as annuities are complex investments. I purchased an Allianz Vision VA in mid-September of 2011. My initial investment was slightly more than 75K, and I am about to invest another 75K in the next week or two. I am now 67 and will turn 68 on Jan 4, 2013. I do not have the death benefit or the benefit for early withdrawal (0% at 7 years). I do have the income protector rider. Do you have any advice for when I should start to receive payouts as part of my Income Benefit? Based on your video review it sounded like a holder of this type of annuity should begin to receive income distributions as soon as possible, otherwise the invested funds are less likely to be used. Any insights you can provide would be appreciated. Thanks again for the review.
James
Hi Jim,
Thanks for the comment and kind remarks.
I’d be careful about adding more to that particular contract as my opinion is there are better options for investors out there. In a nutshell, the income guarantee is inferior to others available and the costs much too high for my taste. That said, without knowing more about your unique situation and goals I cannot make specific suggestions.
Feel free to reach out if you have more questions and thanks again for the comment.
Best,
Jason Wenk
Jim – sorry I didn’t answer your original question. Sorry!!
The sooner you take income the more likely it is your income guarantee will actually return all of your original investment. However, it doesn’t change the overall return expectations much.
And, as I suggested earlier, I would not add more gasoline to the fire (so to speak – I wouldn’t add more money to the existing contract).
Cheers,
Jason
Jason,
Thank you for the great review. I will need to watch this a few times to really understand it well.
My advisor is offering me this product. I am a single 59 yo woman and am rolling over a significant 401K (approx $250k.) He would like to take a portion, about 1/3, and put it in the Allianz Vision NY Variable Annuity. The intended long term purpose is to pay premiums for a New York State Partnership for Long-Term Care policy well into my 80-90′s. He would like to have the income kick in at 10 years from now. For that reason I don’t feel I need to be as worried about the returns. Should I be? I see it as a way to take care of myself, despite whatever health I might be in, considering I may not have any family members to care for me.
The other 2/3 of the 401K he would like to use an LPL Diversified Plus Tactical mutual fund in a growth with income fund. The intended purpose of this would be to provide income for my living expenses to supplement SS payments. Being able to put money into many market products (that are constantly adjusted) rather than one proprietary company’s products seems to be the benefit here.
I realize the fees on both these products are very high and can eat into the collective interest rate on my total sum. I, however, don’t want to be worried for the rest of my life that I have not put my money in the best places to earn the best interest rate and have short changed myself through my own ignorance. Accepting a bit less in interest to insure stability and/or security does not seem like a bad idea.
So my question is, considering these circumstances, is using the Allianz product for this limited purpose the ideal way to achieve my goal?
Thank you for your time!
Hi Pat,
Thanks for the positive feedback on my blog and sharing your question.
I’m not sure I like the plan your advisor is suggesting. It sounds expensive and not really part of a thorough financial plan. Specifically, I think there could be better ways than using a Variable Annuity to generate income for your insurance premiums. Generally, I like the idea of Tactical Asset Allocation, but the Growth and Income model is mostly growth oriented and my be higher risk than most 59 year olds should be taking.
That said, without knowing more about your situation I can’t give any specific feedback. Since I was on vacation last week – hopefully one of my business partners already reached out and provided some feedback.
Thanks again for finding my blog and sharing your questions. Just let me know if there’s more help I can provide.
Best,
Jason Wenk
Excellent Information!
I recently got a large severance package from a former employer. Luckily, my period of unemployment was short and I and am now looking to invest that severance money into my retirement plans. I am 45, married no kids. A financial adviser suggested this Annuity, and wanted to roll over my IRA from my previous employer into this plan as well as money from my severance.
His comments to me were that this annuity would grow at a 6% rate (after admin fees) and if the market was flat or took a downturn, I would still get the guaranteed rate of 6%. Then, if the market went up, I would get those gains as well on top of the guaranteed 6%.
I guess I am suspicious because interest rates in the country are so low. It seems too good to be true.
Am I missing something?
Thanks for your feedback!
Hi Barbara,
Thanks for finding my blog and commenting.
I’d suggest watching the video on the post, as it details how the riders (including the one it sounds like was proposed for you) really work. It does NOT guarantee 6%, so I would be highly skeptical of any financial advisor that suggests it does. At best, they are ill informed. At worst, they are flat out not telling the truth.
Best of luck,
Jason
We just spoke to an advisor at Navy Federal about this product. I googled around to see if there were any reviews on it, and I’m glad to have found your excellent site.
Thank you very much for the detailed review and video addressing the mechanics of this product. I also enjoyed reading some of your other blogs regarding the new market highs, and predictions.
GM
Thanks for the feedback! Glad to be of assistance.
Cheers,
Jason
I am considering the American Equity Indexed. I turn 65 soon and do not need the money at this time. My main concern is protecting the principal. I like parts of the plan but am concerned regarding the 16 year penality period. I am rolling over a 100K IRA , Can you give me your thoughts on this???
Hi Tommy,
Thanks for visiting my blog and sharing your question. Be sure to check your email as I had one of my partners send a more specific email than I can leave via a comment here on the blog. Generally speaking, any annuity needs to fit into a well balanced retirement income plan. 16 years is a long time, and even longer if you’re already close to 65.
Thanks again,
Jason