Fintech executive, writer, math geek, and investment systems developer. Founder and CEO of Altruist and Founder of FormulaFolios.

Independent Review of the Allianz Vision Annuity with Income Protector Rider

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

Market Update - April 23, 2012

Market Update for April 11, 2012