Unlike variable annuities with Guaranteed Minimum Accumulation Benefits that require waiting periods of up to 10 years, the new Index Advantage product will provide opportunity for benefits to be protected every year.
Compared to Fixed Index Annuities (FIAs), the IVA will increase the amount of return potential with high caps on the interest credit coming from the growth of an equity index in exchange for less protection.
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IVAs offer protection from the first 10% of losses per year versus guarantees of no losses from a traditional FIA, although some IVAs will offer that option in exchange for less upside potential. This is a fundamental shift for accumulation choices among variable annuities.
Index Advantage, which is currently approved in 43 states, will provide flexibility through strategies like the Index Performance Strategy and the Index Protection Strategy. Additionally, Index Advantage also includes built-in death benefit protection and tax deferrali.
Allianz Life Financial Services president, Robert DeChellis, said: "Index Advantage offers a way to help manage this dilemma with unique growth opportunities and a level of protection for people willing to accept some downside risk in exchange for additional growth potential."
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