Allianz Essential Income 7 Annuity Review

The Allianz Essential Income 7 annuity is a fixed indexed annuity designed to provide dependable lifetime income along with opportunities for growth potential. The purpose of this review is to provide an in-depth look at how the annuity works, its features and benefits, and who it may be suitable for.

About Allianz Life

Allianz Life Insurance Company of North America specializes in providing a range of financial products aimed at ensuring long-term security. Their offerings include various types of annuities, such as fixed index annuities, which offer a combination of income stability and growth potential through linkage to market indexes.

They also provide life insurance options that not only offer death benefits but can also accrue cash value, giving policyholders flexibility and tax-advantaged growth.

Additionally, Allianz Life is noted for its innovative asset management services, including Buffered ETFs, which help protect against market downturns while allowing for participation in potential gains.

Allianz Life Financial Rating

Rating Company

Rating

Moody’s

Aa3

S & P

A.M. Best Rating

A+

Comdex

Allianz Essential Income 7 Highlights

7-Year Fixed Index Annuity
The annuity provides guaranteed income payments for the first 7 years of the contract. This means you cannot outlive your income during this initial period.
Fee Withdrawals
After the first contract year, you can withdraw up to 10% of your contract's premium annually without penalty, provided the withdrawals occur after the contract anniversary following the most recent premium payment.
Allianz Income Multiplier (AIM) Benefit
This benefit potentially doubles the annual maximum available withdrawal amount if the annuitant is confined to a qualified hospital, nursing facility, or assisted living facility for at least 90 days within a consecutive 120-day period, starting after the fifth contract year.
Death Benefit
Beneficiaries have the option to receive either the full accumulation value, the cumulative withdrawal amount, net premium, or the guaranteed minimum value as a lump sum or as annuity income payments spread over at least five years.
Protected Income Value Bonus
The Essential Income 7 Annuity provides a bonus to the Protected Income Value which applies under specific conditions and might affect the withdrawal percentages and annuity payments.

Allianz Essential Income 7 Annuity Overview

🔔 Important Information

Annuity Term

7 Years

Type of Annuity

Fixed Index

Interest

4.00% (fixed)

Premium Type

Flexible

Maximum Issue Age

80 years

Withdrawal Charge Schedule

18.50%, 8.00%, 7.00%, 6.00%, 5.00%, 4.00%, 3.00%, 0%

Minimum Premium

$10,000

Maximum Premium

$1,000,000

RMD

Yes

Market Value Adjustment

Yes

Allianz Essential Income 7 Historical Rate of Return

The hypothetical historical performance provided herein showcases the annualized return of allocation strategies, representing the investment's annual growth rate considering compounding effects. Similar analyses can be found for each account in official fixed index annuity illustrations provided by insurance carriers.

What's not reflected:
The annualized return does not encompass rider charges, strategy fees, or applicable premium bonuses.

Notes on rates:
The information presented assumes the annuities' current caps, spreads, participation rates, and other related rates, without guarantee.

No guarantees:
These actual elements are subject to change over time, resulting in potentially higher or lower outcomes. Additionally, no single index consistently outperforms in every scenario. It is advisable to consult with a properly licensed and educated annuity professional before making any decisions.

Fees and Charges

There’s a charge that applies annually, and it's a percentage of the accumulation value, deducted monthly. For the guaranteed minimum value, it’s consistently 1.05% across all contract years. The charge for the accumulation value starts at 1.05% in the first year and can go up to a maximum of 2.50% during the next six years, then settles back to 1.05%.

Index Options

The Allianz Essential Income 7 Annuity offers the following two index options to choose from, each designed to meet different investment strategies and goals.

Crediting Methods

This annuity uses the annual point-to-point with a cap crediting method. This formula measures the change in an index from the start to the end of the annual contract term, applying a cap which is the maximum rate of return that can be credited to the annuity, regardless of how much the index actually increases.

Allianz Essential Income 7 Surrender Charge Schedule

The Allianz Essential Income 7 Annuity includes a surrender charge schedule, which applies if funds are withdrawn in excess of the free withdrawal amount before the end of a specified period.

These charges decrease annually and are designed to discourage early withdrawals, helping to ensure that the funds remain invested for a longer period to potentially increase their value over time.

The schedule typically starts with a higher percentage in the first year and decreases each year until it reaches zero, providing more flexibility as you move closer to the end of the surrender charge period.

Here’s a table showing the surrender charge penalties for early withdrawals from the Allianz Essential Income 7 Annuity.

Allianz Essential Income 7 Annuity Key Features

Allianz essential income 7 has the following key features:

Fixed Index Annuity

The Allianz Essential Income 7 is commonly structured as a fixed index annuity. This means it offers a balance between potential growth based on the performance of an external index (like the S&P 500) and the security of a fixed annuity. Your principal investment is protected from market downturns but has the opportunity to grow based on preset crediting methods linked to an index's performance.

Guaranteed Income

Annuities from reputable companies like Allianz often come with a feature that allows for income to be guaranteed for life. This is an attractive feature for retirees seeking the security of a stable, predictable income stream to cover essential expenses after they stop working.

Income Withdrawal Benefits

The income withdrawal benefits typically allow policyholders to take out a percentage of their annuity's value each year, starting at a certain age, without surrender charge. This feature can be essential for individuals looking to maintain a consistent income.

Bonus on Premium

Some annuities offer a premium bonus, which is essentially an immediate increase to your annuity value. For example, with Allianz Essential Income 7, a certain percentage bonus is usually added to your contract value for every premium payment you make.

Accumulation Potential

The accumulation potential may vary based on the performance of the index to which the annuity is linked. There’s a possibility to increase the contract value through index-linked interest crediting methods, although they are usually capped to control the risk.

Surrender Period

This annuity is likely to have a surrender period of about seven years, as suggested by its name. This means that withdrawals above a certain free-withdrawal amount during this period will incur surrender charges and potentially a market value adjustment.

Pros and Cons

Guarantees a steady and predictable income stream, which is particularly valuable for retirees looking for financial stability.
The annual withdrawal percentage increases automatically, which can help income keep pace with inflation and rising costs over time.
Interest grows tax-deferred, which can enhance the efficiency of long-term growth.
Interest grows tax-deferred, which can enhance the efficiency of long-term growth
The principal investment is protected against market downturns, providing a secure financial base regardless of market volatility..

While there is potential for growth tied to a stock index, the growth is capped, meaning it might not perform as well as the market in strong years.
Fees associated with the annuity can be complex and may include administrative fees, mortality and expense risk charges, and optional rider costs.
Early withdrawal from the annuity can result in high surrender charges, reducing the accessible value in the initial years.
Compared to other financial instruments, annuities generally offer less liquidity, which can be a disadvantage if financial circumstances change unexpectedly.

Key Takeaways

The Allianz Essential Income 7 Annuity offers a secure and robust solution for those seeking reliable financial support in retirement.

With features like the Essential Income Benefit, which increases withdrawal percentages over time, and tax-deferred growth potential, this annuity caters to retirees looking to preserve their lifestyle while protecting their capital from market fluctuations.

Its blend of guaranteed income and growth opportunities, alongside flexibility in withdrawal options, makes it an attractive choice for those aiming to balance stability with potential returns on their investments.

For anyone planning their retirement finances, the Allianz Essential Income 7 Annuity is worth considering for its comprehensive benefits and security.

About the Product

Product Name

Allianz Essential Income 7 Annuity

Product Type

Fixed Indexed Annuity

Launch Date

2014

Product Information

The Allianz Essential Income 7 Annuity is a fixed index annuity designed to provide financial stability in retirement through guaranteed lifetime income options and tax-deferred growth.

It features an Essential Income Benefit that automatically increases withdrawal percentages with age, helping retirees manage rising living costs. This product is ideal for those seeking a secure and predictable income stream, alongside the potential for growth linked to a stock market index, while protecting the principal from market downturns.

Product Brochure

Account Types

Non-Qualified, 401k, IRA, Spousal IRA, IRA Rollover, IRA Transfer, SEP IRA, IRA-Roth, and TSP

Not Available In

New York

Annuity Expert

Jeremiah Konger

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Other Allianz Life Fixed Index Annuity Products

Allianz 222

Allianz 222 offers a unique blend of security and growth potential. This annuity features a built-in Protected Income Value benefit that increases your retirement income possibilities every year you defer withdrawals.

Allianz Core Income 7

With a 7-year term and a $10,000 minimum deposit, Allianz's Core Income 7 comes with an income rider that boosts your accumulated value during the savings phase.

Allianz Accumulation

The Accumulation annuity from Allianz gives annuity holders the opportunity to invest using 17 different market indices for potential growth over time.

Allianz Essential Income 7

With a $10,000 minimum deposit, Allianz's Essential 7 annuity allows your retirement income to grow each year. There are no surrender fees once the 7-year term is up.

Allianz Benefit Control

With Allianz Benefit Control, you have more control over how you invest your annuity funds and can earn a bonus on premiums deposited in the initial 18-month period.

Allianz Retirement Foundation

The Retirement Foundation annuity is only available from advisory platforms, not directly to individual investors, so you need to engage a financial advisor to purchase.

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