American Pathway Fixed 5 Review

Looking for a reliable fixed annuity for your retirement savings? The American Pathway Fixed 5 might be what you need. In this review, we'll cover its key features, benefits, and potential drawbacks to help you decide if it suits your financial plans.

About Corebridge Financial

American General Power Index 5 is a fixed index annuity offered by Corebridge Financial. Founded in 1850, the company has established itself as a trusted institution in the insurance industry.

Corebridge Financial is one of the biggest providers of retirement solutions to meet the diverse needs of individuals and families. Based in New York, the company has a proven track record of excellent customer service and a wide portfolio of products and services.

Corebridge Financial enables people to take action toward their financial stability and remains one of the sought-after providers of annuity options.

Corebridge Financial Rating

Rating Company

Rating

Moody’s

A2

S & P

A+

A.M. Best Rating

A

Comdex

80

American Pathway Fixed 5 Highlights

5-Year Fixed Index Annuity

As the name suggests, this annuity has a fixed term of five years. This duration is ideal for investors looking for a medium-term investment option that balances growth potential with a relatively short commitment period. It allows for a defined planning horizon, making it easier to integrate into your overall financial strategy.
Tax-Deferred Growth

Earnings on the Fixed 5 annuity grow on a tax-deferred basis. This means you do not pay taxes on the interest until you withdraw the funds. The advantage of tax deferral is that it can significantly enhance the compounding effect, potentially leading to greater overall returns over the term of the annuity.
Guaranteed Interest Rates

The Fixed 5 annuity offers a guaranteed interest rate for a five-year term, ensuring that your investment grows at a predictable rate. This feature is particularly beneficial for those seeking stability and protection from market fluctuations, providing peace of mind that your principal is secure.
Minimum Guaranteed Surrender Value

If you decide to surrender the annuity before the end of the five-year term, you are guaranteed to receive at least a minimum value. This provision protects your investment by ensuring that you recover a portion of your principal, even if you need to access the funds earlier than planned.
Liquidity Options

The Fixed 5 annuity includes provisions for liquidity, allowing for partial withdrawals without penalties under certain conditions. This can include options like free annual withdrawals up to a specified percentage of the account value. Additionally, there may be waivers for withdrawal charges in cases of terminal illness or nursing home confinement, ensuring that you have access to your funds when you need them most.
Death Benefit

In the event of the annuitant's death, the beneficiary will receive the accumulated value of the annuity. This feature ensures that your investment continues to provide financial support to your loved ones, offering a measure of security and continuity.

American Pathway Fixed 5 Annuity Overview

🔔 Important Information

Annuity Term

5 Years

Type of Annuity

Fixed Index

Interest

5.05% or 3.50%, depending on premium amount

Premium Type

Single Premium Annuity

Maximum Issue Age

80 years

Withdrawal Charge Schedule

9%, 8%, 7%, 6%, 5%, 0%,

Minimum Premium

$2000- $5,000

Maximum Premium

$1,000,000

RMD

Yes

Market Value Adjustment

Yes

American Pathway Fixed 5 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

The American Pathway Fixed 5 annuity has no initial sales charge or annual fee, making it an attractive option for those looking to avoid upfront costs. However, there are withdrawal charges applicable to amounts exceeding the penalty-free withdrawal limit during the initial surrender period.

Index Options

The American Pathway Fixed 5 does not utilize index options since it is a traditional fixed annuity. Instead, it offers a fixed interest rate for a specified period.

Crediting Methods

The interest rate is fixed and guaranteed for a specific term. The rate can vary depending on the amount of premium deposited. Currently, the highest yield for a five-year term is around 5.05%.

American Pathway Fixed 5 Annuity Surrender Charge Schedule

The surrender charge schedule typically spans five years, with the charge percentage decreasing each year. After the fifth year, withdrawals are free from these charges. Starting from the second contract year, up to 15% of the contract value can be withdrawn each year without incurring a penalty.

If you don't use the full 15% penalty-free withdrawal allowance in a given year, up to 5% of the unused portion can be carried over to the next year, potentially allowing up to 20% withdrawal without penalty. Withdrawals exceeding these limits may incur market value adjustments (MVA) if the interest rate environment changes, which can either increase or decrease the withdrawal amount based on current rates compared to the rates at the time of the contract's issuance.

This table shows the surrender charge penalties for early withdrawals from the American Pathway Fixed 5.

American Pathway Fixed 5 Annuity Surrender Charge Schedule

American Pathway Fixed 5 Key Features

American Pathway Fixed 5 has the following key features:

Guaranteed Interest Rates

The annuity offers fixed interest rates that are guaranteed for specific terms (one, three, five, or seven years). The current highest guaranteed annual yield for a five-year term is around 5.05% for premiums between $100,000 and $1,000,000.

Free Withdrawals

Starting from the second contract year, you can withdraw up to 15% of the contract value each year without incurring penalties. This allows for flexibility in accessing funds while avoiding withdrawal charges.

Market Value Adjustment (MVA)

This feature applies to withdrawals exceeding penalty-free amounts during the initial interest rate guarantee period. The adjustment can increase or decrease the withdrawal amount based on current interest rates compared to the rates at the time of contract issuance.

Optional Return-of-Premium Guarantee

This option allows you to cancel the annuity and receive the greater of your initial premium (minus any withdrawals), the contract value minus charges, or the minimum withdrawal value. Selecting this option may result in a slightly lower initial interest rate.

Penalty Waivers for Specific Conditions

The annuity offers waivers for withdrawal penalties in certain situations, such as terminal illness, extended care confinement, or inability to perform activities of daily living. These waivers provide added security and flexibility for accessing funds during critical times.

Pros and Cons

Guaranteed interest rates for up to 5 years
Tax-deferred growth
Flexible payout options
Principal protection
Penalty-free withdrawals up to 15% annually
Systematic withdrawal options

Potential surrender charges for early withdrawals
Market value adjustment (MVA) during the initial term
Withdrawal charges for amounts exceeding penalty-free limits
MVA can decrease withdrawal amount if interest rates rise
Withdrawal limitations during the first year
Lower interest rate with return-of-premium guarantee

Key Takeaways

The American Pathway Fixed 5 offers a reliable solution for those seeking stable and predictable growth in their retirement savings. With a guaranteed interest rate for a five-year term, tax-deferred growth, and flexible liquidity options, it caters to both growth and security needs.

Additionally, features like the minimum guaranteed surrender value and penalty waivers for specific conditions add a layer of protection and accessibility. This annuity is ideal for investors looking for a medium-term commitment with the assurance of principal protection and consistent returns, making it a valuable addition to a well-rounded retirement strategy.

About the Product

Product Name

American Pathway Fixed 5

Product Type

Multi-Year Guarantee Annuity (MYGA)

Product Information

The American Pathway Fixed 5 is a single premium, tax-deferred annuity with a guaranteed interest rate for up to 5 years. It provides principal protection and offers systematic withdrawal options. The annuity includes penalty-free withdrawal privileges of up to 15% annually after the first year. Market Value Adjustment (MVA) applies during the initial term. It also waives withdrawal penalties upon death, providing a death benefit to beneficiaries.

Product Brochure

Account Types

Non-Qualified, 401(k), IRA, Spousal IRA, Pension, IRA Rollover, 401(a), IRA Transfer, TSA 403(b), SEP IRA, IRA-Roth, 1035 Exchange, TSP

Not Available In

Varies by state

Annuity Expert

Jeremiah Konger

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