American Life targets accumulation seekers with new FIA

Consumers are buying annuities in record numbers, attracted to the potential to participate in the market with little or no loss at stake. American Life & Security Corp. is feeding that market need for more new products with the new MaxGrowth 10 Fixed Indexed Annuity.

MaxGrowth is "designed to enhance retirement savings through accumulation while offering the security of principal protection," the company said.

The product is tailored for clients who prioritize accumulation over liquidity, focusing on maximum growth over a 10-year period, the company said.

FIA sales were $59.3 billion for the first half of 2024, up 23% year over year, LIMRA reported.

Some features of MaxGrowth include:

Growth potential: MaxGrowth enables policyholders to earn interest based on the performance of a chosen market index. The company is partnering with S&P Dow Jones Indices and Schroders on indexes.

Principal Protection: Regardless of market conditions, MaxGrowth ensures that the policyholder’s principal remains protected from market losses.

Multiple interest-crediting strategies: MaxGrowth includes various crediting strategies such as annual point-to-point, monthly sum, and performance-triggered options, providing flexibility to match financial objectives.

Tax-deferred accumulation: No taxes are due on MaxGrowth funds until a withdrawal is elected.

Annuitization flexibility: The annuity allows for additional premium contributions within the first six months and offers a 5x5 annuitization option for accessing the full contract value over five years after five years. This option is only available if no withdrawals other than RMDs have previously been taken. Additionally, MaxGrowth includes a nursing home benefit rider.

The two indexes and crediting strategies are:

The S&P Market Agility 10 Index (S&P Market Agility 10 TCA 0.5% Decrement Index): The S&P Market Agility 10 Index is an equity-bond index that measures the performance of equity and fixed income component indices that each take long or short positions based on momentum and volatility indicators to respond to changing market conditions. RBC Capital Markets is the hedging partner for the index.

The Schroders Global Compass Index: The Schroders Global Compass Index is a global multi-asset index that uses a dynamic allocation to seek positive return opportunities amid changing market conditions. The index utilizes a rules-based approach to allocate across multiple asset classes, including global equities, government bonds, and energy commodities.

Tom Bumbolow, head of distribution and business development at American Life, agreed to answer a few questions about the new MaxGrowth FIA.

INN: What is unique about this product?

Bumbolow: "What this product does is ... the full pricing power that we have is going to be focused on the accumulation rates, or the crediting rates, as opposed to a bonus or anything like that. Basically, it's a client who isn't as concerned about liquidity and really wants to kind of drop the hammer or drop the throttle on the potential for accumulation. We launched the product with a 13% cap rate... a 6% fixed rate and a 9% trigger rate on S&P."

INN: What does this product do for American Life?

Bumbolow: "I think it's a differentiating offer within the family of products that we have out there. Just as a reminder, we've got two [multi-year guaranteed annuity] products, a three- and a five-year that have been very, very successful. We've got our Fusion that we launched last year that continues to gain momentum. And then we've got a seven- and a 10-year FIA. We've really leaned in on the bonus and bonus-plus space in the FIA world with the mass migration of exchange business that's happened over the past few years, with the rapid movement of interest rates and the opportunity to get clients and policyholders into better contracts."

INN: Is the product available in all 50 states?

Bumbolow: "We are in 25 states, plus D.C., because that's our full state footprint."

INN: Who is this product aimed at from a consumer standpoint?

Bumbolow: "This is aimed at policyholders looking to maximize their accumulation potential. It's as simple as they're really looking for the best rates out there, and aren't as concerned about liquidity per se. If you have liquidity concerns, you should probably be looking at shorter-term products."

INN: How will you distribute this product?

Bumbolow: "We're distributing it through our IMO partners. We still have the same 10 IMO partners we've had for the past three or four years. So it's solely through the IMO network."

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.