American Equity’s New Fee-Based FIA Broadens Portfolio for Agents

American Equity Investment Life Holding’s first fee-based fixed indexed annuity (FIA) broadens the appeal of the company’s FIA family of annuities to fee-based advisors, the company said.

American Equity, based in West Des Moines, Iowa, is the latest company to launch a fee-based FIA.

Voya Financial, Allianz Life, Lincoln Financial and Great American have launched fee-based FIAs over the past 13 months.

American Equity’s FIA, marketed as Eagle Advisory 8 and launched Aug. 30, joins commission-based Eagle Select 6, Eagle Select 8 and Eagle Select 10 in Eagle Life Insurance’s FIA line. Eagle is a subsidiary of American Equity.

Eagle Advisory 8 comes with an eight-year surrender charge period and lifetime income rider option.

Eagle Advisory 8 will help RIAs and fee-based advisors looking for the “preservation strengths” and for lifetime income stability, said Ron J. Grensteiner, president of Eagle Life and American Equity Investment Life.

Riders to help pay for nursing home care or a terminal illness are also available with the new product, the company said.

Indexes used include the Standard & Poor's 500 Index and the Standard & Poor's 500 Dividend Aristocrats Daily Risk Control 5% Index, American Equity said.

Equity Index Annuities Attract Flows

Fee-based FIAs offer independent advisors more choices in the face of the Department of Labor’s fiduciary rule, designed to limit conflicts of interest found in commission-based sales.

FIAs, which base interest earned on an increase in an equity index, have also been helped by strong equity market performance. Also, money that in the past would have gone into variable annuities are now going into indexed annuities, market analysts said.

With the Standard & Poor's 500 index up 10 percent this year, FIAs can potentially earn a higher return than other safe money alternatives.

Agents who sell FIAs have shifted their attention from guaranteed income to accumulation-focused products with “upside potential,” said Grensteiner in a conference call with analysts last month.

Second-quarter FIA sales fell 6 percent to $14.6 billion compared with the year-ago period, but rose 13 percent compared with the first quarter, according to the latest Wink’s Sales & Market Report.

Indexed annuity sales rose by nearly 10 percent last year over 2015 to a record $58 billion, Wink reported.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at cyril.tuohy@innfeedback.com.

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