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Christian Simmons is a writer for RetireGuide and a member of the Association for Financial Counseling & Planning Education (AFCPE®). He covers Medicare and important retirement topics. Christian is a former winner of a Florida Society of News Editors journalism contest and has written professionally since 2016.Read More
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Ebony J. Howard, CPA
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- Published: April 4, 2023
- Updated: October 25, 2023
- 6 min read time
- This page features 9 Cited Research ArticlesKey Takeaways
- American Equity is a publicly traded insurance company that sells annuities in 50 states and Washington, D.C.
- The company sells three types of annuities: fixed, fixed indexed and immediate.
- Fixed annuities have a fixed interest rate, while fixed indexed annuities have a minimum guaranteed rate and variable rate.
- Immediate annuities provide an income stream for 12 months following a lump-sum payment.
About American Equity
David Noble founded American Equity as a private company in 1995 to sell life insurance and annuities to customers in Iowa. In 2003, he took the company public and issued an initial public offering through the New York Stock Exchange. American Equity expanded over the next two decades and now serves clients in 50 states and in Washington, D.C.
As of 2023, American Equity operated through a group of three member companies. The original company is headquartered in the Midwest, and the second is in New York. Both are registered under the name American Equity Investment Life Insurance Company.
A third company is Eagle Life Insurance Company. All three companies specialize in retirement annuities.
The three firms have more than 800 employees, more than 20,000 affiliated agents and more than 600,000 contract owners nationwide. They reported retained earnings of $349.7 million for the second quarter of 2022.
American Equity’s Reputation and Financial Stability
The reputation of an annuity company is best explained by third-party raters. AM Best’s rating for American Equity Investment Life Insurance Company is A- (Excellent), the fourth-highest rating of 11 ratings ranging from A++ (superior) to D (poor). This shows that the company has a strong financial position and can meet its obligations to policyholders. Additionally, AM Best gives American Equity a credit rating of A- (excellent), meaning the company has enough reserves and creditworthiness to meet its financial obligations.
Fitch Ratings gave American Equity a rating of A- (outlook stable) for financial strength, the seventh highest out of 19 ratings. It also gave a credit rating of BBB. And S&P Global Ratings gave the company an A- for financial strength and BBB- for a credit rating. All these ratings indicate that the company can meet its financial obligations. However, the ratings also indicate that in case of adverse economic conditions, the company may be affected more than higher-rated companies.
Rater Credit Rating Financial Rating AM Best A- A- Fitch BBB A- S&P Global Ratings BBB- A-Source: AM Best, S&P Global Ratings and Fitch RatingsInterested in Buying an Annuity?Connect with a specialist to find out how an annuity can offer you guaranteed monthly income for life.
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Annuity Product Options
American Equity offers three types of annuities. The three are fixed index annuities, fixed annuities and immediate annuities. An annuity is a contract with an insurance company that pays a stream of income, usually during your retirement, in exchange for a lump-sum payment or annual premiums paid to the company.
Fixed annuities are those that have a fixed rate of growth. A pre-negotiated contract spells out the annuity rate of return, which locks in for a specific number of years. During that period, your investment will accumulate interest based on that guaranteed rate.
At the end of the annuity term, you can receive your income as a lump-sum payment or as monthly, quarterly or annual payments. You can also choose to convert it into a lifetime income stream. Fixed annuities protect you from a possible fall in interest rates. But they can limit your income if interest rates rise or if the stock market enjoys a healthy run while your money is tied up.
Fixed Index Annuities
Fixed index annuities combine the features of fixed and variable annuities. That means there’s a minimum interest rate below which the annuity can’t fall, regardless of market changes. However, the rate can increase if a defined stock market index, such as the S&P 500, rises. That provides the same protection as a fixed annuity but with an opportunity to generate more money if interest rates rise.
Immediate annuities are ones that pay off more quickly. You must make a lump-sum payment to the insurance company. Then, after 12 months, the company can pay you the agreed-upon amount over the agreed-upon period. Unlike fixed annuities, you don’t have to accumulate savings.
This option may be ideal for retirees who receive lump-sum payments and want a continuous income stream. You can get the income for life or a set number of years, depending on your age and the lump sum that created the annuity.
American Equity’s Annuity Fees and Charges
American Equity doesn’t charge an annual fee for contracts with a fixed maturity. But it does charge a small percentage fee for lifetime income benefit contracts. It also offers a variety of specialty annuity products — AssetShield and IncomeShield — that have fee regulations on withdrawals. Fees depend on the number of years until maturity.
The company allows annuitants to withdraw interest credited to their accounts for the current contract year. Any withdrawal beyond this amount gets charged a penalty that starts at 9% in the first year. Any future charges get reduced by 1% each subsequent year, except for the maturity year.
For instance, AssetShield 10 is one of American Equity’s popular fixed index annuities. It has a 10-year maturity period and requires a minimum investment of $5,000. Annual withdrawals of up to 10% of the contract’s value are free. If you end the contract before maturity, the surrender value won’t be less than 87.5%.
The specific charges you pay depend on the product you buy. American Equity is open about those charges and lists them in the annuity contract. You can use the company’s online calculator to determine how much you can expect to make in your investment.Beat the Bank With Fixed Annuity Rates As High As 6%Start with a zero-commitment conversation to learn how annuities can help fund your retirement.
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Contact American Equity Customer Service
The American Equity customer service page provides various methods for contacting the company. You can reach out via email, a toll-free number and a physical mail address. There’s also an option for clients to create online accounts to gain instant access to their information.
American Equity was also ranked as the highest annuity provider for Customer Satisfaction in the J.D. Power and Associates 2022 U.S. Individual Annuity Study.
FAQs About American Equity’s Annuity ProductsHow does American Equity ensure the safety and security of your money?American Equity is regulated by state and federal authorities who oversee the company’s financial activities and ensure that it adheres to industry standards and best practices. The company is also a member of state guaranty associations, which provide additional protection to policyholders if an insurance company becomes insolvent.How does American Equity calculate the interest rate for its annuities?American Equity considers many factors when calculating interest rates for its annuity products. These include market conditions, stock market performance, guarantees and benefits, administrative costs, marketing costs and competitive advantages.Are American Equity annuities FDIC insured?American Equity annuities are not FDIC insured. The Federal Deposit Insurance Corporation (FDIC) provides insurance coverage for deposit accounts, such as checking and savings accounts, at banks and savings institutions. Annuities are insurance products, which the FDIC doesn’t insure.Advertisement
Connect With a Financial Advisor InstantlyLast Modified: October 25, 2023
9 Cited Research Articles
- American Equity. (2023). America Equity Timeline. Retrieved from https://www.american-equity.com/holding-company/about-us/company-timeline
- American Equity. (2023). About Us. Retrieved from https://www.american-equity.com/holding-company/about-us
- American Equity. (2023). Annuities: The American Equity Promise. Retrieved from https://www.american-equity.com/annuities
- Glassdoor. (2023). American Equity (AEL) Reviews. Retrieved from https://www.glassdoor.com/Reviews/American-Equity-AEL-Reviews-E23269.htm
- Fitch Rating. (2022, December 8). Fitch Affirms American Equity’s Ratings; Outlook Stable. Retrieved from https://www.fitchratings.com/research/insurance/fitch-affirms-american-equity-ratings-outlook-stable-08-12-2022
- AM Best. (2022, September 9). AM Best Affirms Credit Ratings of American Equity Investment Life Insurance Company and Its Subsidiaries. Retrieved from https://news.ambest.com/PressContent.aspx?altsrc=2&refnum=32460
- American Equity. (2022, August 8). American Equity Reports Strong Results as Investment Yield Improves. Retrieved from https://ir.american-equity.com/static-files/91e984ac-5c7b-426f-9e32-5f68eda1f40d
- S&P Global. (2020, August 21). Insurance Ratings Actions: S&P Changes Outlook On American Equity Investment. Retrieved from https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/insurance-ratings-actions-s-p-changes-outlook-on-american-equity-investment-60039154
- American Equity. (2021). AssetShield 10. Retrieved from https://media.american-equity.com/Documents/01SB1165-10.pdf
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