IndexMax ADVSM, a fixed index annuity (FIA) issued by Midland National, balances growth potential with asset protection, and features an ESG index option from BlackRock.
In 2021, fixed index annuity sales reached $63.7B, a 15% increase from 2020. Improved interest rates and product innovation around cap rates helped make these products more attractive to advisors and clients alike. FIAs remain a highly popular product for investors seeking market growth with complete principal protection, and the ability to add guaranteed lifetime income through a rider. As more investors seek ways to combat inflation, FIA popularity is only expected to increase.
Why DPL Likes IndexMax ADV
Built for accumulation, IndexMax ADV provides tax-deferred growth potential with protection from market downturns. The product features three indices - BlackRock ESG US 5% Index ER, Fidelity Multifactor IndexSM 5% ER, and S&P 500 Low Volatility Daily Risk Control 5% Index ER - as well as a fixed account that credits a guaranteed rate. IndexMax ADV is available in 5- and 7-year terms to fit client portfolio needs.
IndexMax ADV offers two ways to accumulate - via annual performance credits (APC) and term participation credits (TPC). The APC is set at the beginning of the term; regardless of index performance, the accumulated value receives that credit for each year of positive performance. In the last year of the term, the TPC is added to the accumulated value if the index performs positively over the entirety of the term. The monthly average in the final year is then used to determine the ending value, which could be higher or lower then the actual value of the index at the end of the term. The index change between the ending and starting values is determined and then credited to the accumulation value.
How to Think About Commission-Free FIAs
One advantage of utilizing FIAs is to leverage the scale of insurance carriers to deliver strong pricing in a packaged product, making it comparatively easy to implement, while also getting guaranteed downside market protection from the carrier.
When your client needs:
PRINCIPAL PROTECTION: With the principal protection from market risk provided by FIAs, they should be considered for clients nearing or in retirement to help mitigate sequence of returns risk.
FIXED INCOME: FIAs can be viewed as a fixed income replacement as client portfolios are de-risked from equities. They provide sequence of returns protection for those entering or in retirement, with an overall return above 6%, based on historic averages.2
Product information sourced directly from MidlandNational.com
12021 Annuity Sales Highest In 13 Years, LIMRA Reports. (2/2022)
2Fixed Indexed Annuities as a Fixed Income Alternative for Near-Retirees, Wade Pfau. (5/2019)
Fixed index annuities are contracts purchased from a life insurance company that are designed for long-term retirement goals.
While the interest rate credited to an indexed account is linked to the performance of an underlying index, premium payments made to a fixed index annuity are never directly invested in the stock market.
All guarantees are based on the financial strength and claims-paying ability of the issuing insurance company.
A surrender during the surrender charge period could result in a loss of premium. Surrender charge structure may vary by state.
The purchase of an annuity within a retirement plan that already provides tax deferral under sections of the Internal Revenue Code results in no additional tax benefits. An annuity should be used to fund a qualified plan based upon the annuity’s features other than tax deferral. All annuity features, risks, limitations, and costs should be considered prior to recommending the purchase of an annuity within a tax-qualified retirement plan.
Fixed index annuities are not a direct investment in the stock market. They are long term insurance products with guarantees backed by the issuing company. They provide the potential for interest to be credited based in part on the performance of specific indices, without the risk of loss of premium due to market downturns or fluctuation. Although fixed index annuities guarantee no loss of premium due to market downturns, deductions from the accumulation value for additional optional benefit riders or strategy fees associated with allocations to enhanced crediting methods could exceed interest credited to the accumulation value, which would result in loss of premium. They may not be appropriate for all clients. Interest credits to a fixed index annuity will not mirror the actual performance of the relevant index.
The “S&P 500® Low Volatility Daily Risk Control 5% Index ER”, is a product of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”) and have been licensed for use by Midland National Life Insurance Company® (“the Company”). Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”) and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). The trademarks have been licensed to SPDJI and have been sublicensed for use for certain purposes by the Company. IndexMax ADV (“Product”) is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, or any of their respective affiliates (collectively, “S&P Dow Jones Indices”). S&P Dow Jones Indices does not make any representation or warranty, express or implied, to the owners of the IndexMax ADV or any member of the public regarding the advisability of investing in securities generally or in this Product particularly or the ability of these Indices to track general market performance. S&P Dow Jones Indices only relationship to Midland National Life Insurance Company® with respect to these Indices is the licensing of the Index and certain trademarks, service marks and/or trade names of S&P Dow Jones Indices and/or its licensors. The Indices are determined, composed and calculated by S&P Dow Jones Indices without regard to Midland National Life Insurance Company® or the Product. S&P Dow Jones Indices has no obligation to take the needs of the Company or the owners of this Product into consideration in determining, composing or calculating these Indices. S&P Dow Jones Indices is not responsible for and has not participated in the determination of the prices, and amount of IndexMax ADV or the timing of the issuance or sale of this Product or in the determination or calculation of the equation by which the Product is to be converted into cash, surrendered or redeemed, as the case may be. S&P Dow Jones Indices has no obligation or liability in connection with the administration, marketing or trading of the Product. There is no assurance that investment products based on these Indices will accurately track index performance or provide positive investment returns. S&P Dow Jones Indices LLC is not an investment advisor. Inclusion of a security within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, nor is it considered to be investment advice.
The Fidelity Multifactor Yield Index 5% ER (the “Index”) is a multi-asset index, offering exposure to companies with attractive valuations, high quality profiles, positive momentum signals, lower volatility and higher dividend yield than the broader market, as well as U.S. treasuries, which may reduce volatility over time. Fidelity and its related marks are service marks of FMR LLC. Fidelity Product Services LLC (“FPS”) has licensed this index for use for certain purposes to Midland National® Life Insurance Company (the “Company”) on behalf of the Product. The Index is the exclusive property of FPS and is made and compiled without regard to the needs, including, but not limited to, the suitability needs, of the Company, the Product, or owners of the Product. The Product is not sold, sponsored, endorsed or promoted by FPS or any other party involved in, or related to, making or compiling the Index. The Company exercises sole discretion in determining whether and how the Product will be linked to the value of the Index. FPS does not provide investment advice to owners of the Product, nor to any other person or entity with respect to the Index and in no event shall any Product contract owner be deemed to be a client of FPS. Neither FPS nor any other party involved in, or related to, making or compiling the Index has any obligation to continue to provide the Index to the Company with respect to the Product.Neither FPS nor any other party involved in, or related to, making or compiling the Index makes any representation regarding the Index, Index information, performance, annuities generally or the Product particularly.
Fidelity Product Services LLC disclaims all warranties, express or implied, including all warranties of merchantability or fitness for a particular purpose or use. Fidelity Product Services LLC shall have no responsibility or liability whatsoever with respect to the Product.
The BlackRock ESG US 5% Index ER is a product of BlackRock Index Services, LLC and has been licensed for use by Midland National® Life Insurance Company. BlackRock®, BlackRock ESG US 5% Index ER, and the corresponding logos are registered and unregistered trademarks of BlackRock. The annuity product is not sponsored, endorsed, sold or promoted by BlackRock Index Services, LLC, BlackRock, Inc., or any of its affiliates, or any of their respective thirdparty licensors (including the Index calculation agent, as applicable) (collectively, “BlackRock”). BlackRock has no obligation or liability in connection with the administration or marketing of the annuity product. BlackRock makes no representation or warranty, express or implied, to the owners of the annuity product or any member of the public regarding the advisability of investing the annuity product or the ability of the BlackRock ESG US 5% Index ER to track general market performance. BlackRock does not guarantee the adequacy, accuracy, timeliness, and/or completeness of the Index or any data or communication related thereto nor does it have any liability for any errors, omissions or interruptions of the BlackRock ESG US 5% Index ER.
The BlackRock ESG US 5% Index ER (the “Index”) objective is to offer exposure to the iShares ESG Aware MSCI USA ETF subject to a 5% Target Volatility. The index manages to the Target Volatility by incorporating Fixed Income US Treasury iShares® ETFs and a Cash Constituent. The Index tracks the return of the weighted ETFs and any Cash Constituent, above the sum of the Return on the Interest Rate and the Index Fee. It is important to note your premium is not invested in the Index but in the insurance company’s general account, which may include investments that do not follow the environmental, social,and governance (ESG) practices of the BlackRock ESG US 5% Index ER.
Sammons Financial® is the marketing name for Sammons® Financial Group, Inc.’s member companies, including Midland National® Life Insurance Company. Annuities and life insurance are issued by, and product guarantees are solely the responsibility of, Midland National® Life Insurance Company.
Insurance products issued by Midland National® Life Insurance Company, West Des Moines, Iowa. Product and features/options may not be available in all states or appropriate for all clients. See product materials and state availability chart for further details, specific features/options, and limitations by product and state.
The IndexMax ADVSM is issued on base contract form AS203A/ICC20-AS203A, or appropriate state variations including all applicable endorsements and riders. This product, its features and riders may not be available in all states
Under current law, annuities grow tax deferred. An annuity is not required for tax deferral in qualified plans. annuities may be subject to taxation during the income or withdrawal phase. Neither Midland National, nor any agents acting on its behalf, should be viewed as providing legal, tax or investment advice. Your client should be advised to rely on their own qualified adviser.
FOR FINANCIAL PROFESSIONAL USE ONLY. NOT INTENDED FOR CONSUMER SOLICITATION PURPOSES.