American Equity Investment Life Insurance Review

Fixed and fixed index annuities with an annual no-penalty withdrawal

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American Equity

American Equity

Our Take

American Equity Investment Life Insurance does not sell life insurance but instead offers fixed-rate and fixed index annuities to applicants ages 18 to 85. The company has strong financial strength and customer satisfaction ratings in the areas of financial strength and customer satisfaction. It offers a few appealing riders and other benefits, but surrender fees are high and the company is not transparent about its agent commissions. Still, those seeking fixed annuities will find American Equity Investment to be one of the best options available. 

  • Pros & Cons
  • Key Takeaways
  • Specifications
Pros & Cons
Pros
  • A- (Excellent) financial strength rating from AM Best

  • Ranked 3rd in J.D. Power’s 2020 U.S. Life Insurance Study for annuities

  • Many plans offer guaranteed income for life

  • Optional riders add increased liquidity

  • No annual fees

  • Remaining payments go to beneficiaries after your death

Cons
  • Agent commissions not published

  • High surrender charges

  • No online application

  • Mixed customer service reviews on third-party websites

Key Takeaways
  • American Equity Investment doesn’t offer any life insurance products but it does offer fixed rate and fixed index annuity options with many plans providing guaranteed lifetime income. 
  • While American Equity Investment is a top-rated company in J.D. Power’s 2020 U.S. Life Insurance Study, customer service reviews on third-party websites are mixed and the company had a higher than expected number of complaints with the NAIC in 2020 given its size. 
  • With some plans, you can add the option of a terminal illness or nursing care rider, which allows you to access a 100% withdrawal if you are diagnosed with a terminal illness or need nursing care, with some limitations. 
Specifications
  • Year Founded 1995
  • Kinds of Plans Fixed, fixed index, and immediate annuities
  • Number of Plans 12
  • Payment Options Lump sum or over time
  • Official Website https://www.american-equity.com/

Introduction

American Equity Investment Life Insurance doesn’t sell life insurance policies. Instead, it sells fixed-rate and fixed index annuities for people seeking guaranteed income during their retirement. We researched American Equity Investment Life Insurance’s financial strength, customer satisfaction, plan options, available riders, online tools, and customer service reviews to help you compare the annuities that American Equity Investment offers with the competition. 

Company Overview

American Equity Investment was founded by David J. Noble in 1995 and is headquartered in West Des Moines, Iowa. The company sells fixed-rate and fixed index annuities through its wholly-owned subsidiaries which include American Equity Investment Life Insurance Company, Eagle Life Insurance Company, and American Equity Investment Life Insurance Company of New York. 

These three companies have more than 600 employees and more than 20,000 agents who sell policies in all 50 states and the District of Columbia. With over 500,000 contract holders, the company represents just over 1% of the market share for individual annuities premiums. 

Policies are sold through the company’s network of agents and cannot be purchased online. 

Available Plans

American Equity specializes in fixed-rate and fixed index annuities and has several different plan options to choose from. The company also sells an immediate annuity. All of these plan options offer tax-deferred growth. 

Fixed-Rate Annuities

Fixed-rate annuities earn interest at a rate established in the contract and provide monthly income during retirement. American Equity Investment offers two options for fixed-rate annuities.

Guarantee Series

The Guarantee Series is available for applicants ages 18-85. With this plan, you choose a guarantee period of 5, 6, or 7 years. The surrender charge steps down from 9% by one percentage point each year of the guarantee period. However, you have the option for a penalty-free withdrawal each year up to the amount of interest credited. And in the event of your death, your beneficiary will receive the entire contract value. 

If you reach the end of the guarantee period, you may choose to:

  • Apply your contract value to a settlement option or guaranteed income stream
  • Take a partial withdrawal and apply the rest of the contract value to another guarantee period
  • Renew your contract for another guarantee period
  • Surrender the contract and pay surrender charges

GuaranteeShield Series

Available to applicants ages 18-85 in all states except NY, the GuaranteeShield allows you to choose a guarantee period of three or five years. The surrender charge steps down from 9% by one percentage point each year of the guarantee period (except in CA). However, you have the option of a penalty-free withdrawal up to the amount of interest credited each year. If you die, your beneficiary will receive the entire contract value. 

At the end of the guarantee period, you’ll have the option to:

  • Renew the contract for another guarantee period
  • Take a penalty-free withdrawal and apply the rest to another guarantee period
  • Annuitize the contract and get annuity payments
  • Surrender the contract and pay the surrender charge
  • Continue the contract

Fixed Index Annuities

With American Equity’s fixed index plans, the growth of your contract will be tied to an index fund This provides the opportunity for greater growth in strong years while providing principal protection. You’ll be able to choose between the following featured indices:

And when you add the Living Income Benefit Rider to any of these plans, you’ll receive guaranteed income that you can’t outlive.

EstateShield 10

Available to applicants ages 40-75, this contract includes the Living Income Benefit Rider and allows you to start lifetime income payments after 10 years. The surrender charge steps down from 9.2% in the first year to 1% in year 10. However, after the first contract year, you’ll be eligible to take a free withdrawal of up to 10% of the premiums paid. 

If you die, the contract value will be paid to your beneficiaries who will be able to choose a lump sum or a series of payments. The minimum premium is $5,000 and maximum premiums vary by age. You can also allocate a portion of your premium to a fixed interest strategy. 

AssetShield Series

Available to applicants ages 18-85 (except AssetShield 10, which is only available up to age 80), the AssetShield series allows you to choose a 5, 7, or 10-year surrender charge schedule. The surrender charge steps down from 9.2% each year of the schedule. However, each year you can withdraw up to 10% of premiums paid without penalty, starting year two. If you die, the contract value will be paid to your beneficiaries. 

The minimum premium is $5,000 and maximum premiums vary by age. You can also allocate a portion of your premium to a fixed interest strategy. 

IncomeShield 7

Available for applicants ages 50-80, IncomeShield 7 includes the Lifetime Income Benefit Rider, which guarantees lifetime income payments. If you choose the joint life option, payments will continue until the death of the surviving spouse. You can begin benefit payments as soon as 30 days after the contract issue. The surrender charge starts at 9.2% and steps down to 0% by year 8. However, you’ll have the option to withdraw up to 10% of your paid premiums each year without penalty. 

Either the surviving joint owner or the beneficiary is eligible to receive the entire contract value upon the contract holder’s death. Premiums can be allocated to different interest strategies, and the minimum allocation for each is $1,000. 

IncomeShield 10

Available to applicants ages 18-80, IncomeShield 10 comes with a 7% premium bonus for all premiums received in the first contract year that vests over 10 years. The surrender charge steps down from 9.1% in the first year to 0% in the 11th year. However, after the first contract year, you’ll be eligible to withdraw up to 10% of the contract value penalty-free each year. 

You can begin benefit payments as soon as 30 days after contract issue. The Lifetime Income Benefit Rider is automatically included, which guarantees income payments you can’t outlive. If you choose the joint life option, payments will continue until the death of the surviving spouse. If you die, the joint owner or your beneficiary will receive the contract value. 

Premiums can be allocated to different interest strategies, and the minimum allocation for each is $1,000. 

Destinations

This contract is only available in California and Idaho for applicants ages 18-80. It comes with several optional riders to customize the plan. Premiums can be allocated to different interest strategies, and the minimum allocation for each is $1,000. The surrender charge steps down from 9.2% in year one to 0% in year 11. However, after the first year, you’ll have the option to withdraw up to 10% of the contract value penalty-free each year. 

If you die, the surviving joint owner or beneficiary will receive the entire contract value. 

Bonus Gold

This contract offers a 10% bonus on all premiums received in the first year, which is added to the contract value. The surrender charge steps down from 20% in the first year to 0% in the 17th year. However, after the first year, you will have the option to take a free withdrawal up to 10% of the contract value each year. 

The Lifetime Income Benefit Rider is available with this plan if the contract owner is 50 or older at issuance, but a rider fee will be deducted from the contract value for the guaranteed lifetime income benefits. 

Premiums can be allocated to different interest strategies. 

Retirement Gold

Available to ages 18-78, this plan includes an 8% bonus on all premiums received in the first year which vests for 14 years. The premium can be allocated to different interest strategies. The surrender charge steps down from 12.5% in year one to 0% in year 11. However, you’re eligible to take a withdrawal of up to 10% of the contract value each year without penalty after the first contract year. 

You can start receiving income payments anytime after the first contract anniversary, and you can elect for payments to continue until you or your surviving spouse dies. If you die, your beneficiaries will receive the contract value plus the bonus. 

The Lifetime Income Benefit Rider is available to applicants 50+ for a rider fee.

Immediate Annuity

Features and benefits of this plan can vary by state, so you’ll need to speak to an agent to get the full details. However, with an immediate annuity, you’ll pay a single premium and your income payments will begin no longer than 12 months after issue. You’ll have the option of guaranteed income for life or a set period of five to 25 years. 

Because of the high surrender charges with these plans, you should ensure you have access to other liquid savings in case an emergency arises. 

Available Riders

Riders are add-ons that can help you customize your annuity contract. Some riders cost extra and others are included automatically in your contract. Each annuity from American Equity comes with options, but not every rider is available with every plan. 

Lifetime Income Benefit Rider

This rider is included free with plans including EstateShield 10, IncomeShield 7, and IncomeShield 10, and is available for a fee with Bonus Gold and Retirement Gold. It can be configured several ways, sometimes for an additional cost, but it provides guaranteed lifetime income with control over the contract value without having to annuitize. You can get a level or increasing payment of your choice with this rider. 

There are several configurations available for the Lifetime Income Benefit Rider, and while some are included, others come at an additional cost. 

Nursing Care Rider

The Nursing Care Rider allows for a 100% penalty-free withdrawal after the first contract year if the contract owner is confined to a nursing facility for at least 90 days.

This rider isn’t available in CA, and the details of this rider vary by plan, but it is available at no cost for the GuaranteeShield Series, EstateShield 10, the AssetShield series, IncomeShield 7, IncomeShield 10, Destinations, Bonus Gold, and Retirement Gold. It’s also available for Guarantee Series contract owners. 

Terminal Illness Rider

Similar to the Nursing Care Rider, this endorsement allows for a 100% penalty-free withdrawal if the contract owner is diagnosed with a terminal illness by a qualified physician. It’s available on all plans and is included at no cost on most plans. 

Customer Service: A Few Options, But Limited Hours

You can email American Equity Investment at any time at info@american-equity.com or fill out the online form to be contacted by a representative. The company has some resources such as forms available online, but you won’t be able to file a death claim online. There’s also no live chat, but there is an FAQ section. 

You can call American Equity Investment Monday through Thursday, 8:00 a.m. to 4:30 p.m. CT or Friday, 8:00 a.m. to 1:00 p.m. CT. The main office number is 515-221-0002, or you can call toll-free at 888-231-1234. 

Customer Satisfaction: Top-Rated With Some Complaints

American Equity Investment was ranked third in J.D. Power’s 2020 U.S. Life Insurance Study for annuities. This is a strong indicator that customers were happy with their overall experience. However, the company received a slightly higher than expected number of complaints with the NAIC in 2020 given its size. 

For individual annuities, American Equity Investment received a total of 6 complaints in 2020, resulting in an above-average complaint index of 1.61 (the industry average is 1.00). This has been trending downward in recent years, however. 

Some customers reported difficulty with the high surrender charges and being persuaded to buy something they didn’t understand, so be sure you understand how the product works before signing up.

Financial Strength: A- (Excellent)

AM Best is an independent rating agency focused on assessing the reliability of insurance companies. A high score in the A-bracket indicates a company is on solid financial footing and can reliably pay claims. American Equity Investment received an A- (Excellent) financial strength rating from AM Best. 

Cancellation Policy: High Surrender Charges

After an annuity contract is issued, you will have at least 10 days, depending on the state you live in, to cancel the contract without paying surrender charges. This is known as the free-look period. After that, surrendering your contract isn’t cheap and can cost up to 20% of your contract value, depending on your plan. 

Price of American Equity Investment Life Insurance: Pay Upfront or Over Time

American Equity Investment allows for flexible premium payment options on most policies. You can use the retirement calculators American Equity Investment provides to estimate the rate, time, and value of your return. Unlike with life insurance policies, your premium won’t depend on your health status—you’ll pay your choice of premium (minimums and maximums apply on many policies) depending on how much income you want to receive during retirement. 

Note that American Equity doesn’t charge any annual fees. 

How American Equity Investment Compares to Other Life Insurance

American Equity Investment is a great option for people looking for fixed-rate or fixed index annuities, but it’s not the only company out there that provides these products. Some other companies have better financial strength ratings, lower complaint indices, and more plan options. 

American Equity Investment vs. Jackson National Life Insurance 

American Equity Investment and Jackson National Life Insurance are both focused on providing annuities and do not sell life insurance policies. They each have a variety of plans, many of which allow penalty-free withdrawals each year. However, there are several key differences between these two companies:

  • Jackson National Life Insurance offers variable annuities while American Equity Investment does not. 
  • Jackson National Life Insurance is the largest annuities seller in the U.S. and has been around since 1961. American Equity Investment is newer and represents a smaller share of the market. 
  • Jackson National Life Insurance had a complaint index of just 0.24 for individual annuities in 2020, while American Equity Investment had an index of 1.61. 
  • Jackson National Life Insurance doesn’t offer a rider similar to American Equity’s Lifetime Income Benefit Rider. 

While there are pros and cons to each company, people seeking variable annuities should go with Jackson National Life Insurance, while those looking for guaranteed lifetime income should opt for American Equity. 

Read our full Jackson National Life Insurance review

  AM Best Rating NAIC Index  Years in Business  Market Share 
American Equity Investment  A- (Excellent) 1.61 26 1%
Jackson National Life Insurance  A (Excellent)  0.24  60  8% 
Final Verdict

American Equity Investment is highly rated for financial strength and customer satisfaction, offers a few attractive riders, and has plenty of plan options with features like guaranteed lifetime income and penalty-free withdrawals. You must purchase a policy through an agent; policies cannot be purchased online.


Note that agents are paid commission to sell you annuities and the company is not transparent about those commission fees. If this is important to you, you might want to consider using another company.

Methodology

All of our reviews of life insurance companies are based on extensive research and analysis of each company’s offerings, customer service, financial stability, cost, and more. For each company, we compared the life insurance products offered, as well as available features, and reported customer experiences. Visit our life insurance review methodology for the full breakdown of what we evaluated for over two dozen companies.