Allianz Annuities: Overrated Performance
Fixed indexed annuities are good investments if you approach them with the right perspective. Every single one available has its place in certain retirement portfolios. For the most part you can organize them into classes of products and then just choose a company you like. It’s an easier way to analyze things because there are essentially three different types of fixed indexed annuities. The problem is that most salespeople present a product first without showing you the three types of fixed indexed annuities. I’ll get to that in a bit.
I’ve hammered on the Allianz 222 and Allianz ABC in the past because the most prominent sales pitch was a complete misrepresentation of the product. I don’t blame the company except for what amounts to oversight in my opinion. Greedy advisors who just want to make a quick buck deserve most of the blame because they didn’t ask the right questions. My work in the past in regards to this is nothing more than telling the truth about how the products work. It doesn’t mean that the products don’t have a place or that I hate them, rather, they fit a specific situation and are sold to far more people than should be the case.
I have clients that own the 222 and are just fine with how it’s working. That’s because they bought it for the right reasons and did so using reasonable projections. If you are as well-educated as they are about the reality of the contract then I’m not going to try to convince you otherwise. My criticism started more than ten years ago when people started calling about the enormous bonus. Some people argued with me, others realized the bait and switch, while about 1 in 10 understood the components and went ahead with the purchase. All I’m trying to do is educate people so they can make good decisions.
The couple I work with bought the 222 a few months before we had our first meeting. I initially asked if they understood all the components. They essentially said that they knew the bonus is not real money, they didn’t expect it to grow a lot, and they based their future planning off the guaranteed minimum scenario. They were age appropriate for the purchase and had no plans to touch the money for ten years. It was about 15% of their portfolio at the time and they just wanted safe money with some options.
Anyone who bought it in the past with the same expectations and an objective mind should be able to say the same thing. Unfortunately, I hear from a lot of people who don’t understand it the same way. Many of those are in quite the bind because they put a much larger percentage of their assets on the hope of a hypothetical illustration and their retirement might suffer because of it. Sometimes we can improve the situation and other times it’s best to wait it out and hope for the best.
I heard from someone last week who was promised returns of near 8% and that he would be able to walk away with the growth and bonuses after ten years. He didn’t need the income and found my website a little too late. He bought the annuity a few years ago and had seen almost no growth to date and realized his walk away money in another seven years would be a lot less than expected. On a positive note it’s not a whole lot of money so no real damage to his portfolio has been done. He’s young and has plenty of time. While he has options for swapping to another annuity his only purpose in using it is to protect some money. It’s not worth the cost to surrender without a clear goal in mind so I told him to keep it. He can move the money elsewhere at the end of the surrender period when his retirement plans are more in focus.
The Allianz 222 and Allianz Benefit Control fit in a class of fixed indexed annuities that are basically performance-based income. There is an income rider that comes with no fee because the total income that comes when available is based on the growth of the account value. The company only pays a substantial amount of income if you have a lot of growth. Allianz is a very healthy financial institution and I’ve always said that they got that way because they don’t pay much out for the money a contract owner invests.
The second type of fixed indexed annuity contract has a guaranteed lifetime withdrawal benefit that comes with a fee for the income rider. Nobody likes a fee but this is the best way to maximize income at some point in the future. I haven’t seen a 222 or ABC come even close to what other fee-based income products can provide. Last year I helped a couple replace a 222 with a guaranteed income benefit. Not only were we able to project far more income on a guaranteed basis but they could take it a few years earlier. And the new Nationwide contract made more interest in the first year than the Allianz contract had made in four years.
The third type of fixed indexed annuity contract is meant specifically for growth. Income products put all the actuarial weight behind the income so growth in addition is not mathematically realistic. It just doesn’t happen that way in the real world and there is no free money. Products built specifically for growth have all the weight placed on performance. Competitive accumulation contracts will have growth potential two or three times greater than what you’ll get with the ABC or 222. If you want the best opportunity for maximum growth and protected money, look elsewhere.
Performance-based income products are just fine and I do sell them. Although I prefer another company, I always compare it to the Allianz products and point out where it’s better. But it’s something that I only sell to a very specific person who requests the blend of benefits. One lady who bought an alternative product from me said, “I want no fees, no risk of loss, and partial market upside is just fine. I don’t need income but a backstop would be nice in case I need more cash flow later in retirement.” This type of product worked well for her because it’s not the backbone of her retirement plan and it does everything she wants.
If you choose one of the Allianz products for the same reasons then I don’t have a problem with it. Just don’t believe the topline pitch of a low IQ salesman who promises incredible performance without being able to explain how the product works. If he gets defensive when you ask good questions then that’s your sign. He/she doesn’t know anything and I’m not afraid to say it. Too many novices tarnish the reputation of ethical professionals because the flash is easy to sell. Spend some time around here doing your research and you’ll be able to sift through the BS better than anyone else.
Have a great weekend!
Bryan
Watch Podcast Episode 186 Allianz Annuities: Overrated Performance
Download Podcast Episode 186 Allianz Annuities: Overrated Performance on Apple Podcast
Last Updated on July 18, 2025 by Bryan Anderson
I’ve purchased a few of the ABC annuities.
Have one in the S&P accelerated 250%, 5% cap. I’ll take the 12.5% max return if S&P does at least 5%, and have the floor of zero for the down market.
Have another with the S& P and Pimco Asset allocation with participation. Returned 17.22% last year.
25% bonus at start was a plus.
Sounds decent. That’s about standard yield for income products for cash value growth and I basically want to clearly explain the difference between that and increases in income value. If you’d like to send me a redacted statement I’d love to cover the product fairly in a new episode. I can also redact it for you as I’d never share personal information publicly.
I’ll always be grateful to the sales guy that pitched the idea of annuities to cover my projected baseline expenses in retirement. He recommended a 300k with Allianz and showed a robust (baloney)projection. The big red flag was when I asked what other products might he recommend as an alternative and he dug deep that this was the only one. ( Bye. Bye. 👋 ). I’ve worked with you on one annuity, and plan for more. I’m very satisfied and happy that I dug deeper and took the time to educate myself on the complex array of annuities and strategies. Thanks for all your tips and wisdom!
Sue, you avoided it and that’s probably a good thing. You went with a full guarantee instead so now you don’t have to worry about performance and the Allianz would likely never beat it anyway.
How do you know what most salespeople do? Is there some way you monitor that?
Yes, my past work is well-documented. Thousands of conversations with consumers, dozens of sales pitches from marketing organizations, and don’t forget the products I mentioned were the highest selling annuities for several years in a row. It does take a leap of logic in places but there’s no question I have the experience it takes.
Question: if the 222 is offering a 45% bonus and a 3.1% interest doubled (even though it could go down) wouldn’t that be a better fixed income investment then any current MYGA? I understand 10 years and I don’t need the money now. Set up for grandchildren. I’m in my 80’s.
Two questions about this:
1) Will Allianz keep the rate at 3.1% for all ten years?
2) Will your grandchildren choose the five year payout required for the enhanced benefit?
There’s about 15% reduction in present value for waiting five years to get the payments.
I have a Nationwide New Heights Select 10 fixed index annuity. It is equally invested in Goldman Saks strat A and SG Macro Compass Strat A. It was purchased in Aug 2022 using a 2 year strategy. $100K was the initial investment. Current contract value is $111, 435 with a surrender value of $102,109. I believe I would be better advised to switch to a fixed annuity that I believe pays close to 7%. Please advise.
That’s up to you. Getting a 5.5% yield in the first two years isn’t all that bad. You’d only need to keep up that same yield to equal the output of 7% growth on the net amount. Plus, a company with a MYGA that high is undoubtedly low-rated and private equity driven so you won’t get near the credit quality of Nationwide. Don’t forget that you are not required to stick with the two year strategy so consult the salesperson and explore all the options with your current contract to see if there’s something that offers more consistency. Indexed annuities are designed for you to make changes to capitalize on various market scenarios. It’s your money so do what you like best but I think you will be just fine to stick with what you have.