On Monday, May 2nd, 2016, American General released Max Accumulator+ IUL, replacing Elite Index II and Value+ IUL. Max Accumulator+ is clearly charged with supplanting Value+ IUL’s accumulation-oriented block of business, and on the surface, its competitive positioning remains mostly where its predecessor left offin the top quartile for clients under age 55. Max Accumulator+ attempts to further deepen its impact by offering multiple S&P 500 index accounts with varying persistency bonuses, as well as an optional death benefit spread and a new volatility control account.
Max Accumulator+ presents two S&P 500 index prospects: enhanced cash accumulation via a generousthough non-guaranteedpersistency bonus in the Core Cap Rate Account, or an uncommonly high cap tied to a lower persistency bonus in the High Cap Rate Account. American General is the first carrier to compensate for a second, higher S&P 500 cap rate by offering competing persistency bonuses instead of differing policy charges.
All of the product’s accounts offer a guaranteed persistency bonus of 0.25%, effective in year 6. The Core Cap account boasts a non-guaranteed bonus of 0.75% but offers a 10% cap, permitting only a 6.11% maximum illustrated rate. At the same time, the High Cap account is capped at 13.5%, enabling a maximum illustrated rate of 7.47%, but its persistency bonus does not extend past the guaranteed 0.25%. Both routes come with their own risks: the Core Cap account’s performance is sustained by the non-guaranteed persistency bonus, while the High Cap account is dependent on exceptional, and perhaps timely, S&P 500 performance.
Max Accumulator+ positively distinguishes itself with the Select Income Rider, which enables between 10-100% of the death benefit to be spread over 10, 20, or 30 years, similar to Minnesota Life’s Omega Builder. When 100% of the death benefit is spread over 30 years, distributions improve significantly at younger ages (4-5%) and even more at older ages where the product is typically less competitive. With the maximum spread, Max Accumulator’s distributions improve from top-quartile to at or near the top of its competition. NOTE: Max Accumulator+ w/ Select Income Rider utilizing the maximum death benefit spread will be represented on the LifeTrends website as a separate product.
American General also now offers the Merrill Lynch Strategic Balanced Index, a volatility control account. We expect to see similar accounts emerge as carriers continue to adjust to AG49 regulations.
Max Accumulator+ ranks in the top quartile for most clients under age 55. For benchmarking purposes on the LifeTrends website, Max Accumulator+ is run with the Core Cap Rate Account at 5% and 6% illustrated rates, while the High Cap Rate Account is used for maximum illustrated rate scenarios.
Targets tend to rank in the top quartile for clients 55 and under, particularly for female clients.
Rates were uploaded to the LifeTrends website on Tuesday, May 3rd, 2016.