Today’s review is on the AIG Polaris Retirement Protector Variable Annuity, with the purpose of showing you it’s strengths and weaknesses. Because in order to make an informed decision, it is important to consider all available facts such as the following:
- Product type
- Investment options that are available and their realistic long-term investment return expectations
- How it can best help your financial plan
- How it’s most poorly used as part of your financial plan
AIG Polaris Retirement Protector Variable Annuity Quick Facts
|Product Name||Retirement Protector|
|Issuer||AIG (American International Group)|
|Type of Product||Variable Annuity|
|Standard & Poor’s Rating||“A+” (Excellent)|
Before we go into detail, here is an important legal disclosure.
This review of AIG Polaris Retirement Protector Variable Annuity is an independent review at the request of readers. Intended to explain my perspective when breaking down the positives and negatives of this particular model annuity. This is an independent product review, not a recommendation to buy or sell an annuity. Equitable has not endorsed this review in any way, nor do I receive any compensation for this review. Before purchasing any investment product be sure to do your own due diligence and consult a properly licensed professional, should you have specific questions related to your circumstances. This review is not intended to give specific advice and your adviser may know more about your circumstances to make an appropriate recommendation. All names, marks, and materials used for this review are property of their respective owners.
Before we go into the review, some information on Genworth Financial
Founded in 1919, American International Group, Inc. (AIG) is a leading global insurance organization serving commercial, institutional, and individual customers in more than 100 countries and jurisdictions.
They work to pinpoint risks and prevent them from becoming losses, so clients are free to create the future; they help clients identify unseen risks—and stop accidents before they happen.
For nearly one hundred years, the organization has faced and managed complex risks; and provided the risk expertise and financial strength that empowers 90 million clients in more than 100 countries. Today, they’re evolving to better meet client needs. According to AIG “They’re simplifying their structure so that they work more closely with clients, provide greater transparency, and deliver value faster and more efficiently.
There are a few ways that Agents might pitch AIG Polaris Retirement Protector Variable Annuity
- 6% income credit percentage
- Lifetime income
Is any of this True?
Part of this is true and some are misleading, by his I mean that yes you get tax-tax-deferral like any other annuity but if you’d like to have lifetime income you need to buy an income rider. So, you must be aware of that, and know how valuable this annuity is compared to other alternatives. To compare this, you need to see the approx. returns of this annuity’s investments, the fees, and the short-term availability of your money.
It is important for you to remember that Variable Annuity don’t protect your principal so in case there is a downturn in the market you will not only have to face the negative impact of the market but also the fees.
Next in this review we are going to show details in this annuity that you can use to compare and decide if it is good for you or not.
AIG Polaris Retirement Protector Fee Breakdown:
Surrender Charge Fees:
|Smart Foundation Prime||8%||7%||6%||5%||4%||0%|
|Contact Maintenance Fee (waived 75k+)||$50.00|
|Separate Account Charges Contract Years 1-5||1.55%|
|Separate Account Charges After Year 5||1.30%|
|Polaris Income Plus Rider (Optional)||1.00%-2.50%|
|Death Benefit (Optional)||0.25%|
|Portfolio Operating Expenses (Funds)||0.46%-1.98%|
|Aprox. Current Fees Without Riders||3.3%|
|Aprox. Current Fees With Riders||4.55%|
As we can see above the AIG Polaris Retirement Protector is a high-fee annuity, even if you don’t choose a rider your base fee is going to be around 3% which is high. In case you decide to purchase the income rider and the Death Benefit Rider then the fees will go up considerably. In case you have the guaranteed income of a 5.5% you will not be getting even near that percentage; you will have to subtract the fees and get around 1% return on investment which will not even keep up with inflation.
One example would be if you purchased $100,000 of this annuity, and you get a 8% return for the year, you would not get the 8% return youll be getting around 4% or less so instead of your annuity value going to $108,000 it would be more like a $104,500. That’s not bad but you will be missing out a lot in the good market times, and losing more in the bad market times, because the fee will be there whether the annuity performs well or not. So if it is a bad year and the annuity the investment are -4% then you’d be down by -8% or around $92,000.
This type of annuities are design to deplete your money to zero, and make you purchase the income rider so you have “Guarantee” income for the rest of your life. But the reality is that most likely you don’t have to deplete all your money to live a great retirement, that’s why annuities are not really for everybody. Make sure you consult with Certified Financial Planner that can run the numbers for you and create a comprehensive Retirement Income Analysis so you can know the real numbers needed to accomplish your retirement goals.
Investments for AIG Polaris Retirement Protector Variable Annuity
The AIG Polaris Retirement Protector Variable Annuity has a variety of funds that you can choose from. This is a good thing for a variable annuity because you get to diversified in different mutual fund strategies. However, these funds and active portfolios come with a fee, that you have to add to your current annuity fees, and this potentially can eat up all you return, and it bad market years your annuity can perform event worst than any other investment due to these fees.
Also, many of these funds are available for the public, and you don’t need an annuity to buy them. So in case you really like the funds you can contact your financial advisor and tell him to buy it for a lower fee.
There is also the less appealing option a fixed account which will give you a fixed rate of return that the insurance company will set at the beginning of the contract.
How does the AIG Polaris Income Plus Work ?
This rider guarantees you lifetime income and the opportunity to increase income by locking in the greater either the contract’s Highest Anniversary Value or an income base plus a 6% credit. It is important for you to know that this is only possible in the years that you don’t take income from your annuity.
It also offers the possibility to increase your income base 200% in case you never withdraw any money from your annuity for the first 12 years. If the previous rule is met, the 200% on the income base would be given to you of your purchase payments receive in the first contract year only.
After the 12 contract years, the income credits are not longer available, however, you can still increase your income base from your investment gains. Remember that if everything is met and you get the 6%, you will have to subtract the fees which are around 4% with this rider.
At the end all these income riders give you the illusion of having guaranteed income for the rest of your life, but in reality, you are just withdrawing your own money, so there is big possibility that you principal would deplete to zero in the first 10 years of your retirement, and the income rider will only allow you to get the lifetime income that might not be enough against the side effects of inflation.
Don’t fall into the common agent’s traps out there. In order to plan to a worry-free retirement, you have to create a comprehensive Retirement Income Analysis, where all the numbers are taken in consideration, and potentially not only you can have your dreamt retirement but also you can leave a legacy to your relatives. Don’t play with your retirement, leave it to an expert and enjoy!
This Annuity works Best:
- For those looking for high fees
- Tax-deferred growth.
- For those looking for lifetime income
This Annuity Works Worst:
- Those who need liquidity.
- For those looking for high returns and low risk.
- For those who want principal protection.
The AIG Polaris Retirement Protection is an okay variable annuity, it has high fees but almost all variable annuities are like that. The rider can be valuable if you want the lifetime income and don’t put all your retirement money there. It is just a matter of getting the right numbers and from there planning for the best scenario possible in your retirement. Also, one of the downsides is that you have to pay for the standard death benefit which in most variable annuities is for free.
Like I mentioned before get in touch with a Professional. The best in this industry would be a Certified Financial Planner because they have the highest accreditation. You can have a complimentary meeting with one in the link below.