Imagine you could go back in time. What would you do? Go back to high school and make some different choices? Un-marry your spouse or marry someone else? What about going back in time and buying certain stocks or making different investment choices? Well now you can look back retroactively and make choices with the National Western Global LookBack Fixed Index Annuity. Well, er..sort of. Actually what you can do, which is definitely original and innovative is look back in time and look at the performance results of 4 different indices and then assign 40% of your annuity assets toward of the best performing index of the 4, and then assign 30% to the second best performing index of the 4, and then 20% to 3rd best performing index of the 4, and then 10% to the dog of the bunch. The National Western Global LookBack Fixed Index Annuity uses year-end performance weighting for the S&P 500 Index, the Dow EUROSTOXX 50 Index, the Hang Seng 30 Index and the Nikkei 225 Index.
You: So how does that work?
Me: So basically it is a 40%/30%/20%/10% look-back and capture. So for example if you had $100,000 in your National Western Global LookBack Fixed Index Annuity and the S&P 500 Index was the best performing index of your index choices and it had the biggest annual gains of the 4 indexes than $40,000 of your annuity would capture the gains of the S&P 500 Index, but keep in mind the $40,000 would not get the full 15% annual increase of the index. You would however, only get a portion of the annual increase of the index and if any or all of the 4 indexes had negative performance years your money would not be at risk for a loss due to market downturns. Just like other fixed index annuities you only get market upside exposure and no market downside exposure.
You: Well that sounds like pretty good odds.
Me: Yes it is pretty good odds for picking winners. Think about it, 70% of your National Western Global LookBack Fixed Index Annuity account would capture the gains from the top two performers.
You: I’m going to be rich!
Me: Well maybe you will be, but this the National Western Global LookBack Fixed Index Annuity is not the vehicle to do it in. This like any other fixed index annuity is best for providing an income stream for life, it is not designed for huge accumulation. Remember what I said earlier that you will not get all the upside of the annual increases in the 4 indices, you will only get a portion of the annual increases. Overall don’t expect more than 5.5% annual increases, so if a sales agent is filling your head with dreams of 10% and 12% gains it just isn’t so.
You: Could you tell me a little more about the indexes?
Me: Sure, An index is just a measurement of the market. For example the most commonly sited index is the S&P 500 Index. The S&P 500 Index is just a measurement of the 500 biggest companies stock performance. The folks over at Standard & Poor’s just ask the 500 biggest companies how they are doing, some of the companies will report positive increases in stock performance and some of them will report negative performance. Standard & Poor’s then takes the results of all the 500 companies and then adds them together and comes up with a number that is either positive or negative. The National Western Global LookBack Fixed Index Annuity only credits your account when the annual year end results are positive, you usually do not however get the full upside of the increases in any of the indexes used for crediting. You can see the performance of the S&P 500 at the link at the end of this paragraph.
You: So if the S&P 500 index goes 15% in a year than I don’t get the full 15%?
Me: Yes, that is exactly what I am saying. Don’t expect to get the full upside of the market increases.
Me: The next index that is used for crediting purposes is the Dow EUROSTOXX 50 Index. The Dow EUROSTOXX 50 Index is based upon it the aggregate performance of the stock of 50 of the largest and most liquid Eurozone based companies. Just like with the S&P 500 Index the National Western Global LookBack Fixed Index Annuity only credits your account when the annual year end results are positive, and don’t expect get the full upside of the increases in the Dow EUROSTOXX 50 Index.
Me: And final two indexes that are used for crediting purposes are the Hang Seng 30 Index and the Nikkei 225 Index. The Hang Seng 30 Index monitors the stock performance of the 30 biggest companies on the Hong Kong stock market, and the Nikkei 225 Index monitors (you guessed it) the stock performance of the 225 biggest companies on the Japanese stock market.
Additional Features Of The National Western Global LookBack Fixed Index Annuity
You: What other things should I know about the National Western Global LookBack Fixed Index Annuity?
Me: Well for starters the National Western Global LookBack Fixed Index Annuity pays a 7% premium bonus.
You: What’s a premium bonus?
Me: I thought you would ask so let me give you an example, it is the easiest way to explain.
Scenerio 1: say that an insurance company tells you that at the time you elect to turn on your lifetime income stream that they will give you 5% of whatever value is in the income account and they will pay you this amount for the rest of your life. Let’s say that you deposited $100,000 lump sum in the National Western Global LookBack Fixed Index Annuity and then immediately turned on your income stream, then: $100,000 X 5% = $5000 per year of income for the rest of your life. Pretty easy huh? Now let’s look at how that the National Western Global LookBack Fixed Index Annuity 7% bonus affects your lifetime income stream.
Scenerio 2: you deposit $100,000 lump sum in the National Western Global LookBack Fixed Index Annuity. National Western Life Insurance company gives you a 7% bonus (or $7,000) in income account value for the purposes of calculating income. Now when they calculate your income it would be based upon $107,000, so $107,000 X 5% = $5350 per year of guaranteed income for life. This may not seem like much in our little example but the numbers can add up over time, especially if you deposit more than $100,000 and you are credited more than 5%.
The National Western Global LookBack Fixed Index Annuity is a typical fixed index annuity with a niche crediting method. I have to give credit to the creative minds who developed this product. Will it at the end of the day give you spectacular returns based upon the performance of the 4 indexes used for crediting? Probably not, because that is not what it is designed to do. It is however designed to provide a lifetime income stream coupled with upside growth potential for your money without the pain of losing principle money to market downturns. Expect 2.25% to 5.125% returns over the long run, but your results may vary.
This is an independent product review, not a recommendation to buy or sell an annuity. This review is not endorsed by any insurance company and I do not receive any compensation for this review. This review is meant to be an independent analysis to provide the reader with information and concepts to help them make informed decisions. Before purchasing any investment product be sure to do your own due diligence and consult a properly licensed professional should you have specific questions as they relate to your individual circumstances. All names, marks, and materials used for this review are property of their respective owners.