Should You Replace Your Old Annuity?
Why Your Retirement Income May Be Costing You
If you bought an annuity before 2022, today’s higher interest rates and newer products could significantly boost your retirement income. Learn how American Equity, Midland National, and F&G could help you secure a better financial future.
If you bought an annuity several years ago, you might think your retirement planning is complete. But annuities aren’t set-it-and-forget-it products. With today’s higher interest rates, newer products with better features, and evolving carrier ratings, your old annuity might be underperforming—and costing you thousands in potential retirement income.
Why Your Old Annuity May Be Underperforming
Higher Interest Rates Mean Better Income Potential
The Federal Reserve raised rates 11 times between March 2022 and July 2023. Since then, rates have remained elevated. If you purchased your annuity before this period, you’re likely locked into lower payout rates. Annuity income rates typically rise when interest rates go up, meaning a newer annuity could potentially boost your retirement income significantly.
Today’s fixed annuities are offering substantially better yields. As of 2026, Midland National’s LiveWell® Guarantee Max products are offering 5.00% to 5.20% on 7-year guarantee periods for deposits of $100,000 and above. For comparison, older annuities purchased during the low-rate environment of 2019-2021 may have guaranteed minimums of just 1% to 2%.
💡 Did You Know?
If you bought an annuity before 2022, you could be leaving thousands of dollars on the table. Today’s higher interest rates mean newer annuities can offer significantly better payouts.
You May Have Lost Access to Modern Features
The annuity market has evolved considerably since many older contracts were issued. Today’s annuities often feature:
- Lower internal costs – Commission-free annuities are now widely available, offering better value than older products with high annual fees
- Enhanced growth potential – Modern indexed annuities allow participation in market gains with limited downside risk
- More flexible income options – Newer contracts may offer better death benefits, living benefits, or spousal continuation options that older annuities lack
Your Financial Goals May Have Changed
Your annuity needs today might be completely different from when you first bought the contract. Maybe you now want to:
- Ensure income continues for your spouse after you pass
- Build a legacy for beneficiaries rather than maximize income
- Adjust for changes in health, marital status, or retirement timeline
Understanding American Equity: A Fixed Index Annuity Specialist
American Equity Investment Life Insurance Company, founded in 1995, is a Des Moines, Iowa-based annuity specialist that focuses exclusively on fixed index annuities, fixed annuities, and immediate annuities. With 922 employees and A-level financial strength ratings from AM Best, S&P Global, and Fitch, the company supports hundreds of thousands of contract owners across the United States.
American Equity
AM Best Rating: A- (Excellent)
Comdex Score: 71-73
Founded: 1995
Specialty: Fixed Index Annuities
Midland National
AM Best Rating: A+ (Superior)
S&P Rating: A+ (Strong)
Founded: 1906
Assets: $82.7 Billion
F&G (Fidelity & Guaranty Life)
AM Best Rating: A+ (Superior)
J.D. Power 2025: 651 Score
Specialty: Fixed & Indexed Annuities
Financial Strength Ratings
American Equity carries an A- (Excellent) rating from AM Best with a Comdex score around 71 to 73. Following their acquisition by Brookfield Reinsurance in 2024, they’ve maintained solid financial standing. In the J.D. Power 2025 U.S. Individual Annuity Satisfaction Study, American Equity ranked #7 overall with a score of 655, improving four positions from the previous year.
American Equity Product Lines
American Equity offers three core fixed index annuity lines, each addressing a distinct retirement planning goal:
AssetShield
Targets accumulation, protecting savings from market downturns through index-linked growth potential. Money allocated to an index-linked crediting strategy cannot be lost due to index volatility, and credited interest is locked in at each contract anniversary.
IncomeShield
Focuses on generating guaranteed lifetime income through a built-in Lifetime Income Benefit Rider. Payout amounts increase the longer the owner defers taking income. A separate Income Account Value tracks growth independently and is used to calculate lifetime income payments.
EstateShield
Combines guaranteed lifetime income with estate planning, pairing a built-in rider with enhanced death benefit options.
American Equity Customer Service
American Equity maintains service standards designed to support financial professionals and contract owners:
- Customer calls answered in under 60 seconds
- Financial professional calls answered in an average of 30 seconds
- Post-issue transactions typically completed within 24 hours
- Contracts submitted in good order generally issued within 48 hours
- All customer service and call center teams operate out of Des Moines, Iowa
Understanding Midland National: 115 Years of Strength
Midland National Life Insurance Company is one of the most established players in the annuity market, with over 115 years of business. As a member of Sammons Financial Group, a privately held mutual holding company, Midland National isn’t subject to the short-term earning pressures that publicly held companies face.
Financial Strength Ratings
Midland National is rated A+ (Superior) by A.M. Best, A+ (Strong) by S&P Global Ratings, and A+ (Stable) by Fitch Ratings. An A+ Superior rating is the second-highest on the A.M. Best 13-tier scale, putting Midland National in the same financial-strength tier as Pacific Life and Lincoln Financial.
Midland National by the Numbers
As of December 31, 2024:
- Total assets: $82.7 billion
- Life and annuity reserves: $46.8 billion
- Capital and surplus: $5.0 billion
- Over 1 million life insurance and annuity policies in force
- Paid out almost $664 million in life insurance claims in 2024
In the J.D. Power 2025 U.S. Individual Annuity Satisfaction Study, Midland National scored 615.
Midland National Product Lines
Summit LadderedSM Fixed Index Annuity
- Guaranteed growth with a fixed rate account option
- Market-linked growth potential through index account options
- Built-in diversification and automatic allocations
- 100% downside protection
- Tax deferral
MNL RetireVantage 10
A deferred fixed indexed annuity with a 10-year surrender schedule. Premium amounts of $75,000-$1,000,000 can earn first-year yields of up to 3.40%.
MNL Income Planning Annuity
Provides one of the highest payout rates in the A-rated FIA category. On a $100,000 deposit with a 10-year deferral, it can generate approximately $17,160 in annual lifetime income.
Understanding F&G (Fidelity & Guaranty Life)
F&G Life (formerly Fidelity & Guaranty Life) is a respected player in the annuity market, ranking #10 in the J.D. Power 2025 U.S. Individual Annuity Satisfaction Study with a score of 651. While their score dipped three positions from the previous year, they remain above the industry study average of 639. A+ rated by AM Best, F&G offers a range of fixed and indexed annuity products.
What to Consider Before Replacing Your Annuity
Before replacing any annuity, you need to look beyond the sales pitch. Here’s what matters most:
Surrender Charges
Most annuities have a surrender period lasting 6-10 years. Surrender charges typically start around 7-10% and decrease annually. For example, a 10-year surrender schedule like the MNL RetireVantage 10 locks you in for a full decade.
However, most contracts allow you to withdraw up to 10% annually without penalty, even during the surrender period. Some products like the IncomeShield 7 allow up to 10% (noncumulative) of contract value as the penalty-free withdrawal amount each contract year starting in year 2.
⚠️ Important: Surrender Charges
If you withdraw funds during the surrender period, the charge is deducted from your account value. Always check your contract’s surrender schedule before making any decisions. However, most contracts allow you to withdraw up to 10% annually without penalty.
Lost Benefits You Might Regret
Older contracts sometimes have valuable features that newer products don’t offer. Before exchanging, check:
- Death benefits – Some older annuities have enhanced death benefits you’d lose. With many newer products like the MNL Income Planning Annuity, the death benefit equals accumulation value and declines once income is activated
- Income riders – Guaranteed lifetime income at favorable rates might not be available in newer contracts
- Grandfathered features – Certain tax advantages or contract provisions may not exist in today’s products
The New Surrender Clock
Replacing your annuity typically restarts the surrender period on your new contract. You’re essentially locking your money up for another 6-10 years. Is that worth the improved terms?
Tax Implications
If you simply cash out your annuity, you’ll face:
- Ordinary income tax on your gains
- A 10% early withdrawal penalty if you’re under 59½
The Smart Way to Replace an Annuity: 1035 Exchange
If you decide a replacement makes sense, consider a Section 1035 exchange. This IRS provision allows you to transfer funds from one annuity directly to another without triggering immediate taxes.
✅ Key Points About 1035 Exchanges
- The transfer must go directly from one insurance company to another—you can’t touch the money
- Your cost basis carries over to the new contract
- You can exchange from annuity to annuity
How to Evaluate Whether Replacement Is Right for You
Step 1: Gather Your Current Annuity Information
- Most recent statement (shows account value, surrender charges, and performance)
- Contract details (income and death benefit values, fees, riders)
- Call the insurance company for the most current information
Step 2: Identify Your Goal
What do you want your annuity to accomplish?
- Income you can’t outlive?
- Growth for a legacy?
- Protection from market downturns?
Step 3: Compare Side-by-Side
Compare your current annuity against alternatives, accounting for:
- Surrender charges and market value adjustments
- Fees and rider costs on the new contract
- Lost benefits from your current contract
- New surrender period length
- Actual income projections, not just brochure promises
Step 4: Check the Insurer’s Financial Strength
Credit ratings matter—guarantees are only as strong as the company backing them. Check if your current insurer’s rating has changed.
When You Should NOT Replace Your Annuity
A replacement might be a mistake if:
- You’re near the end of your surrender period and can soon exit without penalty
- Your current contract has valuable benefits that can’t be matched today
- The new annuity’s benefits don’t clearly outweigh surrender charges and restarting the surrender clock
- You’re replacing primarily to chase a bonus or commission-driven product
The Bottom Line
If you bought an annuity before 2022, higher interest rates mean you could potentially secure more retirement income today with carriers like American Equity, Midland National, or F&G. But don’t rush—conduct a thorough “replacement analysis” before making any decision. Account for surrender charges, lost benefits, tax consequences, and the new surrender period.
Ready to explore your options? Take our quick quiz to see if your annuity is still serving your retirement goals—or if it’s time for an upgrade.
🔍 Find Out If You Can Replace Your Old Annuity
Take our quick quiz to see if today’s higher rates could boost your retirement income. Or book a free consultation with a licensed annuity specialist.