Introduction
Fixed Indexed Annuities are contracts between the annuitant and an insurance company in which the insurance company promises to credit interest based on the performance of a certain stock market index, such as the S&P 500. Fixed Index Annuities have an inbuilt feature of capital protection, so even if the index goes down, your principal will remain safe.
Annuities are complex products, and many advisors try to mis-sell them without properly understanding the needs of the buyer. Thus, it is very important that you educate yourself on these products and not solely depend upon the annuity agent’s high-pressure sales pitch.
In this article, we will discuss in-depth the Allianz Core Income 7 Fixed Index Annuity. Launched in October 2013, it is one of the most popular Allianz Fixed Indexed Annuities, but is it worth it? After extensive research and due diligence, I have tried my best to provide an in-depth and unbiased analysis of this plan.
The review of the Allianz Core Income 7 Fixed Index Annuity will be broken into multiple subcategories, and I will pen my thoughts on this annuity at the end of this article:
- Product Description
- Product Policy
- Rates and Costs
- Accessing your Money
- Riders
- What makes this product stand out?
- What I don’t like
- Company Details
- Concluding Thoughts
Product Description
The Allianz Core Income 7 is a Fixed Indexed Annuity (FIA) plan that offers the annuitant (annuity investor) an opportunity to earn a market index-linked return without having to incur the risk of market downside. It is a suitable plan for retirees or people who are approaching retirement and aim to grow and protect their retirement savings. This plan is also suitable for people who are looking for guaranteed lifetime income or plan to leave a legacy for their loved ones, in addition to protecting and growing their retirement savings.
Let’s have a look at the high-level fine print of Allianz Core Income 7 Fixed Index Annuity, and then we will discuss each point in detail.
Heading | Information |
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Product Name | Core Income 7 with Core Income Benefit Rider |
Issuing Company | |
AM Best Rating | A+ (2nd of 16 ratings) |
Tenure | 7 years |
Maximum Issue Age | 80 Years |
Minimum Initial Purchase Amount | $10,000 |
Surrender Charge Schedule | 7-year surrender schedule
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Crediting Period and Strategies |
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Plan Types |
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Indexes |
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Free Withdrawals | After the first contract year, 10% of your initial premium can be withdrawn free of charges |
Death Benefit | Upon the annuitant’s death, the beneficiary will receive greater of:
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Riders | One compulsory rider (with a charge)
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Surrender Value | Greater of Accumulated Value (less any withdrawal charges/MVA) and the Minimum Guaranteed Contract Value |

Product Policy
How does the Allianz Core Income 7 Fixed Index Annuity policy work?
An annuitant (maximum age at the time of policy issue: 80) can purchase the Allianz Core Income 7 Fixed Index Annuity with a minimum initial purchase amount of $10,000, and in return, they will earn market index returns (calculated through a formula that we will discuss shortly), credited as per the chosen crediting period. Apart from the regular crediting period, there are various events that may trigger earnings credit: On-free withdrawals, for a long-term care event, terminal illness or injury event, or when a death benefit is payable.
The Allianz Core Income 7 Fixed Index Annuity offers the annuitant the choice of one or more of the five indexes to determine their earnings crediting formula. Three of these indexes are benchmark indexes, while two are Allianz exclusive indexes. Together, these indices offer 7 indexed allocation options. The plan also offers a fixed rate allocation option (making a total of 8 strategy options). We will discuss each available index briefly:
The NASDAQ-100 Index is one of the world’s most popular indexes that tracks 100 of the largest domestic and international non-financial companies listed on the NASDAQ Stock Exchange based on market capitalization. It has a total market cap of $3.5 trillion as of the end of 2020. The NASDAQ-100 Index has a proven history of growth, impact, and performance.
The NASDAQ-100 Index was created in January 1985 and tracks 100 of the largest companies listed on the NASDAQ across sectors like Industrial, Technology, Retail, Telecommunication, etc., except Financial Services.
2. Russell 2000 Index
The Russell 2000 Index is another one of the world’s most popular indexes that tracks 2000 of the smaller companies included in the Russell 3000 Index. It has a total market cap of $3.5 trillion as of the end of 2020. The Russell 2000 Index has a proven history of growth, impact, and performance.
The Russell 2000 Index was created in January 1984. The Russell 2000 is constructed to provide a comprehensive and unbiased small-cap barometer and is completely reconstituted annually to ensure larger stocks do not distort the performance and characteristics of the true small-cap opportunity set.
3. S&P 500 Index
The S&P 500 index is one of the most popular and oldest indexes in the world. It tracks 500 large-cap publicly traded stocks listed in the United States. It is a reliable index and has often succeeded in the test of time. It is very important to note that, similar to most other annuities, the Allianz Essential Income 7 Fixed Indexed Annuity offers the S&P 500 index with cap rates in place, meaning that your interest-earning capacity is capped. These rates tend to change frequently; I will discuss the rates in detail shortly.
4. Bloomberg US Dynamic Balance Index II
Bloomberg US Dynamic Balance Index II reflects the performance of an index strategy that uses the S&P 500 Index and the Bloomberg Barclays US Aggregate RBI Series 1 Index. The S&P 500 Index is a well-established benchmark for U.S. equity markets. The Bloomberg Barclays US Aggregate RBI Series 1 Index is designed to track the Bloomberg Barclays US Aggregate Bond Index —a well-established benchmark for the U.S. bond markets. The Bloomberg US Dynamic Balance Index II shifts weights between U.S. equities (S&P 500) and U.S. investment-grade bonds (Bloomberg US Aggregate / custom RBI Series) plus some cash, based on the realized volatility of those constituents. On days when equity volatility is low, the weight toward the S&P 500 increases; when volatility is elevated, allocation tilts toward bonds/cash to stabilize returns. However, while this approach reduces volatility, it also limits upside potential since equity exposure is scaled back when markets become more volatile.
5. Bloomberg US Dynamic Balance II ER Index
The “ER” stands for Excess Return. It follows a similar volatility-aware, shifting strategy between equity futures and bond futures (or bond aggregate exposure), but returns are reported after subtracting a short-term benchmark rate (cash or funding costs).
It is very important to note that the Allianz Core Income 7 Fixed Index Annuity offers the above indexes with certain rate-limiting mechanisms in place, meaning that your interest-earning capacity is capped. These rates tend to change frequently; I will discuss the rates in detail shortly.
Note: In addition to allocating the funds in the following indexes, the annuitant also has the option to allocate funds at a fixed interest. These Fixed Rates tend to change from time to time. The Fixed Value Rate at the time of writing this article was 2.80%.
Rates and Costs
The earnings crediting formula
The earnings crediting formula is the most important part of this annuity discussion. It is important to know that we don’t simply get the index return credited to our annuity. There are a few rates and caps that the company has in place that affect our earnings. These rates tend to change over time, and the updated rates can always be checked on the company’s website.
The formula to calculate the earnings credited is:
- For Strategies with Participation: (Participation Rate % X Index Return)
- For Strategies with Caps: Index return over a given crediting period with a maximum potential of earning the cap rate
Let’s have a look at the Allianz Core Income 7 Fixed Index Annuity rate sheet to understand how the earnings are determined.

The first thing to note is that we have five indexes, each of which has an annual point-to-point with a cap strategy. The Bloomberg US Dynamic Balance Index II / ER Indices has an additional three strategies. All in, we get to choose from a total of eight strategies (seven index-based and one fixed). The company displays four types of crediting strategies across these rates (Participation, Spreads, Cap, and Fixed).
Let’s quickly go through the terminology described by Allianz:
- Participation rate (PR): Participation rate describes the annuitant’s participation percentage in the return of an index. For example, suppose the participation rate is 60%, and the index returned 10% over the agreed time. In that case, the annuitant will be eligible for only 60% of the return, i.e., 6%.
- Spread: Spread is the percentage of the index return that the insurance company will deduct from your interest calculation. For example, if the spread in the contract is 2% and the index returned 8%, your account will be credited for the return minus the spread (8% - 2%), i.e., 6% of the return.
- Cap rates: This refers to the rate at which your interest-earning capacity is capped. For example, if an index returns 12% but the contract’s cap rate is 6%, the account will be credited with an interest credit of 6% only. It doesn’t matter how much the index goes above the cap rate; the maximum interest that can be earned is the cap rate.
- Fixed account rates: If you opt for a fixed account rate, you simply earn the fixed rate for a particular period specified by the company before your policy begins. These rates usually tend to be low compared to other fixed avenues, such as CDs and MYGAs, so you should avoid fixed rates in a general scenario. The 1-year fixed rate on this policy at the time of writing this article was 2.80%.
Thus, it is very important to check rates before choosing your preferred index.
Out of all these indices, I recommend choosing allocation strategies tied to broad-based indices like the S&P 500 or the Nasdaq-100 because of their strong real performance and the relatively high quality of the securities that constitute these indices.
Index Lock Feature
As this is a Fixed Income Annuity, you are naturally protected from market downturns. But you may have a high chance of missing out on some of the one-off index gains between the two earnings crediting points. This is where the Optional Free Lock-in features come in handy.
Generally, Index gains are automatically locked in at the end of the strategy term, but this feature gives you an option to manually lock in index gains once per strategy term. It means you can lock in index gains when you feel that the index has peaked. The following explains the feature graphically.
In this hypothetical example, the index value rose to 111 in month 18, at which time the decision was made to lock in the index value. The beginning index value (100) is compared to the locked index value (111), resulting in a change of 11%. If the participation rate were 80%, the indexed interest for this crediting period would be 8.8% (80% of 11%). By using Index Lock, you are able to lock in the day’s ending index value and be assured a positive index credit for the crediting period - no matter what happens during the remaining months.
This is one of my most liked features of the Allianz Core Income 7 Fixed Index Annuity, and this option is available to annuitants free of cost!
Note that a rider charge is also displayed. The Allianz Core Income 7 Fixed Index Annuity comes with a compulsory rider called the “Core Income Benefit Rider.” It costs 1.25% during the time of writing this article and is deducted on a monthly basis from the accumulated value. The rider rate can change from time to time. We will briefly discuss this rider in the next section.
Accessing your Money
Each year, you are allowed a 10% free withdrawal of your contract value without incurring charges, fees, or penalties.
Should your needs change unexpectedly and you need to take an excess withdrawal (a withdrawal that is above the free withdrawal amount available in a given contract year), you may be entitled to access additional monies; although certain charges and penalties may apply. Any amount withdrawn in excess of the remaining free withdrawal amount is subject to a Surrender Charge. Below is the Surrender Charge schedule for Allianz Core Income 7 Fixed Index Annuity.
Completed Contract Years | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8+ |
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Surrender Charge % | 8.5% | 8.0% | 7.0% | 6.0% | 5.0% | 4.0% | 3.0% | 0% |

In case you need to surrender your policy, a Market Value Adjustment (MVA) will be applied to the portion of the withdrawal or surrender that exceeds the free withdrawal amount during the withdrawal charge period.
Note that this surrender charge schedule is only valid for the Allianz Core Income 7 Fixed Index Annuity product for select states. For complete details about each state, you may visit the product’s brochure.
The surrender charge of Allianz Core Income 7 Fixed Index Annuity is pretty much in line with all the other annuity issuers.
Once the surrender charge period ends, you can typically access your full contract value without fees. However, any withdrawal reduces both your contract value and, if applicable, the income base tied to optional riders, which may impact future guaranteed income.
An annuitant can also convert the contract into a stream of guaranteed income, known as annuitization. They can choose from various payout options designed to meet different needs.
Life Only – Provides income for as long as you live.
Joint and Survivor Life – Continues payments over two lifetimes, often used by couples.
Life with Period Certain (up to 30 years) – Pays income for life, but guarantees payments for a minimum period even if death occurs earlier.
Period Certain (up to 30 years) – Provides guaranteed payments for a set number of years, regardless of lifespan.
Single Life or Joint Life with Cash Refund – Ensures that if the annuitant(s) pass away before receiving payments equal to the original premium, the difference is refunded to beneficiaries.
Single Life or Joint Life with Installment Refund – Similar to the cash refund, but any remaining balance is paid out over time in installments.
These options allow flexibility in balancing lifetime income needs with legacy goals, offering a way to customize how and when funds are accessed in retirement.
Death Benefit
Your beneficiary(s) can receive the greater of the accumulation value, guaranteed minimum value, or cumulative withdrawal amount as a lump sum (this option doesn't include any bonuses).
Riders
I’ve mentioned a couple of times that the Allianz Core Income 7 Fixed Index Annuity comes with a mandatory Core Income benefit Rider - We will discuss it in detail here.
Core Income Benefit Rider
A core income benefit rider is an income rider that helps increase your lifetime guaranteed annual withdrawal percentage. The higher your withdrawal percentage, the higher your lifetime income will be.
The Core Income Benefit Rider currently costs 1.25% annually, deducted on a monthly basis from accumulated value. When you decide to start receiving income, you can choose from two lifetime withdrawal options - Level Income and Increasing Income:
- Level Income: This option provides a predictable, dependable income for life. The withdrawal percentage is fixed at the time income withdrawals begin and does not change. This option may be a good choice for individuals who value stability and predictability in their income stream. Knowing exactly how much income you'll receive each month can provide peace of mind and make budgeting easier.
- Increasing Income: This option also provides income for life, but with an opportunity for payment increases. The withdrawal percentage starts smaller but has the potential to increase each crediting period based on the interest rate credited to your allocation options in your contract. This option can be attractive for individuals concerned about inflation or increasing retirement expenses. While the initial income may be lower than with the Level Income option, the potential for income increases can help maintain purchasing power over time.
The schedule below shows lifetime income withdrawal percentages (as a percent of the annuity’s accumulation value) for both single and joint plans, for level and increasing options, respectively. Remember that you can start lifetime withdrawals only at age 50 or older.
Lifetime Withdrawals Working Example
At the time you begin income payments, the percentage of your annuity’s accumulation value that can be withdrawn for life depends on (i) whether you elect the single or joint option, and (ii) whether you choose level or increasing income withdrawals.
Suppose the annuity was issued at age 60, and you wait 5 years before starting lifetime income. If you select the single option with level withdrawals, your withdrawal rate would be the base 6.60% (from the table) plus 0.55% for each year you deferred, i.e., 6.60% + (5 × 0.55%) = 9.35% of the accumulation value, fixed for life until death.
Example:
- Issue age: 60
- Deferral period: 5 years (payments begin at age 65)
- Accumulated value at time of income start: $200,000
- Option chosen: Single Life, Level Withdrawals
Step 1: Determine withdrawal percentage
From the table, at age 60, the single-life level withdrawal percentage is 6.60%.
Since income was deferred for 5 years, you add 0.55% per year:
6.60% + (5 × 0.55%) = 9.35%.
Step 2: Apply the withdrawal percentage to the accumulated value
$200,000 × 9.35% = $18,700 annually.
Step 3: Lifetime income
This $18,700 payment is locked in for life. The annuitant will receive this annual income every year until death, regardless of market performance or how long they live.
If you instead chose the single option with increasing withdrawals, your base would start at 5.90% plus the same deferral credits, i.e., 5.90% + (5 × 0.55%) = 8.75% of the accumulation value. However, unlike level withdrawals, your income payments here are not fixed for life, but increase annually in line with the interest credited to your allocation account, giving growth potential over time.
On the face of it, it seems like the rider will benefit if they opt for the increasing income option, but you must keep in mind two things:
- The rider charge: Allianz charges 1.25% annually of the accumulation value, deducted from your account each month, which will reduce your annual accumulation value by 1.25% each year.
- Lifetime income calculation: Most companies use “Income Benefit Base x Withdrawal Percentage” to calculate lifetime income, but Allianz uses “Accumulated Value x Withdrawal Percentage” to calculate the same. Now, the “Income Benefit Base” is usually greater than the “Accumulated Value.” The greater base will result in a greater lifetime income, but in the case of Allianz, the base that they use for lifetime income calculation is smaller.
Contract/Administrative Charge
The Allianz Core Income 7 Fixed Index Annuity levies no annual contract or administrative fees but comes with a compulsory core income benefit rider, which currently costs 1.25% annually, deducted on a monthly basis from accumulated value.
What makes this product stand out?
Allianz Core Income 7 Fixed Index Annuity offers some features that not many fixed-indexed annuities offer. The ones that I like the most are:
- Optional Lock-in of Positive Performance: As this is a Fixed Income Annuity, you are naturally protected from market downturns. But you may have a high chance of missing out on some of the one-off index gains between the two earnings crediting points. This is where the Optional Lock-in features come in handy. Generally, Index gains are automatically locked in at the end of the strategy term, but this feature gives you an option to manually lock in index gains once per strategy term. It means you can lock in index gains when you feel that the index has peaked.
- Broad Index Choices: The Allianz Core Income 7 Fixed Index Annuity offers annuitants the opportunity to participate in some of the broad and popular market indexes, such as the NASDAQ-100 Index, Russell 2000 Index, and the S&P 500 Index. Usually, fixed-indexed annuities offer a very limited choice of broad market and popular indexes, but Allianz offers three of the most popular indexes as a strategic choice. However, all of them are capped, which may be a deal-breaker for many.
What I don’t like
I don’t like plenty of things about the Allianz Core Income 7 Fixed Index Annuity. Most of them are those that limit the income-earning capacity of an annuitant. However, the company positions this annuity for opting for the income rider, so it is still a decent option if lifetime withdrawals are your priority.
- Caps on the Popular Indexes: The rate sheet mentions that the S&P 500, NASDAQ-100, and Russell 2000 strategies are all capped at relatively lower rates. These are some of the most popular indices globally, and I believe that the annuitant should be given a decent opportunity to participate in these indices.
- Compulsory Paid Rider: The Allianz Core Income 7 Fixed Index Annuity comes with a compulsory Core Income Benefit Rider that costs 1.25% of the accumulated value each year. Even after being a paid rider, it doesn’t offer an attractive income-earning capacity. Moreover, Allianz calculates the lifetime income based on the “Accumulated Value” and not the “Benefit Value” that other companies use. The benefit value offers a higher lifetime income than the accumulated value.
- No Enhanced Benefit Rider: Even after charging for the Core Income Benefit Rider, the Allianz Core Income 7 Fixed Index Annuity doesn’t offer any enhanced benefit rider. Many companies offer a free enhanced benefit rider, where the annuitant gets an option to double their lifetime income or to withdraw penalty-free, all of their account value in certain events (like terminal illness or confinement to a Qualified Care Facility) occur.
- Low Realistic Return Expectations: You might have known by now that this is a conservative policy that focuses more on income protection rather than income growth. As a conservative policy, the realistic return expectations are pretty average, ranging between 2% and 5%. It is not the best policy for someone who is looking only for growth and accumulation.
Company Details
You must always keep in mind that, unlike CDs, annuities are not guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other federal insurance agency. An annuity's "guarantee" is only as strong as the insurance company that issues the annuity, so it is always important to assess the issuing company before buying an annuity.
Allianz Life Company
Allianz Life Company has been in business since 1896. It is a subsidiary of Allianz SE, one of the oldest financial services and insurance companies, and has been in the business for over 13 decades. It has been one of the largest providers of fixed and fixed-indexed annuities in the US for many years and has regularly been in the top ten Fixed Indexed Annuity Sales. Allianz SE is a Fortune 500 company.
It is rated as follows by the rating agencies:
Rating Agency | Rating |
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AM Best | A+ (2nd of 16 ratings) |
Moody’s | Aa2 (5th of 21 ratings) |
S&P | AA (3rd of 21 ratings) |
Allianz Life Company has managed to maintain decent ratings for many years. It is considered to be strong and stable financially. As of year-end 2024, some of the other financial highlights for Allianz SE include its:
- EUR 17.8 billion in total sales / direct written premium
- EUR 43.1 billion of total stockholders’ equity
- EUR 7.8 billion in net operating income
- EUR 137.1 billion in total assets
Thus, going by the operating history and financial numbers, we can safely gauge that you can trust your savings with Allianz Annuity Life Company.
Conclusion
The Allianz Core Income 7 Fixed Index Annuity may not be the most competitive option for a broad range of annuitants. Its growth potential is limited, with relatively low caps across most of its index options, which restricts accumulation value. A further drawback is that annuitants are required to purchase the Core Income Benefit rider, which adds meaningful cost without offering proportionate value compared to alternatives in the market.
That said, this annuity may still appeal to very conservative individuals who prioritize guaranteed lifetime income above all else. Backed by Allianz, one of the strongest and most reputable life insurers globally, it offers security and financial strength. However, the product has changed little since its initial launch and has not kept pace with innovations seen in competing FIAs, making it less attractive for investors seeking a balance between growth potential and income protection.
We understand that choosing the right annuity can be a complex decision, influenced by a myriad of factors such as market conditions, individual financial goals, and evolving life circumstances. To better serve you in this critical decision-making process, we regularly conduct in-depth reviews of various annuity products, examining features, costs, and potential benefits. To dive deeper into our extensive reviews, click here.