How it works
American Equity AssetShield Fixed Indexed Annuity: product description and policy
The American Equity AssetShield is a Fixed Indexed Annuity (FIA) plan that offers the annuitant (annuity investor) an opportunity to earn a part of 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 the American Equity AssetShield Fixed Indexed Annuity, and then we will discuss each point in detail.
| Product Name | AssetShield |
|---|---|
| Issuing Company | [American Equity](https://annuityrateshq.com/reviews/american-equity-annuity-reviews) |
| AM Best Rating | A (3rd of 13 ratings) |
| Tenure | 5, 7, 10 years |
| Maximum Issue Age | 85 Years (80 Years for the 10-year policy) |
| Minimum Initial Purchase Amount | $5,000 |
| Surrender Charge Schedule | Varies for different tenure policies |
| Crediting Period | - **Annual** point-to-point with cap rate or participation rate - **2-year** point-to-point with cap rate or participation rate - 1-year Performance Trigger - **Monthly** point-to-point with cap |
| Plan Types | - Nonqualified - IRA - Roth IRA - SEP IRA - SIMPLE IRA - 401(a) - Charitable trust |
| Indexes | - S&P 500 Index - Blackrock Adaptive US Equity 5% Index - BNPP Patriot Technology Index - Nasdaq Premier Index - NYSE Premier Index - S&P 500 Advantage 15% VT TCA Index - S&P 500® Dividend Aristocrats® Daily Risk Control 5% Excess Return Index |
| Free Withdrawals | 10% after the first completed contract year |
| Death Benefit | The greater of the Contract Value or the Minimum Guaranteed Surrender Value |
| Free Rider(s) | - Enhanced Benefit Rider (Only for owners under age 75) |
| Optional Riders | The annuitant can choose any one of the following: - Rate Integrity Rider (RII) - Performance Rate Rider (PRR) - RIRR with PRR \ (Will be discussed in the Article) |
| Minimum Guaranteed Surrender Value (MGSY) | 87.5% of all premiums(minus any withdrawals) accumulated at the Minimum Guaranteed Interest Rate (MGIR), which is currently 2.65% |
The American Equity AssetShield policy is almost identical for all policy tenures, except the crediting period and surrender charge schedule. For ease of discussion and clarity, we will focus on the American Equity AssetShield 10 policy (unless otherwise specified) for the remainder of the article.
How does the American Equity AssetShield policy work?
An annuitant (maximum age at the time of policy issue: 80) can purchase the American Equity AssetShield 10 policy with a minimum initial purchase amount of $5,000, 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 American Equity AssetShield 10 offers the annuitant the ability to choose from one or more of the seven indexes to determine their earnings crediting formula. These indices together offer a total of 23 indexing options. The minimum allocation for each strategy is $1,000. We will discuss each available index briefly:
1. S&P 500 Index
The S&P 500 index is one of the most popular and oldest indices 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 the American Equity AssetShield plan offers a low participation rate for the S&P 500 index. You will be credited only a small part of the S&P 500 return to your annuity. These rates change frequently; I will discuss the rates in detail shortly.
2. S&P 500 Dividend Aristocrats Daily Risk Control 5% Excess Return Index
The S&P 500 Dividend Aristocrats measure the performance of companies within the S&P 500 that have followed a policy of consistently increasing dividends every year for at least 25 years. Constituents are equal-weighted every quarter, with the qualifying universe reviewed once a year in January. The S&P 500 Dividend Aristocrats Index was created in August 2010 and targets a 5% annualized realized volatility.
3. BlackRock Adaptive US Equity 7% Index
The BlackRock Adaptive U.S. Equity 7% Index aims to provide exposure to the iShares Core S&P 500 ETF while adhering to a specified Target Volatility of 7%. To achieve this, the Index integrates Fixed Income U.S. Treasury iShares® ETFs and a cash component. While this strategy can cushion the impact of market declines, it also constrains the potential for upside gains. 4. BNPP Patriot Technology IndexThe BNPP Patriot Technology Index is a rules-based, multi-asset index developed by BNP Paribas. It offers exposure to U.S. large and mid-cap companies operating in 14 critical and emerging technologies identified by the U.S. Department of Defense as vital to national and economic security. The index aims to balance growth potential with asset protection by incorporating a 7% volatility control mechanism, which adjusts exposure among equities, bond futures, interest rate futures, and cash to maintain targeted volatility levels. 5. Nasdaq Premier IndexThe Nasdaq Premier Index is a proprietary benchmark developed by Nasdaq to offer investors a diversified exposure to high-quality U.S. companies across various sectors. Designed with a transparent, rules-based methodology, the index aims to balance growth potential with risk management, making it suitable for long-term investment strategies.6. NYSE Premier IndexThe NYSE Premier Index is a proprietary benchmark developed by the New York Stock Exchange to provide investors with diversified exposure to high-quality U.S. companies across various sectors. Designed with a transparent, rules-based methodology, the index aims to balance growth potential with risk management, making it suitable for long-term investment strategies.7. S&P 500 Advantage 15% VT TCA IndexThe S&P 500® Advantage 15% VT TCA Index (USD) ER is a volatility-controlled index developed by S&P Dow Jones Indices in collaboration with BofA Securities. It is designed to provide exposure to the S&P 500® while targeting a 15% annualized volatility level. This index is particularly utilized within fixed index annuities, offering a balance between growth potential and risk management.
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 change from time to time. The Fixed Value Rate at the time of writing/updating this article was 4%.
Rates and costs
Rates, bonus, surrender charges, 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 rate-limiting mechanisms (in the form of cap rates, participation rates, etc) that affect our earnings. These rates are subject to change over time, and the updated rates can be checked with your financial advisor or on the company’s website.
Let’s have a look at the American Equity AssetShield 10 rate sheet (as of October 2025) to understand how the earnings are determined.
The first thing to note is that we have seven indices. The S&P 500, NYSE Premier Index, and Nasdaq Premier Index each offer four strategies; the BlackRock Adaptive U.S. Equity, BNPP Patriot Technology, and S&P 500 Dividend Aristocrats Indexes have two strategies each; and the S&P 500 Advantage 15% VT TCA Index provides five strategies. Additionally, the contract offers a fixed rate strategy. Altogether, this gives us the option to allocate our contract across a total of 24 strategies—23 indexed and 1 fixed.
Let’s quickly go through the terminology described by American Equity:
- 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%.
- 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%, in this situation, the annuitant will be eligible for 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.
- Performance Trigger Rate: A performance trigger rate offers a straightforward way to earn interest based on market performance. With this strategy, if the linked market index (S&P 500 in this case) experiences a flat or positive return over a specified period (typically one year), you receive a predetermined fixed interest rate, known as the trigger rate. If the index return is negative, no interest is credited for that period, but importantly, your principal remains protected; you won't lose any of your initial investment or previously credited interest.
- Performance Rate Rider Rate (PRR): The Performance Rate Rider offers more options for magnified growth potential. exchange for a fee, this rider provides the opportunity to increase the cap, participation rate, or replacement rate on elected index-linked crediting strategies. The rider fee is locked in for the surrender charge schedule and deducted on the last day of each term.
- Fixed Value Rate: In addition to allocating the funds in the following indexes, the annuitant also has the option to allocate funds at a fixed interest rate. These Fixed Rates change from time to time. The Fixed Value Rate at the time of writing this article was 4%.
An annuitant can allocate their premium into multiple strategies. In my opinion, the strategies using the S&P 500 and Nasdaq Premier indexes are ideal, as they offer a relatively high participation rate and cap rate, and historical/back-tested returns are stable and higher compared to those of other indexes.
Accessing your Money
Each year, you are entitled to a 10% free withdrawal of your contract value without incurring any 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 American Equity AssetShield 10.
| Completed Contract Years | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10+ |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Surrender Charge % | 12% | 12% | 11% | 10% | 9% | 8% | 7% | 5% | 4% | 2% | 0% |
In case you need to surrender your policy, your contract value will be calculated assuming a Minimum Guaranteed Interest Rate (MGIR) of 2.65% for the period you held the policy. Note that this surrender charge schedule is only valid for the American Equity AssetShield 10 product for select states. For complete details about each state, you may visit the product’s rate card.
The surrender charge of the American Equity AssetShield fixed-indexed annuity is in line with all the other annuity issuers.
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
The greater of the Contract Value or the Minimum Guaranteed Surrender Value
Contract/Administrative Charge
The American Equity AssetShield levies no annual contract or administrative fees.
Carrier
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.
American Equity Investment Life Insurance Company
American Equity Investment Life Insurance Company has been in the business since 1995. It has been a major player in the fixed-indexed annuity market for many years and has been regularly in the top ten Fixed Indexed Annuity Sales.
It is rated as follows by the rating agencies:
| Rating Agency | Rating |
|---|---|
| AM Best | A (3rd of 13 ratings) |
| Fitch | A (6th of 19 ratings) |
| S&P | A (6th of 20 ratings) |
American Equity 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 American Equity include its:
- $11.41 billion in total sales / direct written premium
- $3.21 billion in capital and surplus
- $3.3 billion in net investment income
- $61.16 billion in total assets
Thus, going by the operating history and financial numbers, we can safely gauge that you can trust your savings with American Equity.
Pros
Free Enhanced Benefit Rider
This no-fee rider is automatically included for owners under age 75 at issue and includes both a Qualified Nursing Care and Terminal Illness Benefit. Qualified Nursing Care Benefit - After the first contract year, one additional free withdrawal of up to 100% of the contract value is allowed if the owner is confined in a qualified care facility for a minimum of 90 days. Confinement must begin after the contract issue date, and written proof is required from both the qualified care facility and the recommending physician. Terminal Illness Benefit - After the first contract year, one additional free withdrawal of up to 100% of the contract value is allowed if the owner is diagnosed with a terminal illness. Diagnosis must occur after the contract is issued and written proof with supporting documentation is required from a qualified physician.
Optional Rider to increase potential returns
The Performance Rate rider helps to increase cap, participation rate, or replacement rate on available strategies for more accumulation options that can align with a wide variety of goals. However, one must keep in mind that it comes with a fixed fee, which may vary according to the strategy selected.
Minimum Guaranteed Income Rate
In case you need to surrender your policy, your contract value will be calculated assuming a Minimum Guaranteed Interest Rate (MGIR) of 2.65% for the period you held the policy. This rate is generally higher than other policies that offer ~1% MGIR.
Low minimum purchase amount
The minimum purchase amount for this annuity is low at just $5,000. Many of the popular annuities available in the market require a high minimum purchase amount of anywhere between $10,000 and $25,000. The low minimum purchase requirement enables even small investors to purchase annuity products.
Conclusion
Conclusion
With the advancements in healthcare and technology, the average American today lives longer than ever. So, it’s very important to have a stream of income that can grow safely and steadily, and that has the ability to provide a fixed, guaranteed income during retirement years. This not only helps you mitigate the risk of outliving your income but also ensures that you continue to live a decent life even in your retirement.
The American Equity AssetShield is one such annuity that helps you grow your savings with much less risk. Through its Fixed Income Annuity, it offers principal protection or the opportunity to participate risk-free in the market index, provides a stream of guaranteed income, or even provides legacy planning. If you are considering buying a Fixed Indexed Annuity that is ideal for legacy planning, the American Equity AssetShield might interest you.