The Allianz 222 Annuity Reviewed

I have finally done an in-depth review of the Allianz 222 annuity. This is one of those dinner seminar annuities I hear about a lot, and honestly, I can’t recall a time when it’s been the best solution for someone who’s had it pitched to them.

Now, I always say: “There are no inherently bad annuities—just bad recommendations”. The Allianz 222 is a prime example of an annuity that often gets recommended incorrectly, leading to potential pitfalls and misunderstandings about its true value and functionality.


Overview of the Allianz 222

Again, there’s nothing inherently wrong with Allianz or the Allianz 222. It’s the recommendation on what it does and how to use the product that causes so many problems.

The Allianz 222 is issued by Allianz Life Insurance Company, who’s parent company has been around since about 1890. They’re an A+ rated company with around $185 billion in assets— so it’s a very strong company financially.

The 222 is a fixed indexed annuity with an income rider and numerous features and benefits. However, the more bells and whistles these annuities have, the less effective each feature and benefit becomes. This is a very important consideration when evaluating its suitability for your retirement goals.


Features and Benefits of the Allianz 222 Annuity

The Allianz 222 comes with a variety of features and benefits designed to provide income and growth potential. These include a bonus, no fees for the income rider (with a clause allowing for future fees), a 150% crediting towards the protected income value, an income multiplier for long-term care needs, an opportunity for increasing income for life, and a 10% penalty-free withdrawal of the premium starting in the second year of the policy.


Understanding the Allianz 222 Annuity’s Bonus

The bonus is one of the standout features of the Allianz 222. At the time of this posting, it’s 40%, though it typically fluctuates between 18% to 30%. One of the big pitches of this annuity is the bonus itself. However, you must understand that this bonus doesn’t go into your pocket.

Picture two buckets inside this annuity—one marked ‘income’ and one marked ‘account value’ or ‘walk-away money’. The 40% bonus goes into the income bucket, part of an actuarial calculation determining your future income.

Pros of The Allianz 222 Bonus:

    • Significant bonus that enhances future income calculations.

    • Potential to boost the overall value of the annuity.

Cons of The Allianz 222 Bonus:

    • The bonus does not add to the walk-away money.

    • Can be very misleading if not properly understood.


The Allianz 222 Income Rider

The bonus plays into the next feature, which is the income rider. This feature provides a guaranteed income once activated down the road. Since there is no expense for this income rider, the trade-off is a 10-year waiting period to activate the lifetime income.

Remember, there are no deals in the insurance industry—everything is based on math. Because there’s no expense for the guaranteed income rider, the 222 lacks deferred roll-ups like other income annuities with guaranteed income riders. So, you might wait 10 years and still only get paid based on the original amount plus the bonus.

Pros of the Allianz 222 Income Rider:

    • Guaranteed income once activated.

    • No initial cost for the income rider.

Cons of the Allianz 222 Income Rider:

    • 10-year waiting period before activation.

    • No deferred roll-ups, potentially limiting growth.


The Allianz 222 150% Indexing Credit

To make this annuity appear more attractive, the Allianz 222 gives you a 150% indexing credit towards the income value. This means if the index you are tracking grows by 3% in a year, 3% goes into your walk-away bucket and 4.5% is added to your protected income value. This number is then used to calculate your future income, offering a structured way to grow your annuity value over time.

Pros of The Allianz 222 Indexing Credit:

    • Enhanced crediting towards income value.

    • Structured growth based on index performance.

Cons of the Allianz 222 Indexing Credit:

    • Dependent on index performance for optimal benefits.

    • Potential for misunderstanding the true growth potential.


The Allianz 222 Annuity’s Income Multiplier Benefit

The next benefit is the income multiplier benefit. This feature is presented to double your income if you’re confined to a skilled nursing facility, an assisted living facility, or unable to perform two of the six daily living activities.

It’s a great benefit but it has limitations.

The main one to understand is that there must be account value, or “walk-away money”, left in the annuity for this benefit to take place. Most income annuities run out of account value around the age most people need long-term care, so it’s important not to rely solely on this feature for long-term care insurance protection.

Pros of the Allianz 222 Income Multiplier:

    • Significant income boost for long-term care needs.

    • Provides additional security in case of severe health issues.

Cons of the Allianz 222 Income Multiplier:

    • Requires remaining account value to activate.

    • Not a replacement for dedicated long-term care insurance.


Increasing Income for Life

The Allianz 222 also offers the opportunity for increasing income for life. This benefit can be (and almost always is) overhyped, especially in today’s high-inflation environment.

It’s easy to make this annuity sound like a solution to long-term inflation problems when it may just be a small benefit to help offset it. It’s important to be conservative with growth rate expectations—think 3% to 3.5% per year on average over the long term.

Pros of Allianz 222’s Increasing Income for Life:

    • Potential for increasing income to offset inflation.

    • Structured to provide long-term financial security.

Cons of Allianz 222’s Increasing Income for Life:

    • May not fully address inflation concerns.

    • Requires conservative growth expectations for realistic planning.


The 10% Penalty-Free Withdrawal

The last big benefit of the 222 is the 10% penalty-free withdrawal starting in the second year. Almost every annuity offers this option. The difference with the 222 is you can take 10% of the premium every year, not just the account value. For example, if you put $100,000 into 2 different annuities and have zero growth in the first year, you could take $10,000 from either of the annuities starting the second year.

To keep the math simple, let’s just say you have zero growth in the 2nd year as well.  In the standard growth annuity, the account value has dropped to $90,000 after last year’s withdrawal, which only allows for a $9,000 penalty-free withdrawal. However, you could still take $10,000 from the 222 because it’s based on the original premium, not the account value.

Pros of the Allianz 222 Penalty-Free Withdrawal:

    • Flexible withdrawal options from the second year.

    • Based on the original premium, offering higher potential withdrawals.

Cons of the Allianz 222 Penalty-Free Withdrawal:

    • Potential for confusion between premium and account value withdrawals.

    • Requires careful planning to maximize benefits.


Comparison with Other Fixed Indexed Annuities

Let’s compare the Allianz 222 with a fixed indexed annuity with a guaranteed income rider for a 65-year-old couple. If we put $100,000 into the 222 with a reasonable expectation of 3% growth, that couple would get an income of $10,871 at age 75. With continued growth, the actual income would grow by 4.5% due to the multiplier. In contrast, the same couple could put $100,000 into a fixed indexed annuity with guaranteed roll-ups and get a starting income of $17,500 (at the time of this recording) per year at the same age, with no questions asked.

Alternative Strategies for Income and Withdrawals

Now, let’s consider another example. What if a 65-year-old couple put $100,000 into the 222 and started withdrawing $10,000 per year starting in year two? With a 3% growth rate, they’d have a starting income in year 11 of about $2,400 per year. However, we could use the same amount of money with a different strategy and get better results. By funding a nine-year term certain annuity and a second fixed indexed annuity with a guaranteed income rider, the couple could receive a much higher guaranteed payout.


When used appropriately, the Allianz 222 can be a very effective annuity. The cons, however, almost always relate to advisors setting unrealistic expectations. The only guaranteed numbers are on the 0% growth page of the illustration; any other increases depend entirely on index performance.

For more detailed explanations and to see these strategies in action, I encourage you to watch the accompanying podcast episode.

And if there’s a topic you’d like me to cover, leave a comment. I’ll see it and consider putting something together on that topic.

Wishing you all the best in your financial education!

Marty Becker

Podcast Episode 34: The Allianz 222 Annuity Reviewed



Download Episode 34: The Allianz 222 Annuity Reviewed on Apple Podcast

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    • Hi Brian,

      Thank you for your observation. I probably should of specified that this was with the assumption of Non-Qualified money to keep the scenario simple. However, the income from the first annuity in the presented solution would most likely cover most of, if not all, of the total RMDs during that deferral period and have little to no impact on the guaranteed roll-up of the second annuity.

      With the 10-yr deferred scenario, the RMDs for the annuity value at ages 73 & 74 could be also be covered by other IRA money to not interrupt the roll-up.

      A little bit deeper subject with the Qualified Money scenario, but thank you for your comment!

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