Is the American Equity IncomeShield 10 a good annuity?
For a buyer whose main goal is guaranteed income for life, yes, this is a strong and fairly transparent choice. The built-in income rider grows a separate income value at a guaranteed 10% simple-interest rate for up to 10 years, so your future paycheck grows every year regardless of what the index does, and the free Wellbeing Benefit doubles that income for up to 5 years if you need help with daily activities. The trade-off is the annual rider charge, billed against that growing income value rather than your actual account balance, so it takes a bigger dollar bite over time than the percentage alone suggests. Treat this as an income tool, not a growth or legacy product: the account is meant to be spent down once payments start.
American Equity IncomeShield 10 quick facts
| Issuer | American Equity Investment Life Insurance Company |
|---|---|
| AM Best rating | A (Excellent) |
| Product type | Fixed index annuity with a built-in income rider |
| Premium bonus | None |
| Issue ages | 40 to 80 |
| Minimum premium | $5,000 |
| Maximum premium | Up to $1,500,000 for ages 40 to 69, lower for older buyers |
| Surrender period | 10 years |
| Free withdrawal | 10% of contract value a year, starting in year 2 |
| Income rider | Lifetime Income Benefit Rider (LIBR), included in the base contract |
| Income value rollup | 10% simple interest a year, for up to 10 years |
| Rider fee | 1.20% annually, charged on the Income Account Value |
| State availability | Not sold in California, New York, Guam, Puerto Rico or the Virgin Islands |
Today's rates for American Equity IncomeShield 10
Rates change often and vary by state, term and deposit size. Get today's numbers for your state, side by side with other top-rated carriers. Free, with no obligation.
What is the American Equity IncomeShield 10?
The American Equity IncomeShield 10 is a fixed index annuity built around a single job: turning a lump sum into guaranteed income you cannot outlive. Unlike many FIAs that sell an income rider as a separate, optional add-on, the IncomeShield 10 comes with its Lifetime Income Benefit Rider built into the base contract, with the rider's ongoing cost part of the product from day one rather than something you elect later.
This review walks through how the income rider actually calculates a payout, what the Wellbeing Benefit adds if your health changes, how the surrender schedule and fee work, and who this contract fits best.
How the Lifetime Income Benefit Rider and its rollup work
Every IncomeShield 10 tracks two separate numbers, and mixing them up is the single most common mistake buyers make.
Your contract value is the real money inside the annuity. It moves with whatever your chosen index strategies credit, minus the annual rider fee, and it is the figure you would actually receive if you surrendered the contract.
Your Income Account Value is a separate measuring stick used only to calculate future income payments. You cannot withdraw it as a lump sum, and it is never the same number as your contract value.
The Income Account Value grows at a guaranteed 10% simple interest rate every year for up to 10 years, counting from your initial premium, and that growth happens whether your index strategies finish up, down or flat. On a $100,000 deposit, the income value gains $10,000 a year, reaching $200,000 by year 11.
When you decide to start income, American Equity applies a payout factor to that income value. The factor depends on your age when the contract was issued and how many years you waited before turning income on, so both a larger income value and a stronger payout factor reward patience.
Guaranteed income by start year
| Income starts | Age | Income Account Value | Payout factor | Annual income | Monthly income |
|---|---|---|---|---|---|
| Year 1 | 60 | $100,000 | 6.24% | $6,240 | $520 |
| Year 2 | 61 | $110,000 | 6.24% | $6,864 | $572 |
| Year 3 | 62 | $120,000 | 6.25% | $7,500 | $625 |
| Year 4 | 63 | $130,000 | 6.40% | $8,320 | $693 |
| Year 5 | 64 | $140,000 | 6.89% | $9,646 | $804 |
| Year 6 | 65 | $150,000 | 7.05% | $10,575 | $881 |
| Year 7 | 66 | $160,000 | 7.20% | $11,520 | $960 |
| Year 8 | 67 | $170,000 | 7.32% | $12,444 | $1,037 |
| Year 9 | 68 | $180,000 | 7.38% | $13,284 | $1,107 |
| Year 10 | 69 | $190,000 | 7.59% | $14,421 | $1,202 |
| Year 11 | 70 | $200,000 | 7.90% | $15,800 | $1,317 |
Figures assume a $100,000 premium and a 60-year-old male taking single-life income. A joint-life election pays less. Every number in this table is guaranteed at issue; none of it moves with how your index strategies perform.
Take a 63-year-old buyer who deposits $100,000 and waits 5 years, until age 68, to start income. Her income value has grown to $150,000 by then, and the payout factor locked in for a 5-year deferral works out to roughly 7.43%, producing about $11,145 a year for life. Assuming she lives to 95, that is 27 years of payments, or roughly $300,915 total, guaranteed regardless of what the market does over that stretch. Income keeps arriving for as long as she lives, even in years her contract value has already fallen to zero.
The Wellbeing Benefit: what happens if you get sick
Bundled into the income rider at no extra charge is the Wellbeing Benefit, a modest long-term-care-style boost to your payments. After 2 years of owning the contract, losing the ability to perform 2 of the 6 standard Activities of Daily Living, eating, bathing, dressing, transferring, continence and toileting, lets you activate it with an annual physician's certification. A nursing home stay is not required to qualify.
Once activated, a single-life contract pays double its normal income for up to 5 years. A joint-life contract pays one and a half times its normal income for the same stretch. Using the table above, a contract paying $10,575 a year at age 65 would pay $21,150 a year for up to 5 years under this benefit.
The Wellbeing Benefit can only be turned on once over the life of the contract, so think of it as a one-time bridge rather than an ongoing care policy.
Surrender schedule and free withdrawals
| Contract year | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11+ |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Surrender charge | 9.2% | 9% | 8% | 7% | 6% | 5% | 4% | 3% | 2% | 1% | 0% |
Free withdrawals equal to 10% of contract value are available every year starting in year 2, and none of that amount triggers a surrender charge. A required minimum distribution above the 10% threshold is also exempt.
At worst, the contract guarantees a surrender value equal to at least 87.5% of your premium minus withdrawals, credited at the contract's own minimum rate. That sets a floor on how much of your original deposit is at risk if you surrender early, separate from whatever your index strategies have actually earned.
Index options and crediting strategies
Your premium can be spread across six index strategies inside the IncomeShield 10: a plain S&P 500 option credited three different ways, an S&P 500 Dividend Aristocrats variant, and a handful of newer, engineered indexes built by BlackRock, Nasdaq and NYSE. Each strategy credits interest through a cap, a participation rate or a monthly sum method, and every one resets its terms at each contract anniversary.
Because those terms move often and differ by state, premium size and issue date, we leave today's specific numbers off this page. Use the rate box here for what each strategy is currently crediting, and keep in mind that the guaranteed income figures shown earlier do not depend on which strategies you choose or how they perform, since the rollup rate is fixed by contract, not by index results.
Fees and the rider charge
The IncomeShield 10 carries one primary fee: 1.20% a year for the built-in income rider. What makes it unusual is what it is charged against. Most annuity income riders bill their fee off the contract value. This one bills off the Income Account Value instead, the larger of the two numbers, so the dollar cost climbs every year right alongside the 10% rollup.
On a $100,000 deposit, once the income value reaches $150,000 in year 5, the annual fee comes to $1,800. By year 10, with the income value at $200,000, the fee reaches $2,400. Both amounts are pulled from your contract value no matter what your index strategies earned that year, so in a flat year the fee alone can shrink the account even though nothing else changed.
What to understand about this illustration
A few things matter before you compare an IncomeShield 10 quote against another carrier's numbers.
Your income value and your contract value are never the same figure, and only the contract value is what you would receive if you surrendered the annuity. If your income value has grown to $150,000, your surrender value will sit well below that, based on how your actual index strategies performed, minus any surrender charge still in effect.
Some of the newer, engineered index strategies on this contract have credited very little interest in years when the plain S&P 500 performed strongly, even carrying a high headline participation rate. A large participation percentage applied to a low-volatility index does not guarantee a large credit; ask to see how a specific strategy has performed across a range of market conditions, not just its best stretch.
Because the fee is billed off the income value rather than the contract value, expect your contract value to decline gradually once payments start, even in a year with positive index credits. That decline is how the product is designed to work, not a sign something has gone wrong.
Who is the IncomeShield 10 best for
This contract tends to fit someone who:
- Is between 55 and 70 years old with $100,000 to $500,000 to convert into reliable income within 5 to 10 years
- Wants guaranteed income they cannot outlive more than they want to preserve principal for heirs
- Sees the Wellbeing Benefit as a useful bridge if a health event affects daily living
- Wants to delay Social Security and needs guaranteed income to bridge the gap
- Is comfortable knowing the contract value will decline once income begins
It is a weaker fit if you want to leave a larger legacy, might need to surrender the contract early, live in one of the unavailable states, or want growth without an income rider fee working against you.
Other annuities to consider
If the IncomeShield 10 is on your list, these reviews are worth comparing it against:
- American Equity company review: the carrier's full history and ratings
- American Equity AssetShield 7 review: an accumulation-focused FIA from the same carrier, with no income rider
- NAC BenefitSolutions 10 review: a direct income-rider competitor
- Allianz 222 review: another income-focused FIA worth comparing
Pros and cons
Pros
- Guaranteed lifetime income continues even after your contract value reaches zero.
- The income value grows at a guaranteed 10% simple interest rate for up to 10 years, regardless of market performance.
- The Wellbeing Benefit doubles single-life income for up to 5 years if you need help with daily activities, at no extra charge.
- No premium bonus keeps the structure simple, with no vesting schedule to track.
- You can start income as early as year 1 or defer it for a larger payout later.
- Payout factors rise with both your age and how long you defer, rewarding patience.
- Spousal continuation is available for couples who want the income to carry over.
- An Enhanced Benefit Rider waives surrender charges for a qualifying nursing home stay or terminal illness, included at no charge under age 75.
- Required minimum distributions above the free withdrawal amount do not trigger a surrender charge.
Cons
- The 1.20% rider fee applies every year regardless of market performance, and it is charged on the larger income value, not the smaller contract value.
- The surrender period runs 10 years, with a 9.2% charge in year 1.
- Contract value is spent down as income is paid, leaving less for your heirs.
- One proprietary index strategy has credited very little interest in recent years, despite a high headline participation rate.
- The income value is not a lump sum you can withdraw; confusing it with your contract value is an easy and costly mistake.
- Not available in California, New York, Guam, Puerto Rico or the Virgin Islands.
- The Wellbeing Benefit can be activated only once and requires yearly physician certification.
- The maximum premium drops for buyers issued between ages 75 and 80.
Frequently asked questions
What makes the IncomeShield 10 income rider different?
The built-in Lifetime Income Benefit Rider tracks a separate Income Account Value that grows at a guaranteed 10% simple interest rate every year for up to 10 years, unaffected by how your index strategies perform. When you turn on income, American Equity applies a payout factor, set by your age and how long you deferred, to that Income Account Value. Whatever dollar figure comes out of that calculation keeps arriving for the rest of your life, well past the point your contract value might hit zero.
What does the American Equity IncomeShield 10 rider cost?
The rider charges 1.20% a year, calculated against the Income Account Value rather than the contract value, and deducted from the contract value each anniversary. Because the Income Account Value grows every year, the dollar cost of the fee grows too, even in a year your account earned no index credits.
What is the Wellbeing Benefit on the IncomeShield 10?
It is a benefit bundled into the income rider at no extra cost. After 2 years of owning the contract, becoming unable to perform 2 of 6 standard daily living activities lets you activate it with a physician's yearly certification, no nursing home stay required. It doubles income for up to 5 years on a single-life contract, or increases it by half on a joint-life contract, and it can be used only once.
Is the IncomeShield 10 a strong choice for retirement income?
For someone whose priority is guaranteed income they cannot outlive, yes. The rollup guarantees the income base grows regardless of the market, payout factors improve the longer you wait, and the Wellbeing Benefit adds real value for free. It is a poor fit, though, for anyone focused on growing or preserving a lump sum, since the rider fee and ongoing withdrawals both draw the contract value down over time.
What happens to my money if I die holding an IncomeShield 10?
Your beneficiary receives the contract value, never less than the minimum guaranteed surrender value, either as a lump sum or under another payout option. The Income Account Value itself is not the death benefit and is often larger than the contract value, especially once income payments have been running for years.
Written and reviewed by
James Forren Warren
Licensed Retirement Income Strategist · License #20551202
James Forren Warren is a licensed Retirement Income Strategist with Tax Free Wealth Plan. For the past five years he has helped individuals and families turn their savings into retirement income they can count on. He writes and reviews the annuity research on this site and keeps it plain: what a product does, what it costs you, and who it actually fits.
Sources
Educational only, not investment, tax or legal advice. Tax Free Wealth Plan LLC is a licensed insurance agency, not a registered investment adviser or broker-dealer. Annuities are not bank deposits, are not FDIC insured and are not guaranteed by any government agency. Guarantees are backed solely by the claims-paying ability of the issuing insurance company. Features, rates and availability vary by state and change over time; the contract and disclosure documents govern.