How It Works

How the FlexShield 10 Annuity Works

Protect, Build, Flex 

FlexShield 10 is the next generation of accumulation-focused fixed index annuities, designed to protect premium from index volatility, while maximizing the potential for growth. 

Protect: With the FlexShield 10 fixed index annuity, the premium payment is fully protected throughout the life of the contract, regardless of what happens in the market.^Guarantees are based on the financial strength and claims paying ability of American Equity and are not guaranteed by any bank or insured by the FDIC.

Build: As the performance value increases, the FlexShield 10 gives access to greater upside potential and downside risk on index-linked performance segments.

Flex: The FlexShield 10 provides options that have never been available in an American Equity fixed index annuity before - the flexibility to customize your risk and reward profile each year so your contract can be tailored to suit your needs, even if those needs change.  

Premium Allocation

The single premium payment can be allocated to the Fixed Interest Strategy or the Performance Strategy. The Fixed Interest Strategy is set at issue and guaranteed for a set period of time; funds allocated to this strategy cannot be reallocated. 

Within the Performance Strategy, contract owners can allocate money using multiple interest crediting strategies, including the fixed interest segment within the performance strategy and any of the index-linked crediting strategies, in any combination. Funds inside the Performance Strategy can be reallocated on the contract anniversary.  

Index Options

The following indices are available within the Performance Strategy:

  • BofA Destinations Index™ is a volatility control index that includes three assets with the goal of performance in various market environments: US Treasuries, US Equities, and a Gold component. (Ticker: BOFADST5)
  • CS Tech Edge Index tracks four Exchange Traded Funds (ETFs) known for their focus on technology and innovation. This index also includes a volatility target mechanism called truVol™ that adjusts market exposure on a daily basis. (Ticker: CSEATEDG)
  • SG Global Sentiment Index is a global, multi-asset, volatility control index that is made up of global equities, treasuries, and a commodities strategy. (Ticker: SGIXSENT)
  • S&P 500® Index is a market value weighted index of 500 stocks and a common benchmark for the U.S. stock market. (Ticker: SPX)
  • S&P 500® Dividend Aristocrats® Daily Risk Control 5% Excess Return (ER) Index is a volatility control index that consists of the S&P 500 Dividend Aristocrats Index and a cash component (accruing interest at a 3-Month LIBOR). This index is made up of S&P 500 members that have consistently increased dividends every year for at least 25 consecutive years. (Ticker: SPXD5UE)

Calculation Method Options

The FlexShield 10 offers multiple methods for calculating how interest rates can be credited to the performance value based upon the performance of the index: 

  • Cap Rate – the maximum rate to be used in determining any performance adjustments
  • Participation Rate – percentage that determines how much of any gain in the index will be credited to the contract

Performance Floor 

Contract owners also select the maximum percentage of their Performance Value gains they’re willing to risk in order to give access to greater upside potential on index-linked Performance Segments. As the Performance Value begins to accumulate gains, the contract will automatically adjust to the new floor limits on each contract anniversary, up to the selected maximum. The Performance Floor Limit can be adjusted manually on each contract anniversary, as well. 

Let’s say Brenda purchased a FlexShield 10 annuity with a $100,000 premium. At contract signing, she chose to allocate her full premium to the S&P 500 index-linked segment, with an annual point-to-point with cap crediting strategy. She hasn’t received any positive performance adjustments credited to her Performance Value in her first year, so for the first 365 days, her money is allocated to the segment with a 0% Floor and a 7.50% cap. 

At her contract anniversary, Brenda discovers that her annuity’s Performance Value received the full 7.50% performance adjustment. For Year 2, she can choose to keep her funds allocated to the 0% Floor Limit with another 7.50% of possible performance adjustments. Or, she can opt into the next Floor Limit, with the possibility of up to 8.50% performance adjustments on her contract anniversary. That higher crediting rate is unlocked by accepting the potential of a negative adjustment (up to -2.5%). Brenda also has the option to go to an even lower floor limit of -5.0% with a 10% cap after the first year's indexed credit. 


Putting the “Flex” in FlexShield 10

This chart shows how Brenda’s options could hypothetically change. As the Performance Value increases, the Performance Value at Risk (PVAR) also increases, and new Performance floors are unlocked. You can see that Brenda goes into Year 4 with 13.79% of her performance value available to risk, meaning she could opt into any of the available segments that feel comfortable to her. 

When the Performance Value decreases, the options adjust to ensure that Brenda cannot lose more than her Performance Value has gained – keeping her principal protected. 


FlexShield 10 in Action

The chart below represents a how the pieces of the FlexShield 10 fit together over a 10-year time horizon*. 

  • The gray shaded areas represent the Strategy Value (based on your initial premium amount) 
  • The blue areas show the Performance Value 

Over the 10-year time period, the Performance Value can move up or down on an annual basis, based on the index change, the applicable cap or participation rate, and the selected floor. The Strategy Value remains static until the end of the 10th contract year, at which point any gains in the Performance Value are added to the Strategy Value and that then equals the actual contract value on the contract. 

After the end of the 10th contract year, the Strategy Value is allocated to the fixed interest strategy. To continue enjoying the accumulation of the Performance Strategy, submit another FlexShield 10 application. 


Retirement Income Access 

Throughout the duration of the annuity contract, there are multiple ways to access money. 

  • Free Withdrawals: After the first contract year, the opportunity to take withdrawals up to 10% of the Contract Value annually without penalties.
  • Withdrawal and Surrender: For withdrawals in excess of the 10% free withdrawal amount, or a full surrender, the contract value is subject to a charge based on the withdrawal and surrender charge percentages. Once the withdrawal and surrender charge period expires, no charges are applied.

    – If the contract is surrendered before the end of the ten-year strategy term, a performance value enhancement will be added to the contract's surrender value. The performance value enhancement is equal to the performance value gains multiplied by the applicable performance value enhancement percentage, which ranges from 90% in year one to 99% in year ten. 
  • A Market Value Adjustment (MVA) may increase or decrease the amount of a withdrawal in excess of any free withdrawal or the surrender value. MVA does not apply to Free Withdrawals, any amounts received due to death, the minimum guaranteed surrender value or any distributions after the Surrender Charge Period has ended. 
  • Contract Maturity: Distribution from the annuity is set to begin at a maturity date established by the owner or specified in the contract.
  • Enhanced Benefit Rider: This no-fee rider is automatically included for owners age 75 and under, and includes both a Qualified Nursing Care and Terminal Illness Benefit.

    – Qualified Nursing Care Benefit: After the first contract year, a one-time free withdrawal of up to 100% of the contract value is allowed if the owner is confined to a qualified care facility for a minimum of 90 days and the confinement begins after the contract issue date. Benefits and availability may vary by state. See brochure and disclosure for details. Not available in CA

    – Terminal Illness Benefit: After the first contract year, a one-time free withdrawal of up to 100% of the contract value is allowed if the owner is diagnosed with a terminal illness and diagnosis occurs after the contract issue date.*Benefits and availability may vary by state. See brochure and disclosure for details. Not available in CA

Death Benefit

Death benefit proceeds are paid to the surviving joint owner, and if there isn't one, to the named beneficiary(ies) with no surrender charge. The Death Benefit equals the greater of the contract value or the Minimum Guaranteed Surrender Value. If the owner's death occurs during the 10-year performance strategy term, the amount of the death benefit payable will be increased by the amount of the Performance Value gains. Proceeds are generally paid in a lump sum; however, other income options are available.






Annuity contract and riders issued under form series ICC21 BASE-IDZ-SP, ICC21 IDX-12-10, ICC21 E-SC, ICC20 R-BER and state variations thereof.  Availability may vary by state.

The content is provided for informational purposes only and does not constitute advice. For specific details on how this may apply to your personal situation, contact your personal financial advisor or insurance agent for more details. American Equity contracts are only sold through independent agents. Please contact our home office Agency Services department at (888) 221-1234 option 3, or your state insurance department to see if there is an independent insurance agent in your area appointed to sell American Equity annuity contracts.
American Equity Investment Life Insurance Company® does not offer legal, investment, or tax advice. Please consult a qualified professional.
Guarantees are based on the financial strength and claims paying ability of American Equity and are not guaranteed by any bank or insured by the FDIC.
Surrender charges may apply to excess withdrawals that exceed 10% annual free withdrawal available under the contract. You may be subject to a 10% federal penalty if you make withdrawals before age 59 ½.

Market Value Adjustment (MVA) applies to partial withdrawals that exceed the free withdrawal amount allowed and surrenders occurring during the surrender charge period.
Possible interest credits for money allocated to an index-linked crediting strategy are based upon performance of the specific index; however, fixed index annuities are not an investment, but an insurance product, and do not directly invest in the stock market or the index itself.
The "S&P 500®" is a product of S&P Dow Jones Indices LLC (“SPDJI”), and has been licensed for use by American Equity Investment Life Insurance Company (“AEL”). Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). These trademarks have been licensed to SPDJI and sublicensed for certain purposes by AEL. AEL's products are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, or their respective affiliates, and such parties make no representations regarding the advisability of investing in such product(s) and have no liability for any errors, omissions, or interruptions of the S&P.
The BofA Destinations Index™ (the “Index”) has been created and is owned by BofA Securities, Inc. and its Affiliates (collectively, “BofAS”) and the Index has been licensed to American Equity Investment Life Insurance Company (“American Equity”). Neither American Equity nor any fixed index annuity (“Product”) is sponsored, operated, endorsed, sold or promoted by BofAS. Obligations to make payments under any Products are solely the obligation of American Equity pursuant to the term of the contract between American Equity and a purchaser, and are not the responsibility of BofAS.  BofAS indices and related information, the name “BofAS”, and related trademarks, are intellectual property licensed from BofAS, and may not be copied, used, or distributed without BofAS’ prior written approval. The Products have not been passed on as to their legality or suitability, and are not regulated, issued, endorsed, sold, guaranteed, or promoted by BofAS. BOFAS MAKES NO WARRANTIES AND BEARS NO LIABILITY WITH RESPECT TO THE INDICES, ANY RELATED INFORMATION, ITS TRADEMARKS, OR THE PRODUCT(S) (INCLUDING WITHOUT LIMITATION, THEIR QUALITY, ACCURACY, SUITABILITY AND/OR COMPLETENESS).
The SG Global Sentiment Index (the “Index”) is the exclusive property of SG Americas Securities, LLC (SG Americas Securities, LLC, together with its affiliates, “Société Générale”).  Société Générale has contracted with S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices LLC (“S&P”) to maintain and calculate the Index.  “SG Americas Securities, LLC”, “SGAS”, “Société Générale”, “SG”, “Société Générale Indices”, “SGI”, and “SG Global Sentiment Index” (collectively, the “Société Générale Marks”) are trademarks or service marks of Société Générale.  Société Générale has licensed use of the Index and the Société Générale Marks to American Equity Investment Life Insurance Company (“American Equity”) for use in a fixed indexed annuity offered by American Equity (the “Fixed Indexed Annuity”). Société Générale’s sole contractual relationship with American Equity is to license the Index and the Société Générale Marks to American Equity. 
None of Société Générale, S&P, or other third party licensor (collectively, the “Index Parties”) to Société Générale is acting, or has been authorized to act, as an agent of American Equity or has in any way sponsored, promoted, solicited, negotiated, endorsed, offered, sold, issued, supported, structured or priced any Fixed Indexed Annuity or provided investment advice to American Equity, and no Index Party makes any representation whatsoever as to the advisability of purchasing, selling or holding any product linked to the Index, including the Fixed Indexed Annuity.  No Index Party shall have any liability with respect to the Fixed Indexed Annuity in which an interest crediting option is based on the Index, and is not liable for any loss relating to the Fixed Indexed Annuity, whether arising directly or indirectly from the use of the Index, its methodology, any Société Générale Mark, or otherwise.  Obligations to make payments under the Fixed Indexed Annuities are solely the obligation of American Equity.  The selection of the Index as a crediting option under a Fixed Indexed Annuity does not obligate American Equity or Société Générale to invest annuity payments in the components of the Index.
In calculating the performance of the Index, Société Générale deducts a maintenance fee of 0.50% per annum on the level of the Index, and fixed transaction and replication costs, each calculated and deducted on a daily basis. The transaction and replication costs cover, among other things, rebalancing and replication costs.  The total amount of transaction and replication costs is not predictable and will depend on a number of factors, including the leverage of the Index, which may be as high as 200%, the performance of the indexes underlying the Index, market conditions and the changes in the market states, among other factors. The transaction and replication costs, which are increased by the Index’s leverage, and the maintenance fee will reduce the potential positive change in the Index and increase the potential negative change in the Index. While the volatility control applied by the Index may result in less fluctuation in rates of return as compared to indices without volatility controls, it may also reduce the overall rate of return as compared to products not subject to volatility controls.
The CS Tech Edge Index (“the Index”) and “Credit Suisse”, and any trademarks, service marks and logos related thereto are service marks of Credit Suisse Group AG, Credit Suisse International, or one of their affiliates (collectively, “Credit Suisse”). Credit Suisse has no relationship to American Equity Investment Life Insurance Company (“American Equity”), other than the licensing of the Index and its service marks for use in connection with a fixed indexed annuity offered by American Equity (“the Product”) and is not a party to any transaction contemplated hereby.  Credit Suisse shall not be liable for the results obtained by using, investing in, or trading the Product.  Credit Suisse has not published or approved this document and accepts no responsibility for its contents or use.  Obligations to make payments under the Product are solely the obligation of American Equity and are not the responsibility of Credit Suisse.