MasterDex 10TM Picture what’s possible - ANNUITY … 10 Bonus MasterDex 10.pdf · 2006-09-29 ·...

Picture what’s possibleAllianz Life Insurance Company of North America

MasterDex 10TM Annuity

An equity-indexed annuity with “point-to-point” monthly crediting and a premium bonus

CB50640-CT

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Here’s how an annuity works.

An annuity is a contract between a contract owner and a life insurance company. The annuity’s value andguarantees are backed by the financialstrength and claims-paying ability of the issuing insurance company.

As contract owner, you pay premium tothe insurance company. In exchange foryour premium, the insurance company

promises to make payments to you at somepoint in the future. You may also receivethe benefits listed on the following page.

You should not buy an annuity for short-term purposes. You generally haveto keep your premium in the annuity for a specified period of time to avoid the assessment of penalties, such as surrender charges.

An equity-indexed, fixedannuity from Allianz can be a valuable asset.

A prudent wealth management plan shouldn’t rely solely on futureSocial Security to pay for an individual’s retirement years. One way toaccumulate additional assets for retirement income is an annuity.

The money in an annuity has the potential to create an additionalsource of retirement income that can supplement Social Security.Assets placed in an annuity can even provide a variety of incomestreams. This is one reason many individuals use annuities to help themachieve their long-term financial goals, including retirement income.

Discover the MasterDex 10TM Annuity from Allianz

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Annuities offer important benefits.

Potential growth during the annuity’saccumulation phase: During this initialphase, an annuity can be an ideal vehicle to help you accumulate money for your retirement.

Income for life and other options duringthe retirement income phase: When youare ready to start taking income, theannuity offers you a range of payoutoptions. Some options may offer animmediate, single payment. Others mayinclude income payments scheduled overa specific period of time, including yourentire lifetime.

Tax deferral that can help your moneygrow: The money in your annuity cangrow tax-deferred. This means you don’thave to pay taxes on your annuity’sgrowth until you begin to withdrawmoney from the annuity. The power of tax deferral, compounded over the life ofyour annuity’s accumulation phase, mayhave a positive impact on the value yourannuity generates for your retirement. Any distribution may be subject to ordinary income taxes and, if taken priorto age 59 1/2, to a 10% federal tax penalty.

Death benefit protection for your beneficiaries: As we noted earlier, annuities are life insurance products. So it’s only natural that they can give youpeace of mind, knowing your beneficiariesare protected if you pass away.

Equity-indexed annuities are different.

An equity-indexed annuity earns interestbased on changes in an external equityindex. This is different from traditionalannuities, which credit interest calculated at a fixed rate set in the contract. Theselected index varies from day to day and is not predictable. When you buy an equity-indexed annuity you own aninsurance contract – you are not buyingshares of any stock or index.

Many equity-indexed annuities also permit contract owners to allocate premium to a traditional fixed interestoption, where interest is credited at afixed rate of interest not based on anyexternal equity index. The value of anequity-indexed annuity will not dropbelow a guaranteed minimum specifiedin the contract. This means that if youtake money out of the contract or die, you (or your beneficiaries) are guaranteedto receive at least a minimum value.

To summarize, an equity-indexed annuityoffers contract owners:• The potential for growth by basing

interest earned on the performance of an equity index or indexes (Interest earned on an equity-indexedannuity could be less than the interestearned in a traditional fixed annuity.)

• A guaranteed minimum value

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Discover the MasterDex 10Annuity from Allianz.

MasterDex 10 can offer you safety while it helps you reach your financial goals. With MasterDex 10: • You earn a 10% bonus on premium received for five years.1

• Each year, you may receive indexed interest based on monthly changes of a market index, subject to a monthly cap.

• Any indexed interest is locked in once a year, eliminating riskdue to market index losses.2

• Your premium and bonus are protected from index losses.2

1 Bonus annuities may include annuitization requirements, lower caps, or other restrictions thatare not included in similar annuities that don’t offer a premium bonus feature.

2 To receive the annuitization value, the contract must be held in deferral for a minimum of five years and annuity payments must be taken over a minimum of 10 years. If this requirementis not met, you will receive your contract’s cash surrender value. Receiving the cash surrendervalue will result in a loss of bonus, indexed interest, fixed interest, and a partial loss of principal.Any amounts withdrawn may be subject to ordinary income taxes and, if taken prior to age 591/2,to a 10% IRS penalty. These taxes and penalties may additionally reduce the amount you receive.

MasterDex 10TM Annuity from Allianz

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Safety Growth Control

3

SafetyMasterDex 10 locks in any annualindexed interest automatically.2

If indexed interest is credited to yourannuity’s values, it can never be lost dueto market index volatility.

MasterDex 10 protects your principal and 10% bonus from index losses.2

Your principal and bonus are never subject to market index risk. A downturnin the market index(es) cannot have anegative impact on your contract values.We guarantee it.

GrowthMasterDex 10 lets you benefit whenthe market index is heading up.

When the market is headed up, the valueof your MasterDex 10 can also increase.That’s because at the end of each year, youget full 100% participation in potentialmonthly gains subject, however, to anestablished maximum, or monthly cap.

MasterDex 10 has a real difference. This sums it up.

The MasterDex 10 tracks point-to-pointmonthly changes (subject to a monthlycap) in the market index(es). Once a year,those 12 months’ values are automaticallyadded up and credited if positive. The sum helps determine the current value of your annuity.

ControlIf you need cash, MasterDex 10 gives you access.2

Beginning 12 months after your last premium is received, you may annuallywithdraw up to 10% of your total premiums paid until 50% of your total premium has been withdrawn.

You can choose an income stream thatdelivers your annuity’s full value.2

After five contract years, you can receivethe full value of your MasterDex 10Annuity by choosing an income streamover the lifetime of the annuitant or lasting 10 years or longer. This is called annuitization.


“Standard & Poor’s®,” “S&P®,” “S&P 500®,” “Standard & Poor’s 500,” and “500” are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by Allianz Life Insurance Company of North America. Theproduct is not sponsored, endorsed, sold or promoted by Standard & Poor’s and Standard & Poor’s makes norepresentation regarding the advisability of purchasing the product.

The Nasdaq-100®, Nasdaq-100 Index®, and Nasdaq® are trade or service marks of The Nasdaq Stock Market, Inc.(which with its affiliates are the Corporations) and are licensed for use by Allianz Life Insurance Company ofNorth America. The product(s) have not been passed on by the Corporations as to their legality or suitability. The product(s) are not issued, endorsed, sold, or promoted by the Corporations. THE CORPORATIONS MAKE NOWARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE PRODUCT(S).

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MasterDex 10 tracks marketindex changes, then puts itall together. Here’s how.

MasterDex 10 Annuity basics

The MasterDex 10 Annuity is a point-to-point equity-indexed annuity that offers a 10% premium bonus, retirement incomeand a choice of fixed interest and/orindexed interest based on changes in the S&P 500 and Nasdaq-100 indexes.

You can get all the benefits offered by theMasterDex 10 with an initial premiumamount of $2,000 qualified / $5,000 nonqualified or more. You can add moneyat any time during the first five contractyears and receive a bonus on it. Additionalpremium payments made during a contract year, and any bonus, are creditedto your contract’s interim interest accountuntil the following contract anniversary, atwhich time you can decide how theyshould be allocated.

Interest crediting calculations

We capture the current value of the market index on the date you purchasedyour contract, as well as on each contract’s“monthiversary.” So if your contract isdated the seventh of the month your monthiversary will be the seventh day ofevery succeeding month throughout thelife of the contract.

Monthly returns are calculated in twosteps. First, the change from the previousmonth’s index value to the current month’s index value is divided by the previous month’s index value. This amountis then multiplied by the participation rate.

In any given month, a positive monthlyreturn may exceed your annuity’s statedmonthly cap. In that case, the monthlycapped return will be used in the indexedinterest calculation. We can raise or lowerthe monthly cap annually but it will neverbe less than 1%.

At the end of each contract year, themonthly capped returns are added together to calculate your indexed interestfor that year. If this sum is negative, theindexed interest for that year will be zero.

Although there is a monthly cap on positive monthly returns, there is noestablished limit on negative monthlyreturns. This means that a large decreasein one month could negate severalmonthly increases. Actual indexed interest may be lower (or zero) if the market index declines from one monthiversary to the next, even if themarket index experienced an overall gain for the year.

Although an external index may affect your contract values, the contract does not directly participate in any stock orequity investments. You are not buying any shares of stock or shares of an index.The market index value does not includethe dividends paid on the stocks underlying the market index. These dividends are also not reflected in theinterest credited to your contract.

With MasterDex 10, the value of your annuity is based on themonthly point-to-point fluctuations of two of America’s mostrecognized stock indexes: the S&P 500 and the Nasdaq-100.®


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You can earn fixed interest.

Traditional fixed interest is calculated andcredited daily for both the fixed interestallocation and the interim interestaccount. Interest credit rates are declaredannually by Allianz. We can raise or lowerinterest credit rates annually, but they willnever be less than 3%.

There are no up-front fees or futuresales charges.

There are never any asset fees or up-frontsales charges. 100% of your premium iscredited to your annuitization value.However, if annuitization requirementsare not met, you will only receive yourcontract’s cash surrender value, instead ofyour full annuitization value.

Put all your eggs in one basket. Or two. Or three.

When you purchase your MasterDex 10, you can base your annuity’s potentialgrowth exclusively on the S&P 500 or theNasdaq-100.® You can also allocate yourentire premium to a fixed interest option.

If you wish, however, you can allocate (in 25% increments) among all threeoptions. Now THAT’S control!

Change your mind? No problem!

Shortly after your contract anniversaryeach year, we’ll notify you that you canchange your allocations. Changes to your allocations must be submitted in writing.If we receive your changes within 21 daysof your contract anniversary, they will beeffective during that contract year.Allocation changes received more than 21 days after your contract anniversarywon’t take effect until your next contract anniversary.


5

Here’s a hypothetical illustrationshowing indexed interest based on 12 months of hypothetical indexreturns and a 3.00% monthly cap. Weestablish this monthly cap on everyanniversary, and guarantee it for that contract year. We can lowerthe monthly cap but it can never beless than 1.00%. Figures impacted bythe monthly cap are shown in boldtype. Although you can allocate premium to either index (or both), for simplicity’s sake our example willpresume all of the annuity’s premiumhas been allocated to a single index.

To find the indexed interest for theyear, simply add up the 12 monthlycapped returns.

Annuitization value at beginning of contract year: $110,000

Assumed monthly cappercentage: 3.00%

No representation is made of future performance. As a MasterDex 10 contract owner, you do not invest directly in any index. We used ahypothetical 3.00% monthly cap. Using the minimum 1.00% monthlycap the indexed interest for the year would be 0%.

Hypothetical monthly Monthly Month index return cap applied

1 5.27 +3.002 -2.00 -2.003 2.00 +2.004 -1.50 -1.505 4.61 +3.006 2.50 +2.507 3.87 +3.008 0.25 +0.259 -3.00 -3.0010 -4.00 -4.0011 4.43 +3.0012 2.25 +2.25

+8.50%(The sum of monthly cappedreturns equals the year’s indexed interest.)

Value at end of contract year: $119,350

Bonus: 10%

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No matter what the market index does –MasterDex 10 gives you:

• Potential indexed interest based on a market index• Protection from market index losses

The large chart to the right turns back the clock to show how the MasterDex 10Annuity might have delivered from 1995through 2004 if the policy had been offered.

The values shown are based on the following assumptions:

• $100,000 initial premium and a 10%premium bonus

• 100% participation rate guaranteed for the life of the contract

• Hypothetical 3.00% monthly cap for each year

• Minimum guaranteed 1.00% monthly cap for each year

• Product available since 1995• 100% allocation to the S&P 500

Under these assumptions, had theMasterDex 10 existed, it would have provided an average annual interest rateof 8.89% using the 3.00% monthly cap overthe 10-year period shown. Using the minimum 1.00% monthly cap, the averageannual interest rate would be 2.51%.

J F M A M Jn Jy A S O N D

40%

30%

20%

10%

0%

Cumulative capped monthly returns, 1995

Growth

In the best year, MasterDex 10 can deliver potential growth.

S&Pmonthly

return

Month

JanFebMarAprMayJunJulyAugSeptOctNovDec

2.43%3.61%2.73%2.80%3.63%2.13%3.18%

-0.03%4.01%

-0.50%4.10%1.74%

2.43%3.00%2.73%2.80%3.00%2.13%3.00%

-0.03%3.00%

-0.50%3.00%1.74%

1.00%1.00%1.00%1.00%1.00%1.00%1.00%

-0.03%1.00%

-0.50%1.00%1.00%

at 3.00% at 1.00%

Total 34.11% 26.30% 9.47%

3.00%1.00%

Indexed interestcapped monthly

n

nn n n n n n n nnn n

n

26.30% indexedinterest

u

uu

uu

u u u uu

u

uu

u

In these three magnified scenarios(Growth, Principal protection, and Performance), we take a closer look at the MasterDex 10 Annuity during three very different years. Note the way month-by-month changes in the market index have an impact on indexed interest.

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7


Values in this chart are based on S&P 500 performance (without dividends) during the most recent 10-year period. All values are year-end values. Past performance is no guarantee of future results. No representation is made of future performance. You are not buying shares of any stock or index.

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

$240,000

$220,000

$200,000

$180,000

$160,000

$140,000

$120,000

$100,000

$80,000

Hypothetical example based on S&P 500 performance from: 1995-2004


Principal protection

In a negative year, MasterDex 10 locks in previous indexed interest.

S&Pmonthly

returnMonth


-5.09%-2.01%9.67%

-3.08%-2.19%2.39%

-1.63%6.07%

-5.35%-0.49%-8.01%0.41%

-5.09%-2.01%3.00%

-3.08%-2.19%2.39%

-1.63%3.00%

-5.35%-0.49%-8.01%0.41%

-5.09%-2.01%1.00%

-3.08%-2.19%1.00%

-1.63%1.00%

-5.35%-0.49%-8.01%0.41%


10%

5%

0%

-5%


Performance

In an average year, MasterDex 10 can provide indexed interest.

S&Pmonthly

return


Month


1.73%1.22%

-1.64%-1.68%1.21%1.80%

-3.43%0.23%0.94%1.40%3.86%3.25%

1.73%1.22%

-1.64%-1.68%1.21%1.80%

-3.43%0.23%0.94%1.40%3.00%3.00%

1.00%1.00%

-1.64%-1.68%1.00%1.00%

-3.43%0.23%0.94%1.00%1.00%1.00%

Annuitization value at 3.00% monthly capAnnuitization value at 1.00% monthly capCash surrender value

Total -10.14% 0.00% 0.00%

Total 8.99% 7.78% 1.42%


10%

0%

-10%

-20%

-30%

3.00%1.00%

3.00%1.00%


at 3.00% at 1.00%

at 3.00% at 1.00%

n

n n n n n nnnnn

n

nn

nn n

n n n n

nn

n n

n

n

nn

nn

nn

n nn n n

nn

p

pp p p p p p p p p p

$234,427u

u

u

u

u u

u u u u

u

u

Account valuesdon’t decline

3.00%1.00%

u

u

uu

Contract valuesdon’t decline

u

uuu

uuuu

uu

u

u

u

u

uu

u uu

u

u

u

uuu

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8

Choose from a variety of options toreceive steady, predictable incomefrom your annuity.Choose from several annuity payment options.

If you keep your contract in deferral for at least five years, you can choose toreceive annuity payments in any of the following ways:• Interest only – You have the option to

receive interest-only annuity paymentsfor 10 years. Interest will be paid asearned based on the amount of your annuitization value. After 10 years ofinterest-only payments, you can takeyour full annuitization value as a lump-sum payment.

• Installments for a guaranteed period – You can choose to receive annuity payments in equal installments for a period from 10 to 30 years. Each installment would consist of part principal and part interest.

• Installments for life – You have theoption to receive annuity payments inequal installments for the rest of yourlife. Payments end upon your death.

• Installments for life with a guaranteed period – You can choose to receiveannuity payments in equal installmentsfor the rest of your life. Upon your death,the balance of the guaranteed period, ifany, will be paid to your beneficiary thesame way as you previously selected.

• Installments for a selected amount –You may select to receive annuity payments in equal installments of an amount that you choose, as long as the payments last for at least 10years. Payments continue until your annuitization value is gone.

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9


Access your money sooner to help pay for nursing home care.

If you, as the contract owner, should enter a nursing home, long term carefacility, or hospital for at least 30 days out of a 35-consecutive-day period afterthe first contract year, you may take anaccelerated distribution of your contract’s annuitization value over a period as short as five years.

If you don’t want your annuity proceeds to be a tax burden for yourbeneficiary, here’s a solution.

The Death Benefit Rider enables your beneficiary to receive a tax-free deathbenefit up to 28% of taxable gain. It allowsyou to pass on more of your annuity’svalue to your beneficiaries and reduces apossible tax obstacle for them. Althoughthe rate at which your beneficiaries willpay income tax at some future date isunknown, the Death Benefit Rider can offset a substantial portion – or all – of the federal income taxes due at the timeof your death (state or local taxes mayapply). Please note: A Death Benefit Ridercharge will apply; benefit only applies to nonqualified contracts whereowner/annuitant are the same.

• Joint and survivor – You can select tohave equal installments paid until yourdeath, then continue to be paid to yoursurvivor. In this case, you can select100%, 2/3, or 1/2 of your paymentamount to be paid to your survivor until his/her death.

The payout rate used to determine theincome stream depends on the age ofyour contract and the payout optionselected. The guaranteed interest rate inpayout is 1%.

MasterDex 10 offers you a death benefit.

The MasterDex 10 Annuity provides adeath benefit payable to your named beneficiary. If taken as annuity paymentsover at least five years, the annuity payments will be based on your contract’sfull annuitization value. If taken as a lumpsum, the death benefit will equal thegreater of the sum of the premiums paidless any withdrawals or the cash surrendervalue (which equals 87.5% of all premiumspaid, minus withdrawals accumulated atan annual rate of no less than 1.5% andcredited daily). A lump sum will result inthe loss of bonus, indexed interest, andfixed interest. The death benefit paid to aproperly designated beneficiary (otherthan the estate) will pass without thecosts and delays of probate.

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10

MasterDex 10 gives you the freedomto access your money in several ways.Take free withdrawals.

You can take one free withdrawal of up to 10% of premiums every 12 months –without a surrender charge – as long as:• It occurs 12 months after the last

premium is received • No more than one withdrawal is taken

within a 12-month period • Total free withdrawals do not exceed

50% of premiums received

If, within 12 months of a free withdrawal,the contract is surrendered or annuitized,another withdrawal is taken, or additionalpremium is added, the free withdrawalwill be treated retroactively as a partialsurrender with penalty. Withdrawals willdecrease the annuitization value and thecash surrender value of the contract andits death benefit.

A free withdrawal is eligible to receive partial indexed interest at the end of thecontract year. Partial indexed interest isbased on the annual indexed interest andthe amount of time during that yearbefore the free withdrawal was taken.

Schedule Systematic Withdrawal of Credits.

After you have held your contract in deferral for five contract years, you canselect to receive Systematic Withdrawal ofCredits payments. This benefit allows youto receive payments of indexed interestwhile you continue to keep your contractin deferral. Payments will be based on theindexed interest applied to your contractafter we receive your request. You mayselect to receive Systematic Withdrawal ofCredits payments without incurring anycharges or contract penalties, althoughyour payments will lower your contract’sannuitization value and the value of itsdeath benefits.

Take a contract loan.

A contract loan may be taken for up to 50% of the cash surrender value (maximumof $50,000). The loan interest rate is 7.4% annually in advance. Loans are not available with IRA, SEP, or some otherqualified plans. Unpaid loans will reduceyour contract’s cash surrender value andannuitization value.

Take required minimum distributions.

Required minimum distributions from a tax-qualified plan (IRA, SEP, etc.) willqualify as a free withdrawal if taken annually in December or monthlythroughout the year. Contract values and the amount available for free withdrawal will be reduced by the distribution amount withdrawn.

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11


Receive potential indexed interestwhile you take income payments.

The Systematic Withdrawal Benefitallows you to receive a percentage of yourannuity as income while your remainingbalance continues to participate in the index(es).

After your fifth policy anniversary, you canchoose to receive withdrawals from yourcontract’s annuitization value.

You have the flexibility to stop receivingSystematic Withdrawal Benefit payments.Once suspended, your payments can bestarted again after two years have passed.If you restart your Systematic WithdrawalBenefit payments, the percentage of contract values available will be based on the contract year in effect when yourpayments are restarted.

Take a single lump sum or a distribution for less than 10 years.

You may take a single lump sum or a distribution for a period of less than 10years at any time, but the amount youreceive will be your contract’s cash surrender value, which means you loseany bonus or indexed interest. The cashsurrender value of your contract equals87.5% of all premiums paid, minus anywithdrawals, accumulated at an annualrate of no less than 1.5% and credited daily.

PERCENTAGE OFDEFERRAL PERIOD ANNUITIZATION VALUE AVAILABLE 1

6-8 Up to 5% per year

9-10 Up to 6.67% per year

11+ Up to 10% per year

While you are receiving Systematic Withdrawal Benefit payments,any fixed interest or indexed interest will also be paid to you.

We’ve just given you five ways toavoid contract penalties.

If you take a partial surrender any otherway, the amount of your partial surrenderwill be deducted from your contract’s cashsurrender value. A proportionally largerdeduction will also be made from yourcontract’s annuitization value, to reflectthe percentage by which the annuitizationvalue is larger than the cash surrendervalue. As a result, you will lose some ofyour initial principal and bonus, alongwith a portion of your indexed interestand fixed interest credits.

Note: the money you take out may be taxable.

Your contract values grow tax-deferred.However, any distributions from your contract, including free withdrawals, partial surrenders, loans, and requiredminimum distributions, may be taxableas ordinary income. If you are under age591⁄2 when a distribution is taken, the IRS may impose an additional 10% penalty tax.

1 Until you have accessed all your moneyand your policy value equals $0.

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Is the MasterDex 10 Annuity the rightchoice for your retirement plans?

The MasterDex 10 Annuity: a powerful financial tool forprincipal protection along with potential growth.

The MasterDex 10 Annuity offers a combination of insurance guarantees and benefits. It meritsyour careful consideration if:

• You would appreciate receiving an up-front bonus to helpaccumulate money for retirement.

• You wish to receive indexed interest based on potential gains in the S&P 500 or Nasdaq-100.®

• You want to protect your principal, bonus, fixed interest, andlocked-in indexed interest if the market index declines.

• You want long-term tax-deferral of retirement assets.

• You want flexible income options.

• You want a death benefit for your heirs.

12

Make it part of your retirement portfolio.


Page 14 of 16

Our top priority is the safety of your money.

All contracts are issued by Allianz Life Insurance Company of North America, a member ofthe Allianz Group. With over 700 subsidiaries in more than 70 countries, the Allianz Groupis one of the world’s leading providers of integrated financial services.

Our goal is to provide contract owners with wealth management products that can helpmeet today’s needs and financial objectives, with a product philosophy of offering fairand equitable values on each contract we issue. Foremost in our minds is the safety of the money you entrust to our care.

Allianz has consistently been assigned financial strength ratings by Standard & Poor’sand A.M. Best that are among the highest available. It is one of a select group of majorinsurance companies to receive such high ratings.

These independent agency ratings are based on an analysis of financial results and evaluation of management objectives and strategies. The ratings do not indicate approvalby the analysts and are subject to change.

Innovative products, exceptional customer service, and sound financial strength makeAllianz the place to turn to help meet your retirement objectives.

Contracts are issued by Allianz Life Insurance Company of North America (form P50640-CT).

Agent name ______________________________________________________

License number____________________________________________________

Page 15 of 16

www.allianzlife.com

Allianz Life Insurance Company of North AmericaPO Box 59060Minneapolis, MN 55459-0060800.950.1962 (R-2/2006)

Page 16 of 16

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MasterDex 10TM Picture what’s possible - ANNUITY … 10 Bonus MasterDex 10.pdf · 2006-09-29 ·...

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