American Equity IncomeShield 10 Annuity – Guaranteed Income, Long-Term Care Benefits, and a 10% Bonus

The distinguishing characteristic of the IncomeShield 10 premium bonus is that it is applied to both the contract value (the actual withdrawable accumulation value) and the Income Account Value (IAV, the income calculation base) on first-year premiums. Many competing FIA bonus designs apply the bonus only to the income base — not to the contract value — meaning the actual cash in the contract does not benefit from the bonus, only the income calculation figure does. The dual application on the IncomeShield 10 creates two meaningful advantages over single-application bonus designs: first, the contract value is higher from day one, which improves the death benefit available to beneficiaries if the owner passes away before fully drawing down the contract; second, the income calculation base also receives the bonus, which creates a higher starting point for the IAV rollup calculation and therefore a stronger income projection at any given income activation date. The bonus is subject to a vesting schedule over the 10-year surrender period — early surrender or excess withdrawals may forfeit the unvested portion of the bonus in the contract value. Bonus percentages vary by product version and state. It is also important to acknowledge the documented trade-off: products with premium bonuses typically offer lower credited interest rates, lower cap rates, or lower participation rates on indexed strategies than non-bonus alternatives from the same carrier. A personalized side-by-side comparison of the IncomeShield 10 bonus version against the base contract without the bonus — at your specific premium, age, and income timeline — is the most reliable way to determine which version better serves your objectives.

The Income Account Value is a separate calculation figure used within the Lifetime Income Benefit Rider to determine the guaranteed lifetime income payment amount. It is not available as a lump-sum cash withdrawal, cannot be transferred or rolled over, and is not the death benefit. The IAV starts with the premium plus the premium bonus and grows through the LIBR’s stated rollup rate — either simple or compound interest depending on the LIBR option selected — until income payments begin or the end of the accumulation period. Depending on the LIBR option, the IAV rollup rate (for example, 8.25% simple interest under one illustration scenario) compounds the income calculation base forward each year, creating a larger base from which the lifetime income payout percentage is applied at income activation. The contract value is entirely separate: it is the actual money in the contract, grows through index credits and fixed account interest, is reduced by the annual LIBR rider fee (~1.20% of IAV annually deducted from the contract value), can be surrendered subject to charges, and is the basis for the death benefit and the 10% annual free withdrawal. After many years of income payments, it is common for the IAV to be substantially larger than the contract value — because the IAV has been growing through the rider rollup while the contract value has been reduced by income withdrawals and the annual rider fee. This is not a problem; it is by design. The IAV is there to guarantee income payments even after the contract value reaches zero — that is the longevity protection the LIBR rider fee purchases.

The Wellbeing Benefit — which can double guaranteed income payments for up to five years — has specific eligibility conditions that must all be met simultaneously. First, the 2-year waiting period from contract issue must have elapsed. Second, the contract owner must be unable to perform at least two of the six Activities of Daily Living (as defined in the contract) — the six ADLs are bathing, continence, dressing, eating, toileting, and transferring. Third, a physician must certify in writing, in a form acceptable to American Equity, that the owner is unable to perform the required ADLs. Fourth, the owner must already be receiving lifetime income payments under the LIBR before the Wellbeing Benefit can be activated — it is not available during the deferral phase. The Wellbeing Benefit can only be activated once per contract — it is a one-time enhanced payment period of up to five years, not a recurring feature that can be turned on and off. Once the five-year maximum enhanced payment period ends, income reverts to the standard LIBR payment amount. The Wellbeing Benefit is explicitly not long-term care insurance and is not intended to replace a dedicated LTC policy. Its scope is specifically limited to doubling the LIBR income payment for the defined period — it does not pay for care facilities, home healthcare, or other care-related expenses directly. Buyers who have significant LTC risk should evaluate whether the Wellbeing Benefit is sufficient as a standalone care protection strategy, or whether a combination of the IncomeShield 10 and a separate LTC policy better addresses their full care planning needs.

This is one of the most important product decisions for IncomeShield 10 buyers, and the answer depends entirely on whether guaranteed lifetime income is the primary objective. Electing not to add the LIBR results in higher index crediting rates on the base contract — meaning the accumulation value grows more quickly without the rider, and there is no 1.20% annual IAV-based fee reducing the contract value each year. The base contract without LIBR is appropriate for buyers whose primary objective is maximizing accumulation value for eventual lump-sum access, legacy transfer, or a 1035 exchange to another product at the end of the surrender period. Adding the LIBR transforms the product into a lifetime income vehicle — the guaranteed income payment continues for life even after the contract value depletes to zero, which is the core longevity protection that makes it valuable for buyers who are specifically solving for income certainty. The fee trade-off is real and should be modeled: over a 10-year deferral period, approximately 1.20% annually deducted from the contract value amounts to a meaningful reduction in the accumulation value compared to the no-rider version. In years where indexed strategies credit meaningful positive interest, the credits partially offset the fee drag. In zero-credit years, the fee reduces the contract value without any offsetting credit. The question is not whether the LIBR is good or bad — it is whether the guaranteed lifetime income it provides is worth more to you than the higher accumulation value the no-rider version would produce at the same end date. Buyers who genuinely want a guaranteed paycheck for life should add the LIBR. Buyers who primarily want accumulation with principal protection should take the higher crediting rates without the rider.

The Enhanced Benefit Rider and the Wellbeing Benefit are two separate features that serve different purposes and have different activation mechanics. The Enhanced Benefit Rider is included automatically at no additional charge for contract owners age 75 and under — no election or additional cost is required. It provides the Qualified Nursing Care Benefit (one additional free withdrawal of up to 100% of the contract value after year one, following at least 90 consecutive days of confinement in a qualified care facility) and the Terminal Illness Benefit (additional access upon qualifying terminal illness). The Enhanced Benefit Rider activates on specific, documented health events and provides access to the contract value — the actual cash in the contract — without surrender charges. The Wellbeing Benefit is part of specific LIBR options and is available only if the LIBR has been added at purchase. It does not provide access to the contract value; instead, it doubles the guaranteed income payment amount under the rider for up to five years. The Wellbeing Benefit requires the LIBR income payments to already be active before it can be triggered. In practical terms: the Enhanced Benefit Rider is a contract-level health safety valve that allows penalty-free contract value access in nursing home or terminal illness scenarios; the Wellbeing Benefit is an income-level enhancement that doubles the LIBR income payment during ADL impairment. Both can be relevant to the same owner in different scenarios, and both are part of what makes the IncomeShield 10 a more comprehensive health-event-aware income product than many competing FIAs.

The IncomeShield 10 offers multiple index crediting strategies including the S&P 500 (annual point-to-point, cap or participation rate), BlackRock Adaptive U.S. Equity 5% Index, S&P 500 Dividend Aristocrats 5% ER Index, and others depending on the current rate sheet and state. Each strategy credits interest based on the index’s positive performance over the crediting period, subject to caps, participation rates, or spreads; in negative or flat periods, credited interest is 0%. One note of transparency about the S&P 500 Dividend Aristocrats 5% ER Index: this index targets a portfolio of consistent dividend-paying S&P 500 companies with a 5% volatility target, and it includes a fee deduction in the index level calculation that reduces the effective credited return. From approximately 2022 through 2025, this particular index has historically produced near-zero credited interest due to the combination of the volatility constraint, the index fee deduction, and the specific market environment during those years — a performance characteristic that independent reviewers have noted in their analysis of the IncomeShield 10. This does not mean the strategy will always underperform, but it illustrates why evaluating the historical performance of each specific index strategy — not just its name or structure — before committing your allocation is important. Diversified allocation across the available strategies is a common approach, and the fixed interest account provides guaranteed crediting predictability as an alternative to indexed strategies in any given year.

The IncomeShield 10 is purpose-built for buyers who want guaranteed lifetime income as their primary goal — and who want the additional value of both a no-cost Enhanced Benefit Rider and an optional income-doubling Wellbeing Benefit for health-event scenarios. It is particularly well-suited for buyers aged 55–75 with $50,000–$750,000 who want to convert a portion of retirement savings into a guaranteed lifetime income stream — potentially with an income bridge period before Social Security is claimed — who are comfortable with a 10-year surrender commitment, and who have other liquid assets sufficient to cover emergency needs beyond the 10% annual free withdrawal. The IncomeShield 10 is less appropriate for buyers who are primarily seeking maximum accumulation value rather than income (the LIBR rider fee is a persistent drag if income is never prioritized), buyers who need significant annual liquidity beyond 10% of contract value, buyers whose primary goal is legacy transfer (the death benefit is the contract value, not the IAV, and it declines as income withdrawals are taken), buyers in California or New York (not available in those states), and buyers who require an A+ carrier rating as a minimum threshold (American Equity is A, not A+). For buyers in that last category, A+ income FIA alternatives such as the Midland National Income Planning Annuity (A+, Sammons) or the Prudential SurePath Income (A+, Pruco Life) merit a side-by-side comparison.

At the end of the 10-year surrender period, the full contract value becomes accessible without surrender charges or MVA, and the premium bonus is fully vested. The contract does not automatically terminate — it continues in force with all features intact. The owner then has several options: continue the contract in force — the indexed crediting continues, the LIBR continues generating IAV rollup if income has not yet begun, the Enhanced Benefit Rider and any elected LIBR options remain active; activate lifetime income under the LIBR at the applicable payout percentage for the current age — this is often the most economically powerful decision point, because the accumulated IAV at year 10 after 10 years of rollup (on a larger starting base from the premium bonus) produces the highest available guaranteed income amount from the product; take a full lump-sum withdrawal of the contract value; take partial withdrawals of any amount without charges; or execute a 1035 exchange to reposition the contract value into another annuity product if a superior option is available at that time. The end of the surrender period is the planned decision point at which the full benefit of the IncomeShield 10 structure — 10 years of accumulated IAV growth plus full premium bonus vesting — can be activated into a lifetime income stream. Clients who have not yet activated income at year 10 should treat the surrender period end as a mandatory review: compare the current income projection against what a 1035 exchange to a competing carrier could produce, and make an active decision rather than defaulting to automatic renewal.