Midland National Income Planning Annuity – Growing Lifetime Income with Long-Term Care Support

Most income-focused FIAs grow an income base through a stated roll-up rate — for example, an 8% or 9% compound or simple interest rate applied annually to a benefit base, which then determines the income payment at activation. The Midland National Income Planning Annuity uses a fundamentally different structure: there is no roll-up on a benefit base. Instead, the annual Lifetime Payment Amount (LPA) is calculated by multiplying the net premium by an age-banded Lifetime Payment Percentage (LPP) that increases each birthday deferral is extended, for up to the first 10 deferral years. The LPP structure means your future income is determined directly by your age at the time income begins and the amount of the net premium — without a separate calculation base growing at a stated rate. This structure has an important practical implication: it is simpler to model and evaluate because the key variable is transparent — how much income does the LPP produce at your target income start age on your specific premium amount. The 10% annual increase in the LPP for each birthday of deferral (up to 10 years) means that a client who defers from age 65 to 70 receives a substantially higher LPP at 70 than at 65 — and that higher percentage is applied to the same net premium base to determine income. After year 10, the annual LPA itself increases 2.00% per year until the earlier of year 25 or attained age 80, providing a long-term built-in income growth component even after the initial deferral advantage has been fully used.

The Midland National Income Planning Annuity’s “10% Lifetime Payment Increase” feature means that waiting each additional birthday from the issue date increases the Lifetime Payment Percentage — the percentage of net premium that determines annual income — by 10% of the base LPP for that year. This is not a 10% flat increase to a growing benefit base; it is a 10% enhancement to the age-banded percentage applied to the net premium. In practical terms, if the base LPP at issue age 60 is X%, then the LPP at income activation age 61 would be X% × 1.10, the LPP at 62 would be X% × 1.21, and so forth, compounding for up to 10 birthday deferral periods. This compounding of the percentage over the deferral period is a meaningful structural advantage for clients who can genuinely defer income for 5–10 years from issue — the difference in annual income between starting at issue and starting 10 years later can be dramatic. The key planning insight is that the Lifetime Payment Increase feature works best when matched with a client who has other income sources to draw on during the deferral period — Social Security, pension, other investments — and who can commit to not taking income from the contract until the target deferral age is reached. Taking non-LPA withdrawals during the deferral period reduces the net premium, which reduces the income base from which the LPP is calculated, and can eliminate some or all of the value built by deferral. The Lifetime Payment Increase feature is the product’s core design advantage, and it rewards clients who commit fully to the deferral strategy without drawing on the contract during the accumulation phase.

The Midland National Income Planning Annuity allows penalty-free withdrawals of up to 5% of the initial premium annually — compared to the 10% industry standard offered by many competing FIA products. This distinction is explicitly material for buyers who may need partial liquidity beyond their guaranteed lifetime income payments during the 10-year surrender period. Whether 5% is a problem depends entirely on how the contract is used. For clients who will rely primarily on the Lifetime Payment Amount for annual income needs — with any supplemental cash needs covered by other assets held outside the annuity — the 5% free withdrawal provision is typically sufficient or even unnecessary (because LPA withdrawals are defined under the rider rules, not the free withdrawal provision). The problem arises when a client funds the Income Planning Annuity with assets that may need to be accessed in amounts exceeding their annual LPA, either for planned expenses, healthcare costs, or emergencies. In that scenario, any excess withdrawal above 5% of initial premium triggers surrender charges and potentially the MVA — reducing the accumulation value and potentially affecting future income if the excess withdrawal is large enough. The appropriate planning discipline for the Income Planning Annuity is therefore to ensure that sufficient liquid assets are maintained outside the contract to cover emergency and supplemental needs, so the annuity is only accessed through the LPA or within the 5% free withdrawal allowance. For buyers who anticipate needing more than 5% annual access beyond income payments, competing income FIAs with 10% free withdrawal provisions may be more appropriate liquidity structures.

The LPA Multiplier — which can double the annual Lifetime Payment Amount for up to five years — has several specific conditions that must all be satisfied simultaneously: First, the 2-year multiplier benefit waiting period from contract issue must have been met. Second, the covered person must be unable to perform at least two of the six Activities of Daily Living (as defined in the contract) for a minimum of 90 consecutive days. Third, the covered person must notify Midland National of the election to take the LPA Multiplier on or after the lifetime payment election date — meaning the covered person must already be receiving lifetime payments before the Multiplier can be activated. Fourth, written proof, acceptable to Midland National, from a physician (Licensed Health Care Practitioner in California) who has determined the covered person is unable to perform two of six ADLs is required. Fifth, on each annual payment date when the multiplier continues, the covered person must continue to meet the requirements — the inability to perform two ADLs must be ongoing, and confirmation is required annually. The total number of contract years in which the multiplier benefit may be elected may not exceed five. This precision is important: the LPA Multiplier is not automatically triggered by any health event — it requires active election, physician certification, and ongoing confirmation. Additionally, the covered person must be able to complete all six ADLs at the time the contract is issued to be eligible for the multiplier benefit. Clients who have pre-existing ADL limitations at issue should confirm their eligibility before relying on this feature in their planning. The multiplier is explicitly NOT long-term care insurance — it is an income feature built into the annuity rider, and its benefits are narrower and more structured than a standalone LTC policy.

The death benefit on the Midland National Income Planning Annuity equals the accumulation value at the time of death, payable to beneficiaries as a lump sum or in installments. This is a critically important distinction for clients who are evaluating the product in the context of legacy goals: there is no income base or Lifetime Payment Percentage passed to beneficiaries — beneficiaries receive only the remaining accumulation value. During the deferral period before income activation, the accumulation value grows through index credits (and is reduced by the 1.25% annual GLWB rider charge), so the death benefit tracks the contract value minus the ongoing rider fee impact. After lifetime income payments begin, the LPA withdrawals reduce the accumulation value with each annual payment. In years where LPA withdrawals exceed credited interest, the accumulation value declines — and the death benefit declines with it. Over a long income payout period, it is possible and expected that the accumulation value will decline toward zero, at which point the death benefit would also be near zero. This is the inherent design of a maximum-income-focused product: the annuity is optimized to generate the largest possible guaranteed lifetime paycheck, not to preserve or grow the death benefit alongside that income stream. Buyers who want both maximum guaranteed lifetime income and a meaningful death benefit to heirs should evaluate whether a combination approach — income-focused annuity for income, separate life insurance for legacy — better serves dual objectives than relying on the annuity’s accumulation value as the legacy vehicle.

The Midland National Income Planning Annuity and the North American Income Pay Pro 10 are sister products — both Midland National and North American Company are owned by Sammons Financial Group — and they are frequently compared because they compete for similar buyer profiles in the income-focused FIA category. The structural difference between the two products is the income mechanics: North American Income Pay Pro uses an 8% compound roll-up rate applied to a benefit base, which grows the income calculation base annually at a compounding rate regardless of when income is activated. The Midland National Income Planning Annuity uses no roll-up on a benefit base — instead the age-banded LPP structure determines income directly from the net premium, with 10% annual increases to the LPP for each birthday of deferral. Which produces more income at a specific income activation age depends on the buyer’s issue age, the specific premium, and the income start date. The compound roll-up approach (North American) tends to produce more competitive income amounts for buyers who defer for longer periods before activating income, because the compounding of the benefit base grows faster over extended deferral periods than a percentage that simply increases 10% per year. The LPP approach (Midland National) tends to be more straightforward in illustration and evaluation. Both are available through Diversified Insurance Brokers, and a side-by-side income projection at your specific age, premium, and income activation date is the only reliable way to determine which produces the better guaranteed annual income for your situation. Both products are backed by A+ carriers within Sammons Financial Group.

The Income Planning Annuity is designed around the expectation that the primary — ideally only — withdrawals during the deferral period will be the Lifetime Payment Amount once income is activated. Taking non-LPA withdrawals (withdrawals beyond the LPA or the 5% annual free withdrawal allowance) has layered consequences that compound over time. At the most basic level, any withdrawal reduces the accumulation value by the amount withdrawn. The Lifetime Payment Amount is calculated based on the net premium — which is defined as the initial premium reduced by withdrawals on a dollar-for-dollar basis. This means that every non-LPA withdrawal permanently reduces the net premium from which the LPP is calculated, which permanently reduces the annual guaranteed income that will be generated when income activates. The damage is not temporary or recoverable — a $10,000 withdrawal from a $100,000 contract means the LPP will be applied to $90,000, not $100,000, for the full remaining deferral period and all future income payments. Beyond the net premium reduction, excess withdrawals (above the 5% free withdrawal provision) also trigger surrender charges and potentially the MVA during the surrender period, further reducing the accumulation value. And any non-LPA withdrawals taken after income activation are treated as excess withdrawals under rider rules, which may reduce future LPA amounts and can jeopardize the income guarantee. The practical guidance for Income Planning Annuity owners is straightforward: this product works as designed when withdrawals during the deferral period are limited to the 5% annual free withdrawal provision (or less), RMDs from qualified accounts, and when income activation is followed by taking only the defined LPA — no ad hoc supplemental withdrawals from the income phase without fully understanding the impact on future guaranteed income.

The Income Planning Annuity offers multiple index crediting strategies alongside a fixed interest account option. Available indices include the S&P 500, S&P Multi-Asset Risk Control Index, and Fidelity Multifactor Yield Index, among other proprietary volatility-managed benchmarks. A two-year point-to-point crediting option is also available, in addition to the standard annual point-to-point. On certain strategies, no cap is applied — the participation rate is the primary limiting factor rather than a cap rate ceiling. An enhanced participation rate option is also available for clients who want higher participation in exchange for a strategy charge. The index crediting strategies affect the accumulation value — the actual cash in the contract — which in turn affects the trajectory of the death benefit. Notably, for the income structure of this product, the index credits do not directly determine the annual LPA: the Lifetime Payment Percentage is age-banded and applied to the net premium regardless of how the indexed strategies perform. However, the accumulation value (and therefore the death benefit) and the ability to sustain withdrawals if excess amounts are ever taken do depend on the accumulated index credits over time. Clients who are primarily income-focused will often allocate more aggressively to participation rate strategies because the income guarantee exists independently of accumulation performance — the indexed strategies primarily serve to build the residual accumulation value and death benefit during the deferral period, while the guaranteed income itself is determined by the LPP and net premium structure regardless of market results.