California Gold

A Good Plan is Always Better Than a Good Guess

The security of your future begins today with sound planning and building a dependable source for lifetime income.

Starting with our easy-to-understand product descriptions, American Equity works with you to find the retirement solutions that fit your day-to-day lifestyle as you prepare for your lifelong goals.

Every day we work hard to provide safe, secure products backed by our award-winning customer service. And, each day people make the right choice to start planning with us for the life they want -with a strategy they understand.

We Can Help You Get to Where You Want to Go

As a hard-working individual you take your finances seriously. You have invested your time and energy in order to build as well as sustain a quality of life that suits you and your family. As you plan for retirement, it is important to consider any number of factors that can affect your lifestyle:

  • Safety of retirement dollars
  • Tax effect on your standard of living
  • Family illness
  • Money saved for retirement

Fixed Indexed Annuity: The Right Product for the Right Time

Fixed index annuities provide an opportunity to potentially earn more interest than traditional fixed annuities and other safe-money alternatives.

This is done by basing interest earned on an increase in an equity or bond index. You control your annuity by choosing the crediting method on each Contract Anniversary. The most commonly used indexes are:

  • S&P 500®
  • S&P 500® Dividend Aristocrats® Daily Risk Control 5% Index
  • 10-Year U.S. Treasury Bond

While the value of this Contract may be affected by an external index, this annuity does not participate directly in any stocks or equity investments. You aren’t buying shares of stock or an index. Dividends paid on the stocks that comprise the indexes don’t increase your annuity earnings.

Safety in Numbers

Most importantly, your Premium and credited interest can never be lost due to Index Volatility. Your index annuity is actually a Contract backed by American Equity Investment Life Insurance Company ®; you are not purchasing shares of stock or indexes. Your funds are safe and secure with us – one of the leading annuity providers on the market.

Security You Can Plan For

As you plan for your retirement, whether it is a far off goal or soon-to-be reality, our innovative tax-deferred annuities can help you maximize growth while not compromising the safety of your hard earned dollars.

Your nest egg can be affected by any number of conditions. As your partner in planning, American Equity has outlined five core considerations for your retirement future:

  • Safety of Principal
  • Guaranteed Income
  • Liquidity
  • Income Taxes
  • Avoidance of Probate

Safety of Principal

Fixed annuities, by their very nature, are considered a safe-money alternative. Your Annuity Contract is between you and the insurance company for guaranteed interest and guaranteed income options. This means your guarantees are backed by the financial strength and claims-paying ability of American Equity.

Guaranteed Income

American Equity provides you with a guaranteed income with this tax-deferred annuity. You have the ability to choose from several different options, including payments for a specified number of years or income for life -no matter how long you live.


American Equity provides you with opportunities to withdraw funds at any time (subject to applicable Surrender Charges). Our Annuity Contract allows Penalty-Free Withdrawals of up to 10% after the first Contract Anniversary. See page 6 for details.

American Equity also has available certain Riders that increase liquidity in the event of confinement to   a nursing home, or if diagnosed with a terminal   illness.

Please note:

You may be subject to a 10% federal penalty if you make withdrawals or surrender this annuity before age 59 ½. If this Annuity Contract is within a qualified plan all distributions may be taxable. Under  current tax laws, annuities grow tax-deferred. An annuity is not required for tax-deferral in a qualified plan. Any distribution may cause a taxable event. Neither American Equity nor our agents offer legal, investment or tax advice. Please consult your own personal adviser for these matters.

We may change your Annuity Contract from time to time to follow federal or state laws and regulations .

If we do, we’ll tell you about the changes in writing.

California has a law that gives you a set number of days to look at an annuity after you buy it. If you decide during that time that you don’t want it, you can return the annuity and get all your money back. Please review your Contract after delivery to confirm the number of days you have.

Like any annuity issuer, American Equity incurs expenses to sell and issue its contracts, including the payment of a commission to its agents, and these expenses are taken into consideration when interest rates, caps, spread and participation rates are established and reset. You will receive all benefits as set forth in the Contract.

Income Taxes

One of the primary advantages of deferred annuities is the opportunity to accumulate a substantial sum of money by allowing your Premium and interest to grow tax-deferred. Unlike taxable investments, you pay no taxes on your annuity interest until you begin to take withdrawals or receive income. This allows your money to grow faster than in a taxable account.

With our annuities, you earn interest on your Premium, interest on your interest and interest on what you would normally pay in income taxes.

The chart below demonstrates how much more your money grows over a 20-year period with a tax­ deferred annuity compared to an account that is currently taxed.

Avoidance of Probate

When planning for the future, a central concern is for our loved ones after we are gone. In the case of premature death, your beneficiaries have the accumulated funds within your annuity available to them and may avoid the expenses and delay of probate. Your named beneficiaries can choose to receive the proceeds as monthly income or a lump sum payment.

Gold Standard in Retirement Planning

California Gold is a fixed index annuity that allows for the accumulation of money over a long period of time. Because of the Bonus credited on all Premium paid in the first Contract Year, it allows for a more rapid accumulation of interest than other fixed annuities. The Bonus is applied to your Contract Value immediately, but is vested over time. In addition, we vest the Bonus 100% immediately in the event of death, the beneficiary receives the entire Contract Value, including 100% of the   Bonus.

So, just how do the Interest Crediting and Bonus Vesting features of California Gold work, and how do they affect your long-term accumulation of wealth for retirement? Let’s take a look.

Premium Payment & Allocation

You may direct your Initial Premium payment in any combination you choose, into either the Fixed Value or any of the Indexed Values. Any additional Premium payments you make after your Initial Premium will automatically go into the Fixed Value. At each Contract Anniversary, you may choose to transfer between the different values, giving you greater flexibility.

Your Contract Value equals the sum of your Fixed Value, plus your Indexed Value. Your Accrued Premium Amount is the portion of the Contract Value resulting from Premiums paid plus Interest, less withdrawal amounts.

Interest Crediting

You have 10 different value options to choose from in determining how we will credit interest to your Contract Values. Additionally, we provide a Minimum Guaranteed Interest Rate which guarantees you a minimum return upon surrender. We calculate all interest rates as effective annual rates, compounded daily.

To calculate withdrawal or surrender amounts we track interest credits to Accrued Premium Amount and Accrued Bonus Amount on a pro-rota basis.


American Equity guarantee a 5% Premium Bonus on all Premiums received in the first Contract Year. We add this bonus to the Contract Value on the date we receive the Premiums, and we allocate it to the same values as your Premiums.

Accrued Bonus Amount is the portion of the Contract Value resulting from the Bonus, plus interest, less withdrawal amount s. Surrender Charges do not apply to your Accrued Bonus Amount.

Bonus Vesting

The Bonus vests over a nine-year period. Each year after the first Contract Year, you become vested in a percentage of the Bonus, until you become 100% vested at the end of the

ninth Contract Year. The vested amounts on the Bonus are the amounts that you do not forfeit as a result of an early Partial Withdrawal or Surrender.

If you take a Partial Withdrawal or Surrender you will receive the vested portion of your Bonus according to the following schedule.


  1. At Partial Withdrawal – the pro-rota portion of the Partial Withdrawal Amount allocated to your Accrued Bonus Amount multiplied by the Bonus Vesting percentage; or
  2. At Surrender – your Accrued Bonus Amount multiplied by the Bonus Vesting percentage minus the non-vesting portion of any Penalty-Free Withdrawals taken from your Accrued Bonus Amount in the last 12 months.

The Bonus is always 100% vested in the Death Benefit.


You may make withdrawals from your Contract Value at any time. Withdrawals include Penalty-Free Withdrawals and Partial Withdrawals. We will determine withdrawal proceeds taking into consideration any Penalty-Free Amount available, any Surrender Charges and Bonus Vesting.

1.   Penalty-Free Withdrawals

Once each Contract Year, after the first anniversary, you may take one Penalty-Free Withdrawal of    up to 10% of the Contract Value. Penalty-Free Withdrawals are not subject to Surrender Charges and Bonus Vesting.

2.   Partial Withdrawals

You may make Partial Withdrawals at any time. We will first determine any amount of the Partial Withdrawal that would be penalty-free. Amounts above the Penalty-Free amount are subject to Surrender Charges and Bonus Vesting Schedule.

All withdrawals are pro-rated between the Accrued Premium Amount and the Accrued Bonus Amount   of the Contract Value. We apply a Surrender Charge to your Accrued Premium Amount and vesting     to your Accrued Bonus Amount. Withdrawals in excess of the Penalty-Free Withdrawal Amount will cause loss of part of your Accrued Bonus Amount.

Death Benefit

The Death Benefit is the full Contract Value of your Annuity Contract and is paid in a lump sum with no Surrender Charges, plus 100% Bonus Vesting, to your named beneficiaries. Other income options may also  be available.

Accessibility –  10% Penalty-Free Withdrawals

We understand that access to your money is very important. This annuity offers an annual 10% Penalty­ Free Withdrawal once each year, beginning in year two. Please see Withdrawals section above. In the    first year, you may receive Systematic Withdrawals of interest or Required Minimum Distributions from the Fixed Interest Account as quickly as 30 days after your Contract is issued.

Nursing Care Rider (NCR-4-CA)

This Rider is automatically included at no cost, for annuitants under age 75 at issue. This allows you to take a 50% Penalty-Free Withdrawal if the Annuitant is confined in a Qualified Nursing Care Center, after the end of the second Contract Year, continually for at least 60 consecutive days.

Terminal Illness Rider (TIR-100)

This Rider is automatically included at no cost, for annuitants under age 75 at issue. This allows you to take an additional Penalty-Free Withdrawal of up to 100% of the Contract Value if the diagnosis of a terminal illness by a qualified physician occurs after the first Contract Year, and is expected to result in death within one year.

Indexes Used

Foundation Gold offers the following indexes:

  • The S&P 500 Index contains stocks from 500 various industry leaders and is widely regarded as a leading benchmark for U.S. stock market
  • The S&P 500 Dividend Aristocrats Daily Risk Control 5% Index is a volatility control index that consists of the S&P 500 Dividend Aristocrats Index and a cash component (accruing interest at 3 Month LIBO R). The Index is dynamically adjusted between the two components to target a 5% level of volatility.The S&P 500 Dividend Aristocrats Index is made up of S&P 500 members that have followed a policy of consistently increasing dividends every year for at least 25 consecutive years. This Index is well diversified across all market sectors.
  • 10-Year S. Treasury Bond is a government-issued debt designed to mirror general market interest rates.

Index Crediting Method

To allow you greater flexibility in utilizing our interest crediting methods, American Equity offers nine index choices and one fixed interest value choice. The annuity structure allows for annual transfer between different values. A Transfer of Values (TOV) letter and form are sent one month prior to the Contract Anniversary as a courtesy to you.

  • Annual Monthly Average – Index Credits are based on 12 dates during the year. The average is calculated by adding the 12 Index amounts on each monthly date and dividing by 12. Caps or Participation Rates are applied to the Index Credit Calculation.
  • Annual Point to Point – On each Contract Anniversary the Index Value is compared to the previous year’s Index Value. The Index Credit is based on increase in the Index Value from point to point. Caps or Participation Rates are applied to the Index Credit Calculation.
  • Monthly Point to Point – Each month a percentage of change is calculated. Caps are applied to any increase. The sum of the resulting monthly values is the Index Credit applied on each Contract Anniversary.
  • Performance Triggered (PT) – On each Contract Anniversary the PT Index Price is compared to the previous anniversary’s PT Index Price.   The PT Rate is credited if the PT Index Price on the current

Contract Anniversary is equal to or greater than the previous Contract Anniversary’s Index Price. The minimum PT Rate is 1%.

  • Bond Yield with Cap (BYC) – On each Contract Anniversary the Bond Price is compared to the Bond Price on the previous anniversary. The Index Credit is based on the decrease in the Bond Price. The BYC Interest Credit Calculation is determined by first applying the Cap followed by the Spread.
  • Volatility Control Index- On each Contract Anniversary the Index Value is compared to the previous year’s Index The Index Credit is based on the increase in the Index Value from point to point, less a Spread.
  • Fixed Interest – This is based on a current declared interest rate guaranteed to never be less than Fixed Value Minimum Guaranteed Interest Rate stated in the Annuity Contract.

Calculation Information:

  • Cap Rate – Applies to Annual Monthly Average, Annual Point to Point and Monthly Point to Point Crediting Methods.
    • An upper limit applies to the Index Credit. Cap rates are subject to change, declared each Contract Anniversary and guaranteed to never be less than 1%. -OR-
  • Cap Rate/Spread – Applies to the Bond Yield with Cap Crediting Method.
    • Cap Rate – An upper limit applies to the Index Credit. Cap rates are subject to change, declared each Contract Anniversary and guaranteed to never be less than 1%.  (and)
    • Spread – A deduction used in calculation of Index Credit. Spread is set at issue, and guaranteed for the life of the Annuity Contract. -OR-
  • Participation Rate (PR) -Applies to Annual Monthly Average or Annual Point to Point Crediting Methods.
    • The stated percentage of any Index increase credited to the Annuity Contract. PRs are subject to change, declared annually and guaranteed to never be less than 10%. -OR-
  • Spread Only-Applies only to Volatility Control Index Crediting Method.
    • A deduction used in calculation of Index Credit. The Spread is subject to change, declared each Contract Anniversary and guaranteed to never be more than 10%.

Minimum Guaranteed Surrender Value {MGSV)

At no time will the Surrender Value of the Contract be less than 87.5% of Premium received, less any Withdrawals, accumulated at Minimum Guaranteed Interest Rate stated in the Contract. The MGSV is a separate calculation from Contract Value.

Cash Surrender Value

The Cash Surrender Value is the amount we pay if you Surrender the Contract. It equals the greater of the Accrued Premium Amount minus any Surrender Charges, plus the Vested portion of the Accrued Bonus Amount or the Minimum Guaranteed Surrender Value.

Surrender Charges

We deduct a Surrender Charge on Partial Withdrawals or Surrenders during the Surrender Charge Period according to the following schedule:

  1. At Partial Withdrawal, the Partial Withdrawal from your Accrued Premium Amount multiplied by the Surrender Charge percentage; or
  2. At Surrender, your Accrued Premium Amount, plus any Penalty-Free Withdrawals from your Accrued Premium Amount in the last 12 months, multiplied by the Surrender Charge


Source: American Equity

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