North American Annuity Review [2025 Update]

Planning for retirement often involves exploring various financial tools designed to provide security and income during your non-working years. Annuities are one such tool, offering tax-deferred growth and the potential for a guaranteed income stream. Among the many providers in the market, North American Company for Life and Health Insurance stands out as a prominent player, particularly known for its fixed indexed annuities. But is a North American annuity the right choice for your specific retirement goals?

Understanding annuities, let alone choosing the right one from the right company, can feel overwhelming. That’s where objective, expert guidance becomes invaluable. At Insurance By Heroes, we understand the weight of these decisions. Founded by a former first responder and military spouse, our agency is built on a foundation of service and trust, staffed by professionals who share a background in public service. We operate as an independent agency, meaning we aren’t tied to any single carrier like North American. Instead, we partner with dozens of the nation’s top insurance companies. This allows us to meticulously compare options and tailor solutions specifically for you, ensuring you get the coverage that truly fits your needs and budget, not just what one company offers.

This review will delve into North American annuities, exploring their product offerings, financial strength, and potential benefits and drawbacks. Crucially, we’ll frame this information within the broader context of the annuity market, highlighting why comparing North American’s options against those from other leading carriers – a service Insurance By Heroes specializes in – is essential for making an informed decision.

Understanding Annuities: The Basics

Before diving into North American specifically, let’s quickly recap what an annuity is. In essence, an annuity is a contract between you and an insurance company. You make payments to the insurer (either a lump sum or multiple payments over time), and in return, the insurer agrees to make payments back to you, either immediately or at some point in the future. Key features often include:

• Tax Deferral: Your money grows tax-deferred, meaning you don’t pay taxes on the earnings until you start receiving payments or withdraw funds.
• Income Options: Annuities can provide a stream of income you cannot outlive, offering peace of mind in retirement.
• Death Benefit: Many annuities include a provision that pays out a remaining value to your beneficiaries upon your death.

There are several types of annuities, each with different risk and reward profiles:

• Fixed Annuities: Offer a guaranteed, fixed interest rate for a specific period. They are generally considered low-risk.
• Variable Annuities: Allow you to invest your premiums in various sub-accounts (similar to mutual funds). Returns depend on market performance, involving higher risk but also potential for higher growth.
• Fixed Indexed Annuities (FIAs): Offer potential growth linked to a market index (like the S&P 500), but with protection against market downturns. Your principal is typically protected, but potential gains might be limited by caps, participation rates, or spreads.
• Immediate Annuities: Start paying out income soon after you purchase them.
• Deferred Annuities: Allow your money to grow tax-deferred for a period before you begin receiving income payments.

Choosing the right type depends heavily on your risk tolerance, time horizon, income needs, and overall financial plan. This is a key area where working with an independent agency like Insurance By Heroes provides significant value, as we can explain these nuances and help you compare specific products across multiple carriers.

About North American Company for Life and Health Insurance

North American Company for Life and Health Insurance (often simply called “North American”) has a long history, tracing its roots back to 1886. It is a subsidiary of Sammons Financial Group, Inc. (SFG), which is, in turn, wholly owned by Sammons Enterprises, Inc., a large, privately held company with diverse business interests.

Being privately held means North American isn’t subject to the short-term pressures of public shareholders, potentially allowing for a more long-term focus. The company primarily markets fixed and fixed indexed annuities, along with life insurance products, positioning itself as a provider of retirement and protection solutions.

North American emphasizes its commitment to financial strength and stability, which is crucial when considering a long-term contract like an annuity. They rely on a network of independent agents and financial professionals to distribute their products.

Financial Strength Ratings: A Critical Factor

When you purchase an annuity, you are relying on the insurance company’s long-term ability to fulfill its promises, potentially decades into the future. Therefore, assessing the financial health and stability of the insurer is paramount. Independent rating agencies evaluate insurance companies based on their financial condition, operating performance, and ability to meet obligations to policyholders.

Here are North American’s current financial strength ratings from major agencies (as of late 2023/early 2024 – always verify current ratings):

• A.M. Best: A+ (Superior) – Second highest of 16 ratings.
• S&P Global Ratings (Standard & Poor’s): A+ (Strong) – Fifth highest of 22 ratings.
• Fitch Ratings: A+ (Strong) – Fifth highest of 19 ratings.

These ratings indicate a strong financial position and a high capacity to meet policyholder obligations. An A+ rating from A.M. Best, in particular, is considered excellent within the insurance industry. However, while strong ratings are essential, they are just one piece of the puzzle. A company can be financially sound but offer products with features (like high fees, restrictive caps, or long surrender periods) that may not align with your individual needs. This is why Insurance By Heroes looks beyond just ratings, analyzing the specific contract details from North American and comparing them against offerings from other highly-rated carriers.

North American Annuity Products: An Overview

North American primarily focuses on Fixed and Fixed Indexed Annuities. Their product lineup can change, so it’s vital to get current details, but here’s a general overview of the types of annuities they typically offer:

North American Fixed Annuities

These products offer safety and predictability. Key features generally include:

• Guaranteed Interest Rate: A fixed rate of return is guaranteed for a specified number of years (the guarantee period).
• Principal Protection: Your initial premium is protected from market loss.
• Tax Deferral: Earnings grow tax-deferred until withdrawal.
• Withdrawal Provisions: Often allow for penalty-free withdrawals up to a certain percentage (e.g., 10%) of the account value each year after the first year. Withdrawals exceeding this amount during the surrender charge period will incur penalties.

Fixed annuities are suitable for conservative individuals seeking stability and a known rate of return, often as an alternative to Certificates of Deposit (CDs) but with the added benefit of tax deferral.

North American Fixed Indexed Annuities (FIAs)

FIAs are North American’s flagship annuity products and represent a significant portion of their business. These are more complex than traditional fixed annuities but offer the potential for higher returns linked to the performance of a market index, without direct exposure to market losses.

Key features and concepts associated with North American FIAs often include:

• Index-Linked Growth Potential: Interest credited to your annuity is based, in part, on the performance of a chosen market index (e.g., S&P 500, Dow Jones Industrial Average, or proprietary indices). You don’t invest directly in the index.
• Principal Protection: Like fixed annuities, your principal is generally protected from market downturns. If the index performs negatively, you typically earn zero interest for that period (though some products may offer a minimum guaranteed rate), but you don’t lose your principal due to market volatility.
• Crediting Methods: How index-linked interest is calculated can vary. Common methods include:
  • Caps: A maximum rate of interest you can earn, regardless of how high the index climbs (e.g., if the cap is 7% and the index gains 10%, you earn 7%).
  • Participation Rates: A percentage of the index’s gain that is credited to your annuity (e.g., if the participation rate is 60% and the index gains 10%, you earn 6% interest).
  • Spreads (or Margin Fees): A percentage deducted from the index gain before interest is credited (e.g., if the spread is 2% and the index gains 10%, you earn 8%).
• Choice of Indices: North American FIAs typically offer a selection of indices to choose from, sometimes including volatility-controlled or proprietary indices alongside standard ones like the S&P 500.
• Fixed Account Option: Most FIAs also include a traditional fixed-rate allocation option.
• Income Riders: Optional riders can be added (often for a fee) to provide a guaranteed lifetime income stream, even if the account value depletes. These riders have specific rules and calculations.
• Surrender Charges: These are penalties applied if you withdraw more than the allowed amount during the surrender charge period, which can last several years (e.g., 7, 10, or even 14 years). These charges typically decrease over time.

Examples of North American FIAs might include product lines like the NAC VersaChoice, Performance Choice, or PrimePath. Each specific product has unique features, cap rates, participation rates, available indices, rider options, and surrender charge schedules. It is absolutely crucial to understand these details before purchasing.

While the potential for growth linked to market gains without downside risk is appealing, the complexity and limitations (caps, participation rates) mean FIAs are not suitable for everyone. Comparing the specific caps, rates, fees, and rider benefits of a North American FIA against similar products from other top carriers is essential. Insurance By Heroes has the tools and expertise to perform this detailed comparison for you, ensuring the product aligns with your risk tolerance and goals.

Potential Benefits of North American Annuities

Based on their product offerings and company profile, here are some potential advantages:

• Strong Financial Ratings: As discussed, North American enjoys high ratings from major agencies, providing policyholder confidence.
• Principal Protection (Fixed and FIAs): Their core products offer protection against market loss for your principal investment.
• Tax-Deferred Growth: Allows your earnings to compound faster than they might in a taxable account.
• Potential for Competitive FIA Returns: Depending on the specific product, index performance, and current cap/participation rates, their FIAs may offer growth potential exceeding traditional fixed annuities or CDs, while still protecting principal.
• Variety of FIA Options: They typically offer a range of FIAs with different features, crediting methods, and index choices, allowing for some customization.
• Optional Income Riders: The availability of lifetime income riders can address longevity risk (the risk of outliving your savings).

Potential Drawbacks and Considerations

It’s equally important to consider the potential downsides and complexities:

• Complexity (Especially FIAs): Fixed indexed annuities can be difficult to understand fully, with various crediting methods, caps, rates, and riders impacting actual returns. Misunderstanding these can lead to unmet expectations.
• Limited Upside Potential (FIAs): Caps, participation rates, and spreads inherently limit the interest you can earn, meaning you won’t capture the full gains of the linked index, especially in strong bull markets.
• Surrender Charges: Annuities are long-term commitments. Accessing significant portions of your money early can result in substantial surrender penalties. These periods can be lengthy (sometimes over 10 years) for North American products.
• Fees for Riders: Optional riders, particularly income riders, come at an additional cost, which reduces your net return.
• Interest Rate Sensitivity (Fixed Annuities): While offering guarantees, the rates on fixed annuities might be lower than other potential investments, especially during periods of rising interest rates.
• Liquidity Constraints: Beyond the penalty-free withdrawal amounts, your funds are largely illiquid during the surrender charge period.
• Product Suitability: A North American annuity, even if it’s a good product, might simply not be the best fit for *your* specific financial situation, goals, risk tolerance, or time horizon compared to alternatives.

These considerations underscore the importance of not looking at any single company or product in isolation. The features that make a North American annuity attractive to one person might be drawbacks for another. That’s the core value proposition of working with Insurance By Heroes: we help you weigh these pros and cons in the context of your unique circumstances and compare them against a wide array of solutions from different providers.

Why Choose an Independent Agency Like Insurance By Heroes?

When researching options like North American annuities, you might encounter agents who only represent one or a very limited number of companies. These are known as captive agents. While they might know their specific products well, they cannot offer objective comparisons across the broader market.

Insurance By Heroes operates differently. As an independent agency founded by individuals with backgrounds in service – a former first responder and a military spouse – we bring a unique perspective focused on protection, planning, and client well-being. Our team understands the importance of trust and clear communication, values honed through careers dedicated to public service.

Here’s why partnering with us provides a distinct advantage:

• Access to the Market: We work with dozens of highly-rated insurance carriers, including North American, but also many others like Athene, Allianz, Midland National, Security Benefit, and more. This extensive network allows us to shop the market effectively on your behalf.
• Unbiased Advice: Our loyalty is to you, our client, not to any single insurance company. We have no incentive to push one carrier’s product over another’s, except when it genuinely represents the best fit for your needs.
• Tailored Solutions: We take the time to understand your complete financial picture, retirement goals, risk tolerance, and income requirements. Based on this comprehensive understanding, we compare various products – fixed annuities, FIAs, life insurance, etc. – from multiple carriers to find the optimal solution. A North American annuity might be on the shortlist, but only if it truly stacks up against the competition for your situation.
• Expertise and Comparison: Annuities, especially FIAs, have complex contract details. We have the expertise to dissect these details – comparing cap rates, participation rates, rider costs and benefits, surrender charge schedules, and company financial strength across different providers. We can show you side-by-side comparisons to illustrate the differences.
• Simplified Process: Navigating the world of annuities can be daunting. We simplify the process, explaining complex concepts in plain language and guiding you every step of the way, from initial consultation to application submission.
• Service-Oriented Approach: Our background in public service informs our commitment to integrity and putting your interests first. We aim to build long-term relationships based on trust and sound financial guidance.

While North American is a reputable company with strong products, limiting your search to just one carrier means potentially missing out on a better opportunity elsewhere. Insurance By Heroes ensures you see the bigger picture and make a choice based on comprehensive comparison, not limited options.

Who Might Consider a North American Annuity?

Generally speaking, North American annuities, particularly their FIAs, might appeal to individuals who:

• Are nearing or in retirement and seeking principal protection with some potential for growth linked to the market.
• Have a moderate risk tolerance – comfortable forgoing potentially higher market gains for downside protection.
• Are looking for tax-deferred accumulation.
• Need or desire a guaranteed income stream in retirement (potentially utilizing an income rider).
• Have a long-term time horizon and do not anticipate needing significant access to the funds during the surrender charge period.
• Are looking for alternatives to CDs or traditional fixed annuities that may offer higher potential returns (albeit with more complexity and limitations).

However, even if you fit this profile, it is *essential* to confirm suitability through a personalized analysis. For example, someone needing maximum liquidity, having a very high-risk tolerance and seeking direct market participation, or requiring access to funds in the short term would likely find annuities, including those from North American, unsuitable. A thorough needs analysis conducted by an independent advisor at Insurance By Heroes is the best way to determine if a North American product, or an alternative from another carrier, aligns with your specific objectives.

Comparing North American to the Competition

The annuity marketplace is highly competitive. Many other top-rated insurance companies offer fixed and fixed indexed annuities with varying features, rates, and benefits. Some may offer:

• Higher cap rates or participation rates on their FIAs.
• Shorter surrender charge periods.
• Different index options, including potentially better-performing proprietary indices.
• More flexible withdrawal provisions.
• Lower fees for income riders or other features.
• Unique rider benefits tailored to specific needs (e.g., enhanced income for long-term care needs).

Conversely, North American might excel in certain areas, perhaps offering particularly strong guarantees on an income rider or a specific index strategy that performs well in certain market conditions. The “best” annuity is entirely relative to the individual client and the current market environment.

This constant flux and variation across providers make the role of an independent agency like Insurance By Heroes indispensable. We stay current on product offerings and rate changes across the industry, enabling us to provide timely and relevant comparisons. We can model potential outcomes based on different product structures and help you understand the trade-offs involved in choosing one carrier or product over another.

Conclusion: Making an Informed Decision with Insurance By Heroes

North American Company for Life and Health Insurance is a financially strong company offering reputable fixed and fixed indexed annuity products. Their focus on principal protection combined with potential index-linked growth makes their FIAs a popular choice for retirement planning. Features like tax deferral and optional income riders add to their appeal for certain individuals.

However, no single insurance company or product is the perfect solution for everyone. The complexity of FIAs, the limitations imposed by caps and participation rates, and the long-term commitment required by surrender charges necessitate careful consideration and comparison. North American annuities should be evaluated not in isolation, but alongside top competitors in the market.

This is where Insurance By Heroes provides critical value. Our independence allows us to objectively assess North American’s offerings against those from dozens of other leading carriers. Our background in public service ensures a client-first approach grounded in trust and integrity. We take the time to understand your unique situation and leverage our market access and expertise to find the annuity or insurance solution that truly aligns with your retirement goals and financial well-being.

Don’t navigate the complexities of annuity selection alone. Let the dedicated team at Insurance By Heroes put their experience to work for you. We can help you understand if a North American annuity fits into your plan, or if another option from a different carrier might serve you better.

Ready to explore your options and get personalized annuity quotes? Take the first step towards a more secure retirement. Fill out the quote form on this page, and one of our experienced, service-driven advisors will contact you to discuss your needs and provide a no-obligation comparison of the best available solutions from across the market. Let Insurance By Heroes be your trusted partner in planning for the future.