PrimePath Pro 10 review

Yes, for the right buyer, with one important caveat. It is a sensible choice for someone who wants protected lifetime income from a top-rated carrier and is comfortable with the idea that the heavy lifting on income growth will come from the chosen crediting strategies rather than a guaranteed roll-up. It is a weaker choice if the buyer expects the benefit base to compound aggressively while sitting in conservative crediting options.

The main reason to buy PrimePath Pro 10 is to lock in a structured path to future protected lifetime income without paying a visible rider fee year after year. The secondary reason is the chronic illness LPA Multiplier, which can increase income payments if the owner can no longer perform certain activities of daily living. Compared to peer income FIAs that quote a higher roll-up but pair it with a 1.0 to 1.2 percent rider fee, PrimePath Pro 10 takes a quieter, lower-cost approach to the same problem.

I think this product fits a 55 to 70 year old buyer who plans to turn income on in roughly 8 to 15 years, wants principal protection in the meantime, and has the patience to actively use the crediting menu rather than parking the money in a low-rate fixed bucket. It also fits buyers who want chronic illness coverage built into the same contract, which can reduce the need for a separate long-term-care policy. It is not the right fit for someone shopping for the highest advertised roll-up, someone who needs income within the first three to five years, or someone who wants to keep their money fully liquid.

You are not buying a high-roll-up income engine. You are buying a long-deferral, low-cost income chassis from a strong carrier. The benefit base, which is the figure used to calculate future lifetime income, grows by 1.00% per year compounded for up to 15 years or until you start income, whichever comes first. Anything beyond that growth has to come from the index credits that flow into the benefit base, the LPA Multiplier if you ever need care, and the payout factor that applies when income begins. The rider is doing two jobs at once: guaranteeing that income will be available for life regardless of account value, and quietly adding the chronic illness enhancement.

The core feature is Benefits Rider IV, North American's built-in Guaranteed Lifetime Withdrawal Benefit. The mechanics work in three layers.

First, the benefit base starts equal to your premium and grows by 1.00% compound interest each year for up to 15 contract years, or until you turn income on, whichever happens first. After 15 years, that guaranteed growth stops. That 1.00% number is the part to internalize. It is well below the 6, 7, or 8 percent roll-ups common in peer income FIAs.

Second, your benefit base can also pick up index credits, which is how it can outgrow the 1.00% floor in good years. This makes the crediting menu inside the contract matter more than it would inside a higher-roll-up peer, because it is the main lever for outperforming the floor.

Third, when you turn income on, the contract applies a payout percentage based on your age at activation and converts the benefit base into a guaranteed lifetime withdrawal amount. That payout continues for life even if the underlying account value runs to zero, which is the whole point of a GLWB.

The other piece of the rider worth knowing is the LPA Multiplier. If the owner is unable to perform a defined number of activities of daily living, the lifetime payment amount can be multiplied. That feature, included with the base rider, is meaningful in a chronic illness scenario.

The crediting menu is where this contract earns most of its real-world income-growth potential, and there is a lot of it. PrimePath Pro 10 offers nine crediting methods spread across six indices, including the S&P 500, S&P 500 Low Volatility Daily Risk Control 5%, S&P Multi-Asset Risk Control 5% Excess Return, S&P Maestro 5 Index ER, Morgan Stanley Dynamic Contribution, and Morgan Stanley Dynamic Global. Methods include fixed, annual point-to-point with cap, margin, participation, or enhanced participation, monthly point-to-point with cap, and two-year point-to-point variants.

This breadth matters more here than on the typical income FIA. Because the guaranteed roll-up is only 1.00%, the buyer needs the index credits to do real work over a long deferral. The enhanced participation strategies, which historically offer the highest stated participation rates, carry a strategy charge that is deducted once per term from the accumulation value and is guaranteed for life. That charge is the price of admission for the most aggressive looking participation numbers in the menu. The brochure quotes participation rates from 100 to 285 percent and caps from 2.2 to 7.25 percent depending on strategy. Those are the snapshot figures from the January 16, 2024 rate sheet; live rates will look different and should be confirmed before locking allocations.

This is a long-commitment contract. The free withdrawal is up to 7% of beginning-of-year accumulation value annually, and it does not begin until contract year two. Year one is effectively zero-liquidity outside of the nursing home waiver, which allows a 100% withdrawal without surrender charge or MVA if the owner is confined to a qualifying facility for 90 or more consecutive days, but only during the first contract year.

The surrender schedule starts at 10% and stays at 10% for the first five contract years, before stepping down to 9, 8, 7, 6, and 4 percent in years 6 through 10. That is a heavier front end than the linear schedules used on many peer 10-year FIAs, which typically start in the 8 to 9 percent range. A market value adjustment can also apply on withdrawals above the free amount, which means rising interest rates can compound the cost of an early exit.

The takeaway is that this contract should not be money the buyer expects to touch in the first five years. After year two, the 7% free amount provides reasonable working liquidity for required minimum distributions or modest cash needs, but anything larger will run into both the surrender charge and the MVA.

There is no separate, ongoing rider fee. That is genuinely unusual for a product with a built-in GLWB and a chronic illness multiplier, and it is one of the more attractive things about the contract. Most peer income FIAs deduct 0.95 to 1.30 percent of the benefit base or account value each year for an equivalent rider package.

The tradeoff is structural. North American funded the rider's no-fee design by setting the guaranteed roll-up at 1.00% instead of the higher figures that peers offer in exchange for a fee. If the buyer would have spent ten years paying a 1.10% rider fee on a competitor's contract, the math on a fee-free 1.00% roll-up is closer than it first looks, but only if the index credits show up. In a sustained low-return environment for the chosen strategies, the missing roll-up is not made up by anything.

The other live cost is the strategy charge on the enhanced participation crediting methods. That charge is deducted once per term from accumulation value and is locked for the life of the contract. The brochure does not publish the strategy charge percentage in the materials reviewed, which is a gap a prospective buyer should fill in directly with the agent or carrier before allocating to those methods.

Legal Entity: North American Company for Life and Health Insurance

Parent: Sammons Financial Group

A.M. Best Rating: A+

North American is a major Midwestern carrier under Sammons Financial Group, with a long history in the fixed indexed annuity market. The A+ rating from A.M. Best is one of the higher marks in the FIA business and supports the credit-quality argument for using this product as a long-term income source.