Why a 7-Year FIA Is Best for Most Annuity Buyers (2026)
Most FIA buyers spend hours picking the carrier and minutes picking the surrender length. The surrender decision matters more. The same $500K placed in a 7-year versus 10-year versus 14-year FIA produces materially different outcomes. Not because of the year-1 stated cap, but because of what each surrender length does to your renewal-rate-exposure window, premium-bonus claw-back risk, §1035 optionality, and ability to respond to a changing life stage.
This article makes the case for the 7-year sweet spot, names the cap-rate environment as of June 2026 (sources: AnnuityAdvantage, public carrier rate sheets, planeasy.com, carrier disclosure documents), and walks through three exceptions where 10 or 14 wins, plus a straight answer to "what about a 5-year FIA?"
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Why true 5-year FIAs are scarce
Most buyers searching for a "5-year FIA" assume the term exists at parity with the 5-year MYGA shelf. It doesn't. Carriers price FIAs around the option budget: the portion of bond-portfolio yield used to buy market-linked call options that fund the annual index credit. That option budget is small in current rate environments (200-350 bps), and amortizing it across a shorter surrender period forces aggressive cap compression.
The arithmetic: a 7-year FIA with a 2.5% option budget can fund a ~6-7% S&P 500 annual point-to-point cap. Shortened to 5 years, the same option budget funds a ~4-4.5% cap. At that point the buyer is paying for FIA structure (surrender charges, 0% floor, renewal-cap risk) without the upside that justifies the trade-off. Carriers know this and largely refuse to issue the product.
The exceptions: short-surrender RILAs (Brighthouse Shield Level 3-year, Lincoln Level Advantage 3-year, Equitable Structured Capital Strategies 3-year) fill the short-end accumulation-with-protection niche. But RILAs have buffer or floor downside, not a hard 0%, trading higher caps for accepted downside exposure. A handful of legacy 5-year FIAs (American Equity Foundation series, legacy Allianz products) are mostly no longer sold to new buyers.
For most buyers searching for a "5-year FIA," the right answer is actually a 5-year MYGA. The MYGA delivers a contractually guaranteed 5.85-6.00% at 5 years. That materially beats the 4-4.5% expected return on a 5-year FIA over any reasonable equity-return scenario. See Why a 5-7 Year MYGA Is Best for Most Retirees and Best FIA with 5-Year Surrender.
CD vs MYGA, after tax
What $100,000 earns in 7 years: CD vs MYGA, after tax
Rates used: CD 5.00%, the top nationally available 5-year CD (Bankrate, October 14, 2026); change it to the rate you are offered. MYGA 6.00%, the best A-rated rate we track as of October 13, 2026: Aspida WealthLock 7-year (AM Best A-, reaffirmed 9/18/2026), $100,000 and up, effective October 1, 2026 (Aspida rate sheet; not sold in New York).
| CD, interest taxed every year | $130,710 |
|---|---|
| MYGA, tax-deferred, before tax | $150,363 |
| MYGA after paying tax on all the interest at withdrawal | $139,283 |
| Tax deferral alone adds about | $1,548 |
| MYGA ahead of the CD, after tax | $8,573 |
Assumes 22% federal and 0% state income tax, no withdrawals, rates held for the whole term. MYGA interest is taxed as ordinary income when you withdraw it, not as capital gains. Gains taken before age 59 1/2 can owe a 10% IRS penalty, and cashing out early can cost a surrender charge. In an IRA both grow tax-deferred, so the edge there is the rate alone. Bank and credit union deposits are FDIC or NCUA insured up to the limits; a MYGA is backed by the issuing insurer's claims-paying ability and your state's guaranty association up to its limits, not the FDIC. General education, not tax, legal or financial advice.
The 4-axis decision framework for FIA surrender length
Surrender length selection is not a one-dimensional cap-rate decision. There are four axes, and the right surrender for you is the one that scores best across all four for your specific situation. Walk these in order.
Axis 1: Cap rate captured
The FIA cap-rate curve in mid-2026 sits roughly as follows for top-of-shelf A-rated carriers on S&P 500 annual point-to-point crediting (per AnnuityAdvantage, public carrier rate sheets, and carrier disclosure documents, June 2026):
| Surrender length | Typical top cap | Carrier example | vs 7-year base |
|---|---|---|---|
| 5-year (scarce) | 4.0-4.5% | Legacy products only | -250 bps |
| 7-year | 6.0-7.0% | Athene Performance Elite 7 Plus (A+) | baseline |
| 10-year | 7.0-8.0% | Allianz Accumulation Advantage (A+) | +100-150 bps |
| 14-year | 9.0-10.0% | F&G Prosperity Elite 14 (A) | +300 bps |
| 15+ year | 10.0-10.25% | SILAC Denali 14 (B AM Best caveat) | +325-400 bps |
The slope is real: 14-year products offer ~50% more headline cap than 7-year products. But the slope is asymmetric: cap is the year-1 stated rate. Renewal caps (years 2 through surrender expiry) can drop materially. A 7-year FIA has 6 years of renewal-cap exposure; a 14-year has 13. The longer the surrender, the more years your cap can be compressed by the carrier without breaching contract, and that asymmetry consumes a meaningful fraction of the headline cap premium.
Axis 2: Lockup tolerance
Surrender length is a lockup. The 10% annual free withdrawal absorbs most routine liquidity needs, but the asymmetric tail risk (need 30-50% of principal for healthcare, family emergency, or major life-stage shift) is what surrender length determines.
7 years aligns with most pre-retiree planning windows: 60→67, 65→72, 67→74. Each increment brackets a single dominant retirement-income decision (Medicare eligibility, Social Security claiming window, RMD start). 14 years extends past most life-stage transitions. For a 65-year-old, 14 years lands at age 79, past the cognitive-decline inflection point and into the highest-medical-cost decade.
Axis 3: Premium bonus impact
Many longer-surrender FIAs include a premium bonus, typically 4-10% of premium credited to account value at issue. A $500K deposit with a 6% bonus produces a $530K starting account value. The bonus is real, but it vests over the surrender period. Exit early and the carrier claws back the unvested portion plus surrender charges.
Premium bonus is concentrated at 10-year and longer surrender lengths because the carrier needs the longer surrender to amortize bonus dollars. 7-year products rarely offer more than 3-4% bonus (F&G Power Accumulator 7 is the rare 7-year with a 4% bonus tier). For a buyer who holds to surrender expiry, the bonus is a real economic positive; for a buyer who might §1035 exchange early, the bonus claw-back can convert nominal bonus into nominal penalty.
Axis 4: Renewal-rate exposure
This is the underweighted axis, and the strongest argument for shorter surrender. The year-1 cap is contractually guaranteed at issue. Every year thereafter, the carrier resets the cap based on prevailing option costs, bond portfolio yields, and competitive pressure. Carriers contractually guarantee only a minimum cap floor (typically 1-2%). That means a 7% year-1 cap can drop to as low as 1% in years 2 through surrender expiry without breaching contract.
Renewal-cap compression has been the dominant FIA story since 2022. Option costs rose 200-400 bps; many FIAs sold in 2020 with 8% caps now renew at 4-5%. Carriers vary widely on renewal integrity. See Renewal Rate Integrity: Grading Carriers. The 7-year FIA has 6 renewal years; the 14-year has 13. Shorter surrender = shorter exposure window. The 7-year buyer gets out with full §1035 optionality; the 14-year buyer eats whatever the carrier serves for 13 renewal years.
Why 7-year FIAs win for most
The 7-year FIA is the structural sweet spot. It captures ~75-85% of the cap a 14-year product offers, requires half the lockup, aligns with typical retiree planning windows, and limits renewal-rate exposure to a tolerable window. For the largest population of FIA buyers (pre-retirees and retirees age 55-72 with $100K-$2M to deploy), it wins outright.
7-year FIAs post ~6-7% caps versus ~9-10% on 14-year, a 30-40% discount on stated cap. But the relevant comparison is realized return over actual holding period, and the realized return on a 14-year is shaped by 13 years of renewal-cap exposure. Historical data on Athene and F&G 14-year products shows renewal caps compress to roughly 60-75% of year-1 stated cap across the surrender period. The 14-year's nominal 9-10% cap delivers a blended realized cap of ~6.5-7.5%, essentially the same range as a 7-year's nominal cap.
Worked example: $250K, Athene PE 7 vs PE 15 Plus, 7-year horizon
Two age-60 buyers, both $250K, both plan to hold 7 years.
- Buyer A, Athene Performance Elite 7 Plus, 6.5% year-1 cap: assume S&P 500 averages 8% annualized over 7 years with 2 down years (0% credit), 5 up years averaging 6.5%. Compound to ~$362K by year 7. §1035 at maturity into next-best product.
- Buyer B, Athene Performance Elite 15 Plus, 9.5% year-1 cap, exits at year 7: same S&P scenario. Year-1 cap of 9.5% with renewal compression to ~7% by year 4 and 6% by year 7 (blended 7-year cap ~7.2%). Compound to ~$378K. Surrender charge year 7 of ~6%, MVA negligible = $355K net.
Buyer A nets $362K free and clear, contract matured, full §1035 optionality. Buyer B nets $355K after surrender penalty, having locked a 15-year contract he didn't fulfill. The 7-year wins on net result before even accounting for Buyer B's foregone optionality during years 1-7.
Aligned planning windows, bounded renewal exposure, §1035 at year 7
Retirees plan in roughly 7-year increments: 60→67 (early retirement), 65→72 (Social Security + Medicare window), 70→77 (RMD-bracket years). A 7-year FIA matures into the next planning window with full optionality. The 14-year FIA matures two life-stages removed from purchase. The 7-year also has 6 years of renewal-cap exposure post year-1 versus 13 for the 14-year: a shorter exposure window and bounded downside on renewal compression. At year 7 maturity (age 62-72 for the typical buyer), you get full §1035 portability into the then-best FIA, MYGA, SPIA, or hybrid LTC product. That lines up with peak cognitive function and the natural retirement-income-strategy inflection most retirees experience around 65-72. To see what a SPIA could pay you after tax for your age and state, try the SPIA vs GLWB vs DIA calculator.
Top 7-year FIAs (June 2026)
| Carrier | Product | S&P PtP Cap | AM Best | Bonus | Notable |
|---|---|---|---|---|---|
| Athene | Performance Elite 7 Plus | ~6.5% | A+ | None on 7-yr | Strong renewal-rate integrity record |
| F&G | Power Accumulator 7 | ~8.5% | A- | 4% premium bonus | Top 7-yr cap on the A-shelf; bonus rare at 7-yr |
| Symetra | Edge 7 | ~7.0% | A | None | Clean structure, low complexity |
| North American | Performance Choice 7 | ~6.25% | A+ | None | Conservative cap, strong cap floor |
| Lincoln | OptiBlend 7 | ~7.0% | A+ | None | S&P 500 + Goldman Sachs volatility-controlled options |
Caps current as of June 2026 per AnnuityAdvantage and public carrier rate sheets; subject to change weekly. The right pick depends on buyer's state of residence (for guaranty-fund posture), total deposit size, crediting-strategy preference (S&P annual point-to-point versus volatility-controlled), and the carrier's renewal-rate integrity record.
When 10-year FIAs win
The 10-year FIA is the second-best choice for most buyers, and the right choice for a specific profile. The marginal cap pickup over the 7-year is real, bonus structures are richer, and for buyers with high confidence in not touching principal, the trade-offs favor the 10-year.
10-year FIAs post ~7-8% S&P annual point-to-point caps versus ~6-7% on 7-year, a 100-150 bps premium. Athene Performance Elite 10 Plus posts ~7.5%; Allianz Accumulation Advantage posts ~7.25%; F&G Prosperity Elite 10 posts ~8.0%. Most 10-year products bundle a 4-8% premium bonus that vests over the surrender period. At 10-year horizons the bonus adds meaningful dollars. For a buyer with substantial liquid assets outside the FIA and high confidence in not breaching the surrender wall, the 10-year captures additional cap premium without meaningful liquidity risk.
$500K worked example: 10-year horizon
Two age-62 buyers, both $500K, both plan to hold to surrender expiry.
- Buyer A, Athene PE 7 Plus, then §1035 into new 7-year at year 7: blended realized cap ~5.5% across 10 years. Compound to ~$854K by year 10.
- Buyer B, Athene PE 10 Plus, 7.5% year-1 cap, 6% premium bonus: starting account value $530K. Blended realized cap ~6.0% across 10 years. Compound to ~$949K by year 10.
Buyer B wins by ~$95K, about $9,500/year of premium. Real, and worth the lockup if Buyer B genuinely holds the full 10 years and the carrier's renewal behavior matches historical norms. In scenarios with weaker renewal behavior, Buyer A's mid-horizon reset captures opportunity Buyer B can't access.
Best 10-year FIAs
| Carrier | Product | Cap | AM Best | Bonus |
|---|---|---|---|---|
| Athene | Performance Elite 10 Plus | ~7.5% | A+ | 6% |
| F&G | Prosperity Elite 10 | ~8.0% | A- | 8% |
| Allianz | Accumulation Advantage | ~7.25% | A+ | None: strong base cap |
| Symetra | Edge 10 | ~7.5% | A | None |
When 14-year FIAs win (rare)
The 14-year FIA is right for a narrow buyer profile and wrong for most of the buyer pool. It captures the highest available caps and stacks the richest premium bonuses, but the 14-year lockup extends past most retiree life-stage transitions, and renewal-cap exposure across 13 renewal years is the longest on the shelf.
14-year FIAs post the highest year-1 caps: 9-10% on A-rated carriers, occasionally 10.25%+ on smaller carriers. SILAC Denali 14 has historically posted the top (~10.25% on S&P 500 annual point-to-point), but SILAC carries a B AM Best rating materially below the A-shelf, and position size needs careful sizing against state guaranty fund coverage. The 14-year shelf also concentrates the richest bonus structures: North American Charter Plus 14 (10% bonus), F&G Prosperity Elite 14 (8-10% bonus). The 14-year is right for buyers who plan to hold the contract until death and pass full account value to beneficiaries. Typical profile: 60-65 years old, $2M+ net worth, other income streams cover all expenses.
$500K worked example: 14-year horizon, hold to maturity
60-year-old buyer, $500K, plans to hold to age 74.
- F&G Prosperity Elite 14, 9.5% year-1 cap, 8% bonus: starting account value $540K. Blended realized cap ~7.0% across 14 years. Compound to ~$1.39M by year 14.
- Athene PE 7 Plus rolled twice (7 → 7), 6.5% year-1 cap each: blended realized cap ~5.5% across 14 years. Compound to ~$1.07M by year 14.
The 14-year wins by ~$320K, about $22,800/year of premium. Material. But the comparison assumes the buyer (a) holds to year 14, (b) carrier renewal behavior matches benign assumptions, and (c) no life event forces early exit. Bonus claw-back on an exit at year 8 would erase most of the premium.
Best 14-year FIAs
| Carrier | Product | Cap | AM Best | Bonus |
|---|---|---|---|---|
| SILAC | Denali 14 | ~10.25% | B (caveat) | varies |
| F&G | Prosperity Elite 14 | ~9.5% | A- | 8-10% |
| North American | Charter Plus 14 | ~9.0% | A+ | 10% |
The reality: a 14-year FIA bought at 70 matures at 84. That is past median life expectancy for most American men, past cognitive-decline inflection points, and squarely in the highest-medical-need decade. Most buyers over 70 are better served by a 7-year FIA (matures at 77, still cognitively capable, still flexible) or a hybrid LTC annuity. Carriers happily sell 14-year products to 70-year-olds; the product is rarely the right fit for the buyer.
The three exceptions when shorter wins
The 7-year captures the bulk of the FIA buyer pool. Three buyer profiles are better served elsewhere on the surrender curve.
Exception 1: Specific known cash need at 5-7 yr mark, use a MYGA instead
If you have a specific, known, undeferable cash need at the 5-year or 7-year mark (a planned home downsizing, a known estate distribution, a bridge to a known income event), the right product is a MYGA at the same term, not an FIA. The MYGA delivers contractually guaranteed yield (5.85-6.00% at 5-7 years on top carriers) with no dependency on equity market performance. FIA credits can be zero in flat or down years; the buyer who needs a known future dollar amount cannot tolerate that uncertainty. See Why a 5-7 Year MYGA Is Best for Most Retirees.
Exception 2: Health concerns or shorter actuarial horizon, SPIA or short MYGA
Buyers with health concerns or a shorter actuarial horizon (terminal diagnosis, advanced age, family history of early decline) are better served by either (a) a SPIA that maximizes period-certain income against actual remaining lifespan, or (b) a short MYGA (3-5 year) that preserves principal for beneficiaries while delivering rate certainty. The 7-year FIA's surrender length and equity-linked uncertainty don't fit the constrained-horizon profile.
Exception 3: RILA preference, Brighthouse Shield 3 or 6-year
Buyers who will tolerate some downside exposure in exchange for higher caps belong on the RILA shelf, not the FIA shelf. Brighthouse Shield Level 3-year posts 12-14% S&P caps against a 10% buffer (you eat the first 10% of any market loss in exchange for the cap premium); Brighthouse Shield Level 6-year posts 18-22% caps against the same buffer structure. For a buyer comfortable with bounded downside in exchange for materially higher upside, the RILA captures equity-linked returns the FIA structurally cannot.
How to build a 7-year FIA strategy for $500K
Actual implementation. $500K deployed across two A-rated carriers on the 7-year shelf, capturing diversification across state guaranty fund coverage, crediting-strategy variety, and renewal-rate integrity. Single maturity event at year 7, full §1035 optionality at maturity.
Sample build
| Position | Amount | Carrier | Product | Year-1 Cap | AM Best | Bonus |
|---|---|---|---|---|---|---|
| 1 | $250,000 | Athene | Performance Elite 7 Plus | ~6.5% | A+ | None |
| 2 | $250,000 | F&G | Power Accumulator 7 | ~8.5% | A- | 4% |
Blended year-1 cap: ~7.5%. F&G premium bonus delivers $10K of additional starting account value (4% on $250K). Combined starting account value: $510K.
Two-carrier diversification posture
Most states' guaranty fund covers $250K per owner per carrier. Splitting $500K across Athene and F&G keeps each exposure exactly at the typical cap. The carriers also differ on crediting strategy menus (Athene offers strong S&P 500 and Russell 2000 point-to-point variants; F&G offers S&P 500 with various volatility-controlled index alternatives). Diversifying across crediting strategies captures more of the realized index-credit opportunity.
Year-1 cap snapshot, free withdrawal, and §1035 plan
Year-1 caps are contractually guaranteed at issue. Both Athene PE 7 Plus and F&G Power Accumulator 7 carry contractual minimum cap floors of 1.0-1.5%. Carriers can compress renewal caps to as low as 1.0-1.5% in adverse conditions without contract breach. Athene and F&G both hold strong historical renewal records on these product families. Both products allow 10% annual free withdrawal from year 1 ($25K/year per position, $50K/year combined) with no surrender charge or MVA. Chronic illness, terminal illness, and nursing home waivers lift surrender on most contracts.
At year 7 (both contracts mature within the same window), full §1035 portability into then-best products. Likely decisions at maturity: (a) roll into the then-best 7-year FIAs if the cap environment is rich, (b) convert to a SPIA if the buyer is now 67+ and income certainty is the dominant need, (c) exchange into a hybrid LTC annuity (Lincoln MoneyGuard, OneAmerica Asset Care, Securian SecureCare), or (d) take cash and pay tax on the deferred gain. The maturity decision should be made 12-18 months before year 7 with full shelf research.
7-year FIA vs 7-year MYGA, which fits when?
The 7-year buyer can split between FIA and MYGA at the same surrender length. Direct comparison:
| Dimension | 7-yr FIA | 7-yr MYGA |
|---|---|---|
| Year-1 credited rate | 0-7% (cap-bounded, depends on S&P) | 5.95-6.10% (contractually fixed) |
| Credited rate certainty | 0% floor only; cap variable annually | 100% contractually guaranteed full term |
| Upside potential | S&P 500 annual point-to-point capped at ~6-7% | None: fixed rate only |
| Downside floor | 0% in down market years (no losses) | Locked rate every year regardless of market |
| Bonus structure | Sometimes (F&G PA7 = 4%) | Rare on 7-yr MYGA |
| Tax treatment | Tax-deferred until withdrawal | Tax-deferred until withdrawal |
| Free withdrawal | 10% annual | 10% annual |
| Surrender + MVA | Yes, declining schedule | Yes, declining schedule |
| Death benefit | Full account value | Full account value |
| Renewal-rate exposure | 6 years post year-1 | None: rate locked |
| Best buyer | Wants equity-linked upside with 0% floor protection | Wants contractually guaranteed yield certainty |
The MYGA wins on certainty. The FIA wins on potential upside, particularly in strong equity environments. For most buyers, splitting 50/50 captures both. See the combo strategy in the FAQ. For buyers who want pure yield certainty, MYGA outright. For buyers with conviction on equity markets and willingness to tolerate renewal-rate ambiguity, FIA outright.
7-year FIA vs 10-year FIA: same-carrier head-to-head
Same carrier, same product family, different surrender length. Direct comparison using Athene Performance Elite 7 Plus vs Performance Elite 10 Plus:
| Dimension | Athene PE 7 Plus | Athene PE 10 Plus |
|---|---|---|
| Surrender period | 7 years | 10 years |
| S&P 500 PtP year-1 cap | ~6.5% | ~7.5% |
| Premium bonus | None | 6% |
| Starting account value on $250K | $250,000 | $265,000 |
| Minimum guaranteed cap floor | ~1.0% | ~1.0% |
| Free withdrawal | 10% annual | 10% annual |
| Renewal-cap exposure window | 6 years | 9 years |
| §1035 decision point | Year 7 | Year 10 |
| Bonus claw-back risk on early exit | None | Yes, declining schedule |
| Age at maturity if bought at 62 | 69 | 72 |
| Best buyer | Wants optionality at year 7 | Will hold to year 10, values bonus + higher cap |
The 10 wins on stated cap and starting account value (bonus). The 7 wins on optionality and renewal-rate-exposure-window. For most buyers, the 7's clean exit at year 7 with full optionality beats the 10's marginal cap pickup once renewal-rate risk and bonus claw-back risk are weighted in.
Get my 7-year FIA shelf comparison built
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The right 7-year FIA depends on your deposit size, state of residence (for guaranty fund posture), age, existing fixed-income allocation, crediting-strategy preference (S&P annual point-to-point versus volatility-controlled), and the carrier's renewal-rate integrity record. The structure in this article is a starting point. The actual shelf comparison gets tuned to your specifics.
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Hans Goldstein · 213-414-2808 · NPN 20602398, independent licensed insurance producer appointed with 25+ A-rated carriers
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Frequently Asked Questions
Related reading and tools
- Best FIA with 5-Year Surrender, the honest answer to the scarce-5-year question
- Why a MYGA Is Best for Most Retirees, the case for MYGAs in retirement
- Why a 5-7 Year MYGA Is Best for Most Retirees, the companion MYGA flagship
- Athene Performance Elite FIA: full product family review
- Athene Performance Elite 7-Year FIA: specific 7-year variant
- F&G Power Accumulator FIA: full product family review
- F&G Power Accumulator 7-Year FIA: specific 7-year variant
- Symetra Edge FIA: Term Variants, 7/10/14 comparison
- Renewal Rate Integrity: Grading Carriers, the cap-drop scorecard
- Growth Potential Score: FIA growth framework
- Death Benefit Quality Score: carrier-by-carrier grading
- Income Quality Score: income-rider grading
About Hans Goldstein: Independent retirement income specialist focused on FIA and MYGA-centered fixed-income strategy. CA Life License #4273294. NPN #20602398. Appointed with 25+ A-rated annuity carriers. Phone: 213-414-2808. Email: hans@hansgoldstein.com.
Disclosure
This article is general educational information and is not a personalized recommendation, solicitation, or offer of any product. FIA surrender length selection depends on individual circumstances. Cap-rate citations are approximate and reflect publicly available data as of June 2026 from AnnuityAdvantage, public carrier rate sheets, planeasy.com, and carrier disclosure documents; caps change weekly and renewal caps after year 1 are not contractually guaranteed beyond a minimum floor (typically 1-2%). Carrier examples are illustrative and not endorsements; specific producer appointment status varies by carrier. Hans Goldstein is an independent licensed insurance producer (NPN 20602398) appointed with multiple A-rated carriers. No compensation has been received from any carrier in connection with this article. Worked examples use illustrative cap-rate and equity-market assumptions and are not projections; actual future caps and index credits will differ. State guaranty fund coverage varies by state. SILAC Denali 14's cap-rate leadership is noted but the B AM Best rating is materially below A-shelf carriers and requires careful position sizing. Always read the actual contract and consult a licensed advisor before purchasing. Tax discussion of IRC §1035 reflects law as of 2026 and is subject to change.