What’s Covered In This ReviewIn today’s review, I’ll be covering the following information on the Income Edge Fixed Index Annuity from Lincoln Financial:
- Product Type
- Current Rates
- Realistic long-term return expectations
- How this annuity is best used
- How it is most poorly used
Annuities can be complex. That’s where having an Annuity Investigator who loves math comes in. We make the complex, simple.
If you’ve been in the midst of trying to find out as much as you can about the Lincoln Financial Lifetime Edge Fixed Index Annuity, you may have already discovered that there is a lot of information about these types of products available online. If you are hoping to find a product that offers you the opportunity for higher returns – along with an income stream in retirement that lasts for life – the Lifetime Income Edge annuity from Lincoln Financial may be a viable option for you. But, before you run out and sign on the dotted line to purchase this product, it is highly recommended that you first find out as much as you possibly can about it. That’s because once you have purchased any type of annuity, it can be somewhat difficult – and expensive – to get out. Over the past decade or so, annuities have become much more popular with investors as a way of getting a guaranteed, ongoing income stream in retirement – particularly because stock market performance can be so unreliable. Yet, this may not necessarily be a good thing because, even though most financial advisors work hard to do what is right for their clients, some of these sales agents may not be providing the best or most knowledgeable advice regarding these products. Plus, because of annuities’ rise in popularity with investors, there are many insurance companies that have expanded their product lines with products that feature a lot of “bells and whistles.” (These are often referred to as “hybrid” annuities). So, this has had the effect of making these products – which are already somewhat confusing – even more, difficult to understand…even for well-educated consumers. The result of all this makes it all that much more important that you are fully aware of what you’re planning to commit to, and why you may be choosing one particular annuity over a long list of many others like it.
Information About Annuities and Retirement Income that You Can TrustIf this is the first time you’ve visited our website, we would like to officially welcome you to AnnuityGator.com. You will find that we make up a team of experienced financial professionals who are focused on providing the most comprehensive, and nonbiased, annuity reviews online. We have been doing so for quite a few years now, and because of that, we have become well known as a trusted source of annuity information. Given that, if you are in the process of seeking out more details about annuities, then you may have noticed that there is a great deal of conflicting information about these products floating around on the Internet. While this is not surprising, it can make it more difficult to find the information you need on a particular product so that you can make a well-informed buying decision. (Or alternatively, a decision to pass on a certain annuity and move on to another, better option for you). It is also possible that you’ve recently attended an annuity seminar where you were offered a free meal, along with a presentation about how fixed index annuities work. In fact, it could be that the seminar was the catalyst that has ultimately led you here to our website today in search of more information. Even though there are many very good websites on the Internet today that market annuities, there are some that will actually try to lure you in by making some pretty bold claims, like:
- High-income payments
- Lowest annuity fees
- Guaranteed lifetime income
- 7 – 8% Rate of Return
Lincoln Financial Lifetime Income Edge Fixed Index Annuity at a Glance
|Product Name||Lifetime Income Edge|
|Issuer||Lincoln Financial Group|
|Type of Product||Fixed Index Annuity|
|S&P Rating||AA- (Lincoln National Life Insurance Company)|
|Phone Number||(888) 916-4900|
Opening Thoughts on the Lincoln Financial Lifetime Income Edge Fixed Index AnnuityLincoln Financial Group has been in the business of offering insurance and financial tools to its customers since 1905. Over the past 110+ years, the company has grown and expanded, and today it comprises a well-organized family of companies that continue to base their business on dependability, honesty, and customer service. This group of companies consists of the following entities:
- Lincoln National Life Insurance Company (Fort Wayne, Indiana)
- Lincoln Life and Annuity Company of New York
- Lincoln Financial Distributors
- Lincoln Financial Advisors
- Lincoln Financial Securities Corporation
- Lincoln Financial Foundation
Before we get into the gritty details, here are some legal disclosures…This is an independent product review, not a recommendation to buy or sell an annuity. Lincoln Financial has not endorsed this review in any way, nor do we receive any type of compensation for providing this review. This review is meant to be an independent review at the request of readers so that they may see our perspective when breaking down the positives and negatives of this particular annuity. Prior to purchasing any type of investment or insurance product, it is important that you do your own due diligence and that you consult a properly licensed professional if you should have any specific questions that relate to your individual circumstances. All names, marks, and materials that were used for this review are the property of their respective owners. For more information on how to compare annuities in order to determine which one may be right for you, click here to obtain our free annuity report.
How Lincoln Describes the Income Edge Fixed Index AnnuityLincoln Financial Group describes the Lifetime Income Edge annuity as an annuity that offers the following features and benefits:
- Lifetime income, with a degree of flexibility
- An income base with a 5% annual compounding enhancement, which guarantees growth towards future lifetime income
- Income bonus rate
- 10% nursing home enhancement (which increases the withdrawal rate for qualified nursing home expenses for those who are age 65 and over).
How an Insurance or Financial Advisor Might Pitch this AnnuityToday, there are many insurance and financial advisors who promote fixed index annuities as being a financial vehicle that offers the “best of all worlds.” This is because this type of annuity can offer you the opportunity to get a market index-linked return (which could be higher than that of a regular fixed annuity), while at the same time, protecting your principal in the event of a market loss. (In this case, if the underlying index that the annuity is tracking has a negative return in a given year, the annuity account is simply credited with a 0% return for that time period). But, it is essential to truly understand what you’re getting with a fixed index annuity because in many ways, they are not all that they are cracked up to be. For instance, while you can attain a higher return than a fixed annuity if the underlying index goes up, typically these returns will be “capped” at a certain amount. As an example, if the cap on your fixed index annuity is 5%, and the underlying index has a return of 10% in a given year, your annuity would only be credited with 5%. It is also important to keep in mind that the income base on this annuity is used only to calculate your guaranteed lifetime withdrawals via the lifetime benefit amount – but it is not available as a lump sum withdrawal or a death benefit. (It is easy to get tripped up on this, though, and many index annuity buyers realize this only after it is too late). In this case, the income base equals the contract value at the time of the annuity’s issue. However, while the contract value changes based on the performance of the interest crediting accounts, the income base grows with annual lock-in opportunities and it is reduced by excess withdrawals. Also, for you to benefit from some of the additional features of the Income Edge annuity from Lincoln Financial, there may also be some additional “hoops” you need to go through. As an example, in order to actually get the income bonus rate, you are required to wait a certain number of years before you start taking income from the annuity. If you don’t, then you will not be eligible for this bonus. Also, while the 10% nursing home enhancement benefit can be a nice feature that helps in paying for the high cost of nursing home facility care, this benefit is subject to a long list of provisions, meaning that you may or may not qualify for this feature – even if you are confined to a nursing home facility in the future.
What About the Fees on the Lincoln Financial Lifetime Income Edge Fixed Index AnnuityJust like most any other financial product, annuities will have various fees and charges involved – both up-front, and throughout the life of the contract. In the case of Lincoln Financial’s Lifetime Income Edge product, many of the optional features, like the Guaranteed Lifetime Withdrawal Benefit, on the annuity will cost you an additional amount of premium. This, in turn, can end up having an impact on your overall return. Plus, if you want to withdraw more than 10% of your contract value during the first several years of owning the annuity. In this case, there is a surrender charge incurred if you make an excess withdrawal during the first five years. And, if you are under the age of 59 1/2 when you do so, you may also incur an additional “early withdrawal” penalty of 10% from the IRS.
The Annuity Gator’s End Take on the Lincoln Financial Lifetime Income Edge Fixed Index AnnuityWhere it works best: The Lincoln Financial Lifetime Income Edge Fixed Index Annuity may be a viable option for you if you are looking for:
- Protection of your principal
- The potential for higher growth
- A lifetime stream of guaranteed income
- Want access to more than 10% of your contract value within the first several years of owning the annuity
- Do not plan to use the guaranteed lifetime income feature