What Will We Be Covering in this Annuity Review?
In this review, we will be covering the following details on the Pacific Life Core Protect Advantage Variable annuity:
- Product type
- Current rates
- Realistic long term investment expectations
- How it is used
- How it is most poorly used
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If you have been considering the purchase of a variable annuity because you want to grow your savings tax-deferred, while at the same time have the ability to attain market-related returns, then the Pacific Life Core Protect Advantage variable annuity may be a wise choice. But depending on your current financial situation, even if you purchased this product several years ago, today your situation may have changed, rendering this annuity no longer needed or wanted for what you are hoping to accomplish.
What you will likely notice about this annuity is that, just like any other financial or insurance product, there are areas where it may perform quite well, and then there are other areas where it doesn’t perform very well at all.
In order to really know whether or not the Pacific Life Core Protect Advantage variable annuity is the right one for you, it may be necessary to read over a myriad of “small print” in the prospectus and/or other written materials. Unfortunately for most people, even though this is important, it can be about as fun as getting a root canal.
This is where the Annuity Gator comes in!
Annuity and Retirement Planning Information that You Can Trust
If this is the first time you have visited our AnnuityGator.com website, then we would like to welcome you to our site. We represent a team of knowledgeable annuity pros who are focused on providing our visitors thorough – yet non-biased – annuity review. We have been at this for a number of years now, much longer than our competitors. So, we have become a highly trusted source of annuity information.
If you have been in the process of seeking annuity info online, then it’s likely that you have at some point run across conflicting information regarding these financial vehicles. This, however, is not entirely surprising, because there are many, many annuities out there in the marketplace, and there are numerous opinions – both good and bad – about them.
If you have recently attended an annuity seminar or workshop, you may have – in return for a complimentary lunch or dinner – already heard some of the details about this, or another, annuity. Attending that even may even be what has brought you here to our site in search of additional details.
In your quest for annuity information, you may also have run across some of the other websites out there on the Internet that tout the benefits of their products. In fact, some of these sites make some pretty bold claims, such as:
- Highest annuity rates
- Lowest Fees
- Top rated annuity companies
- Get your quote now!
While these sites may be able to provide you with some of the information that you need, we dare say that the website that you are on right now will provide you with much more of the in-depth information that is required for making a good, solid purchase decision.
We feel that you have to have the entire picture in order to truly make a decision that is right for you – and, because you can get “locked in” to an annuity, if you buy one of these products and then decide that you want to get out, it can cost you a great deal in surrender fees.
So if you’re ready to begin the review, let’s get started!
Pacific Life Core Protect Advantage Variable Annuity at a Glance
Opening Thoughts on the Pacific Life Core Protect Advantage Variable Annuity Product
Pacific Life has more than 145 years of experience in helping its clients to grow and protect wealth. The company works with individuals, families, and businesses – and it provides a long list of financial and insurance products.
As of year-end 2016, Pacific Life held roughly $143 billion in total assets, and for the year 2016, it paid out $2.3 billion in insurance and annuity benefits to its clients, policyholders, and beneficiaries.
The company has received very high ratings from the insurer rating agencies, including a(n):
- A+ (Superior) from A.M. Best Company
- A+ (Strong) from Fitch Ratings
- A1 (Good) from Moody’s Investor Service
- AA- (Very Strong) from Standard & Poor’s
Pacific Life, at the end of 2016, stood as the #1 seller of indexed universal life and universal life sales, and it was the 8th largest company in terms of total life insurance sales. The company also ranks as #13 in terms of variable annuity sales, and the #16 largest fixed annuity seller.
Overall, variable annuities are designed for accomplishing two key goals. One is to grow principal, and the other is produce retirement income in the future. However, in reality, these types of annuities really are not all that great at producing income, because of the risk that they present to the investor, as well as to the insurance company that offers them.
In fact, due to the fact that a variable annuity’s value can fluctuate so much, the insurance company that offers it can only actually guarantee less income than the more safe alternatives like fixed annuities can offer. Therefore, for each dollar that is invested in a variable annuity, it is going to provide you with less income than a fixed annuity would for the exact same money. Given that, if your main goal in purchasing an annuity is to ultimately use it for producing retirement income, then a variable annuity is not likely going to be the best option.
When it comes to the investment aspect of variable annuities, these vehicles can provide investors the opportunity for unlimited growth. However, along with that can also come downside risk – and in some cases, a substantial amount of downside risk.
Variable annuities are also known for having a significant amount of charges and fees – not just up front, but also throughout the time that an investor owns the product. One reason for this is the fees that are charged by the variable annuity itself. But, because variable annuities are also invested in mutual funds, you will typically also have to pay the fees that each of the funds charges, too.
Before we get into the gritty details, here is some necessary legal information that we need to disclose…
This is an independent annuity product review and it does not constitute any type of recommendation to purchase or sell an annuity. Pacific Life has not endorsed this review in any way, and I do not receive any compensation for providing this review. This information is meant to be an independent opinion so that readers may see my personal perspective when determining the potential advantages and/or drawbacks of this particular financial vehicle, and how it may or may not fit into their specific financial portfolio. Prior to purchasing any type of investment or investment product, it is important to pursue your own due diligence and to consult with a competent and properly licensed financial professional before moving forward. This way, you can more precisely ensure that the product and/or service fits in with your individual circumstances. All names, trademarks, and materials that were used in this annuity review are the property of their respective owners.
Want to know more about what to look for when shopping for a variable annuity? Click here to immediately download our free report on variable annuities.
How Pacific Life Describes the Core Protect Advantage Variable Annuity
Pacific Life describes their variable annuities such as the Core Protect Advantage as long-term contracts between you and the insurance company that can help you to grow, protect, and managing retirement savings in a tax-advantaged way.
Just some of the benefits of these types of annuities can include the following:
- Grow retirement savings faster through the power of tax-deferral
- Manage your investment strategy by transferring among a diverse selection of investment options free of tax consequences
- Convert your assets to guaranteed, lifetime retirement income
- Leave a financial legacy through a guaranteed death benefit
The Core Protect Advantage can be beneficial in terms of protecting against future rising inflation. For example, unlike a fixed annuity that offers a painfully low rate of return (in return for protection of your principal), variable annuities provide the opportunity to grow your money based on market returns.
Depending on your personal risk tolerance, you can also choose from a number of different equities / mutual funds in order to diversify the portfolio and to ultimately find a balance between higher return / high-risk investment options, and lower return / lower risk options. And, even though this still can’t guarantee a profit (or even guarantee against the avoidance of losses), when properly diversified, it can help to protect against the impact of extreme market swings.
You may also purchase an optional living benefit which can help you to receive guaranteed income for life, and to also ensure that even in a down market environment, you have a level of financial protection in place.
The annuity also comes with a death benefit feature, whereby if the owner or annuitant dies, a financial legacy can still be left for loved ones – which can also help with avoiding both the cost and the delay of probate.
By going with an optional death benefit, you can have the potential to lock in any market gains and to also increase the death benefit amount, which can help to offset the impact of taxes for your beneficiary (or beneficiaries).
How a Financial Advisor Might “Pitch” this Annuity
If you were offered the Pacific Life Core Protect Advantage variable annuity by a commissioned insurance or investment advisor, then it is likely that they will be focusing on the positives of this annuity, while possibly not highlighting the aspects of this annuity that could be considered drawbacks. One such drawback is the risk that the investor takes when purchasing a variable annuity.
Today, variable annuities are not nearly as popular as they were several years ago. Rather, index annuities – which offer the opportunity for index-linked return, along with the safety of principal – have become much more sought after. One reason for this is because they can guarantee safety, yet provide a higher return than a regular fixed annuity.
With that in mind, it is probable that a financial professional will key in on the ability of a variable annuity to possibly provide a higher return, as well as diversity in investment options. Also, because people are living so much longer today, one primary fear that many retirees have is that of running out of money. The guaranteed lifetime income from an annuity can help to rid that fear.
This particular annuity comes from a very strong and stable financial company – and one with nearly a century and a half of experience in the financial industry. So that is definitely a plus. In addition, if your risk tolerance tends to be at the higher end of the spectrum, going with variable products such as the Core Protect Advantage from Pacific Life can offer you the opportunity for a higher rate of return than the fixed, or even the fixed indexed annuity products that are now available.
But, if one of your key reasons for purchasing an annuity is for the income benefit, it is highly recommended that you first take into consideration the projected income from this annuity, as there may be other products out there that can offer a higher level of guaranteed income – along with more protection from a downward moving market.
Because there is no “perfect” product or investment, it is important to know clearly what your priorities are right from the beginning. This is especially the case before you move forward with signing an annuity contract because once you are in, it can be difficult – and costly – to get out.
It can be difficult to know which annuity will be the best one for you and your specific circumstances. But it can be helpful to know some key tips when shopping for this type of product. Click here in order to obtain our free annuity shopper’s guide so that you can feel more confident in your decision going forward.
What About the Fees on the Core Protect Advantage Annuity?
Overall, variable annuities tend to be some of the more costly investment vehicles that are available in the market today. For instance, these products typically carry annual maintenance fees, as well as fees for any of the additional riders that you opt to include (such as living benefits and/or the optional death benefit).
If you want to take more than 10% of your contract value out of the annuity within the first several years, you will also incur a surrender charge. (For those who are under the age of 59 1/2 and take such withdrawals, you can also count on incurring an additional 10% “early withdrawal” penalty from the IRS).
And, you mustn’t forget the fact that each of the individual investments – typically mutual funds – that are included in your variable annuity will also have their own annual management fees. (And yes, this is the case even if your funds lose money in a downward moving market).
So you have to ask yourself this – is the tax-deferred nature of the growth in this product really worth all of the risks that you’ll be taking on, plus all of the fees?
The Annuity Gator’s End Take on the Pacific Life Core Protect Advantage Variable Annuity
Where it works the best:
Variable annuities such as the Pacific Life Core Protect Advantage variable annuity will typically work best for those who are looking for the following benefits:
- The opportunity for higher, market- related growth (as versus that of a fixed or fixed indexed annuity)
- Tax-deferred gains (which can be particularly beneficial for people who have already “maxed out” their IRA and/or 401(k) plan and still want to invest additional funds
- Guaranteed lifetime income in retirement
Where it works the worst:
There are some people who may alternatively want to shy away from this annuity – in particular, those who:
- Have a low tolerance for risk and are seeking principal protection
- Do not plan to use the lifetime income feature
When considering any type of financial investment, it is essential that you determine first what your overall goals are. That way, you will be much better able to go through the process of eliminating the options that won’t fit in with your plan.
In the case of the Pacific Life Core Protect Advantage variable annuity, there can be some nice features, such as the numerous equity investment options, we well as the ability to diversify your holdings within the annuity contract.
Plus, you can also obtain tax-deferred growth of your money – which in turn, can allow your funds to grow and compound exponentially over time. Plus, you can count on at least some amount of guaranteed income down the road.
But, in order to really know if this particular annuity will be a good fit for you is to have it tested. We can do this for you. The calculator and resulting spreadsheet are free. So, if you are interested, please let us know and we will be happy to run the figures for you.
Have Any Additional Questions on the Core Protect Advantage Variable Annuity from Pacific Life? Did You See Any Mistakes in this Annuity Review?
We admit that this annuity review ran a bit long. Therefore, we really do appreciate you sticking with us here. Our thought is that we would much rather provide you with “too much” information than not enough.
If you did feel that this annuity review was helpful, then, by all means, please feel free to forward it on to anyone else that you think might also benefit from it. Alternatively, if this review brought forth, even more, questions, then please also let us know.
Also, as many humans do, we can at times make mistakes. So, if you happened to notice any mistakes in this review, please send us a message here via our secure online contact form so that we can make the corrections as soon as possible.
Any other annuities that you’d like to see reviewed?
If there are any other annuities that you would like to see reviewed, please let us know that, too, and we will get our team of qualified annuity “geeks” on the case and have more reviews available on our website soon.
The Annuity Gator