What’s Covered In This ReviewIn this review, we’ll cover the following information on the Pacific Life Pacific Index Choice 6 Fixed Indexed Annuity:
- Product Type
- Current Rates
- Realistic long term return expectations
- How it is used
- How it is most poorly used
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If you’ve been in the process of considering the purchase of an annuity because you want tax-advantaged growth, the safety of principal, and a retirement income that you literally cannot outlive, then the Pacific Life Pacific Index Choice 6 fixed indexed annuity could be a good option for you. That is because, with a fixed indexed annuity, you get the opportunity to attain index-linked returns – which can be higher than the returns of a regular fixed annuity – along with protection of your principal, even in the event of a market downturn. These annuities can also offer you a lifetime income option so that you can rid yourself of the worry that you’ll run out of income in retirement. But, prior to running out and signing on the dotted line to buy this – or any – annuity, it is imperative that you first have a good understanding of just exactly how the product works, as well as how it may or may not fit in with your overall financial needs and goals. Over the past few years, the purchase of fixed indexed annuities has increased dramatically. One reason for this is because of the many benefits these vehicles can offer during their “accumulation” period, as well as when the time comes to convert the annuity to an income stream. Yet, because of the increased demand for these types of annuities, there are many insurance companies that are coming out with “new and improved” products and that offer a long list of bells and whistles on them. Unfortunately, this can make an already confusing product even more difficult to understand – not just for consumers, but also for many financial and insurance advisors, too. With that in mind, unless your current advisor has a key focus on selling fixed indexed annuities, you may want to take just a bit of time and acquaint yourself with the ins and out of this product before you invest a large chunk of your retirement savings in it.
Annuity and Retirement Income Planning Information You Can Actually TrustIf this is the first time that you’ve visited the AnnuityGator.com website, please allow us to officially welcome you here. At Annuity Gator, we make up a team of annuity experts who focus on providing highly comprehensive, yet unbiased, annuity reviews. We have been doing this for many years now – far longer than our competitors have – and because of that, we’ve become a trusted source of annuity information. Recently, though, there have been numerous “copycat” websites that have been popping up all over the Internet. And, while some of these may be able to give you some basic information regarding annuities, what you are likely going to find is that these sites are often just simply reiterating what our information here already shows. If you have spent any time online looking for annuity information, then it is likely that you’ve also come across some very conflicting details about these financial vehicles. This, however, is not at all surprising, as there are a lot of different annuities out there – and just about everyone has a different opinion about them. It is also possible that you’ve recently attended an annuity seminar where, as you dined on a free dinner or lunch, the presenter provided you with a myriad of details about the Pacific Life Pacific Index Choice 6 or some other similar annuity. It may even have been your attendance at that seminar that has led you here to our website in search of additional information. Likewise, in your quest for information about annuities via the Internet, you may also have seen some annuity marketing websites that focus on luring visitors in for the purpose of obtaining their contact details. These sites will often time do so by making some fairly bold claims about the annuities they offer, such as:
- High Annuity Income Payouts
- Guaranteed Income for Life
- Top-Rated Annuity Carriers
- Low Fees
Pacific Life Pacific Index Choice 6 Fixed Indexed Annuity at a Glance
|Product Name||Pacific Index Choice 6|
|Type of Product||Fixed Indexed Annuity|
|Phone Number||(800) 772-4448|
Opening Thoughts on the Pacific Life Index Choice 6 Fixed Indexed AnnuityPacific Life has been helping clients to grow and protect wealth for nearly a century and a half. Throughout the years, this insurer has grown and expanded, both in terms of client base and assets under management. The company held approximately $143 billion in total assets as of year-end 2016, and during the 2016 year, Pacific Life paid out roughly $2.3 billion just in insurance and annuity benefits. Because of its strong financial footing, as well as its timely payout of policy holder claims, Pacific Life has earned high ratings from the insurer rating agencies, including the following:
- 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
Before we get into the gritty details, here are some necessary legal disclosures…This is an independent annuity product review. It is not a recommendation to purchase or to sell an annuity. Pacific Life has not endorsed this review in any way, nor do we receive any type of compensation for providing this review. This annuity review is meant solely to be an independent review at the request of our readers so that they may see out perspective when breaking down the positives and the negatives of this particular annuity. Before purchasing any type of insurance and/or investment 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 situation. All of the names, marks, and materials that were used for this annuity review are the property of their respective owners. For more information on how to compare annuities in order to determine which one may be the best for you and your financial circumstances, click here to obtain our free annuity report.
How Pacific Life Describes the Pacific Index Choice 6 Fixed Indexed AnnuityPacific Life describes the Pacific Index Choice 6 fixed indexed annuity as a limited premium, deferred, annuity that offers six different index-linked crediting options, as well as a fixed account, along with various income payout alternatives. The underlying indexes that are tracked include the S&P 500, and the MSCI All Country World Index (ACWI). Each of these indices has three crediting options:
- 1-year point-to-point with cap
- 2-year point-to-point with cap
- Declared index interest option
How an Insurance or Financial Advisor May Pitch this AnnuityIf you have been looking at annuities for any length of time, you have likely noticed how insurance companies – and their agents – do a great job of painting a nice, rosy picture of the benefits you can get with their products. When it comes to fixed indexed annuities, advisors will typically key in on several features, including the opportunity to earn more interest than with a regular fixed annuity, while also keeping your principal intact (no matter what happens in the volatile market). You can also cast your worries aside as they pertain to lifetime retirement income, as (with the lifetime income option), you will continue to receive income for as long as you need it. But in their quest to sell you an annuity, insurance and financial advisors who earn sales commissions may tend to leave out some of the other components that could be considered as drawbacks. As an example, the Pacific Life Pacific Index Choice 6 imposes a “cap” on the index-linked return (as do most other fixed indexed annuities). This means that if the underlying index has a phenomenal performance in a given year, your return will be still “capped” at a certain amount. For instance, if the underlying index has a return of 12% in a given year, but the cap on the annuity is 5%, then your return would be limited to 5% for that year. Also, it is important to be aware that once the initial interest rate guarantee period expires (in this case, six years), the renewal rates and the caps will be declared on each contract anniversary. This means that you could end up with a lower interest rate guarantee down the road – and it could be one that makes it difficult to beat, or even meet, future inflation. This, in turn, could have an impact on your income, and your future purchasing power. Likewise, a lower cap could have the effect of providing you with a lower return, even in years where the underlying market index(es) has a significant upward movement.
Fees Charges on the Pacific Index Choice Annuity from Pacific LifeAs is typical for most annuities, there will also be some charges and fees to be mindful of with the Pacific Index Choice annuity from Pacific Life. For instance, while there are no annual contract, mortality & expense, or administrative fees, there are other areas where you could still face charges – which could affect your overall return. For instance, if you choose to add the optional guaranteed minimum withdrawal benefit, you’ll incur an annual charge (for both single life and joint life) of 0.75% of the protected payment base, up to a maximum of 1.5%. There is also an additional charge if you choose to add the optional death benefit. Here you’ll see a fee of 0.40% of the death benefit base deducted each year from the contract value. In addition, if you need to access any more than 10% of the annuity’s contract value during the first six years of owning the contract, you could incur a surrender charge. In the case of the Pacific Life Pacific Index Choice 6, there are six years of withdrawal charges, that begin at 9%.
Pacific Life Pacific Index Choice 6 Withdrawal Charge Schedule
The Annuity Gator’s End Take on the Pacific Life Pacific Index Choice 6 AnnuityWhere it works the best: As a fixed indexed annuity, the Pacific Index Choice 6 can work well for those who are seeking the following benefits:
- The opportunity for a higher return than on a regular fixed annuity
- Protection of principal, regardless of what happens in the stock market
- Guaranteed lifetime income benefits (for an individual, or an individual and a joint income recipient)
- Don’t want your potential return to be held back by a cap
- Need access to more than just 10% of your contract value within the first six years of owning the annuity
- Do not plan on utilizing the lifetime income benefits