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Independent Review of the Lincoln National Life Covered Choice Advisory 5 Annuity

What will be discussed in this annuity review?

In this review, you will learn more of the in-depth details about the Lincoln National Life Insurance Company’s Covered Choice Advisory 5 annuity, including:
  • How the annuity worksIndependent Review of the Lincoln National Life Lincoln OptiBlend 5 Fixed Indexed Annuity
  • What to anticipate regarding performance
  • Possible benefits and drawbacks
  • Charges and fees
  • Where it may fit well in a portfolio
  • Where it may not fit very well

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 process of looking for an annuity that can keep your principal safe, while also providing the opportunity to grow funds based on the performance of an underlying market index – as well as offer a lifetime stream of income in retirement – you may want to consider taking a closer look at the Lincoln Life Insurance Company’s Covered Choice 5 Single Premium Deferred Fixed Indexed Annuity. But, before you go out and make a long-term commitment on this – or for that matter, on any – annuity, it is always a good idea to first take a closer look at how the product works, and how it may or may not work in your particular situation. Over the past decade or so, fixed indexed annuities have become extremely popular. This comes in large part by the fact that they can offer you a guaranteed stream of income during retirement, which can in turn, provide you with peace of mind in knowing that you won’t run out of income, regardless of how long you may live. Due to the increased popularity of these types of annuities, the number of insurance and financial services reps who are offering them has expanded a great deal. However, this may not be a positive thing. One reason for this is because, while these professionals typically work hard to offer the best possible information for their clients, because fixed indexed annuity products are complex and have a lot of moving parts, even the insurance and financial advisors who sell them may not always be all that familiar with the intricate details about them. However, because fixed indexed annuities – or for that matter, any annuities – can oftentimes require a large percentage of your overall savings, you really need to know how the product will work because if you change your mind later and want to get out of it, you will find yourself paying a pretty hefty surrender penalty.

Annuity and Retirement Income Planning Advice that You Can Trust

If you’ve never landed on our website before, please allow us to officially welcome you here to Who exactly are we? We are a team of annuity and retirement income specialists who are focused on offering in-depth, yet non-biased, annuity reviews. We have been doing this for quite some time now – much longer than our competitors – and because of that, we have come to be a trusted source of annuity information. If you have been looking for details about annuities via the Internet, then it is probable that you have run across a lot of very conflicting opinions about them. This, however, is not really all that surprising to us. That is because there are many different annuity products available out there in the marketplace today, and many people – both consumers and financial advisors alike – will often have differing thoughts about them. It is also possible that you have recently attended an annuity seminar where, in return for a free lunch or dinner, the presenter provided you with a great deal of information about the Lincoln Life Covered Choice 5, or some other similar annuity. You might even have set a follow up meeting with the presenter, which in turn, has led you here to the Internet in search of more detailed information about this (and / or other annuities). Even though there are many very good websites out there online that are keyed in on offering annuity products and information, there are some that will attempt to “lure” visitors in by making some pretty bold claims, such as the following:
  • Lowest fees
  • Highest income payouts
  • Guaranteed lifetime income
  • Top-rated companies
Might this look familiar? However, while these claims may sound very enticing, it makes it all that much more important to know whether or not these claims are actually true. This is where we come in. In fact, if you have come to our site in search of more information on the Lincoln Life Covered Choice 5 fixed indexed annuity, then you are definitely in the right place. Here you will not only find the nice, rosy details about everything good that this annuity offers, but also the factors that may be considered as drawbacks. That is because we feel that knowing the entire picture is really the only way to make a well-informed decision as to whether or not the annuity will be right for you. If you’ve done any amount of investing in the past, you may notice that insurance and financial advisors will often tend to happily give you all of a product’s benefits, yet will simply gloss over the disadvantages – if they even discuss them at all. When it comes to fixed indexed annuities, for instance, advisors will usually go into great detail about how the product offers the opportunity for higher growth than that of a fixed annuity, while at the same time keeping your principal safe. We don’t think it’s right to be just one-sided, though. In order to be perfectly clear here, we do feel that annuities can provide investors with some very nice benefits. However, this is only the case if the product fits in with your specific short- and long-term goals. The review that you are in the process of reading right now was created with the intent of assisting you with better understanding all of the “fine print” that is associated with the Lincoln Life Covered Choice 5 fixed index annuity. So, if you are ready to begin, then let’s dive right in!

Lincoln Life Insurance Company’s Covered Choice 5 Fixed Indexed Annuity at a Glance

Product NameCovered Choice 5
IssuerLincoln Financial Group
Type of ProductFixed Indexed Annuity
S&P RatingAA-
Phone Number(800) 672-4822

Opening Thoughts on the Lincoln Life Covered Choice 5 Fixed Indexed Annuity

Lincoln Financial Group was originally founded in 1905, with the endorsement of Abraham Lincoln’s son, Robert Todd Lincoln. For more than 115 years, Lincoln has stuck with honest values and dependable service so its clients can better achieve their short- and long-term wealth enhancement and protection goals. Today, Lincoln National Corporation operates as the parent company for numerous affiliates, which includes Lincoln National Life Insurance Company. As of year-end 2019, Lincoln National was ranked as the fourth largest life and health insurer, with more than $16.4 billion in (2018) revenue. The company has also achieved other accolades, too, including:
  • #1 in variable universal life insurance sales
  • #2 in universal life insurance sales
  • #4 in term life insurance sales
  • #1 in total life insurance sales
  • #5 in 401(b) employer-sponsored retirement plan market assets
  • #3 in healthcare segment assets
  • #9 in 401(k) market assets
  • #2 in variable annuity sales
  • #6 in fixed indexed annuity sales
  • #8 in total fixed annuity sales
  • #3 in total annuity sales
  • #5 in long-term disability
  • #3 in short-term disability
  • #7 in total employee-paid coverage
Due in large part to its financial strength and good reputation for paying out policy holders’ claims, Lincoln National Life Insurance Company has also earned some impressive financial strength ratings, including a(n):
  • A+ from A.M. Best
  • A+ from Fitch Ratings
  • A1 from Moody’s Investor Service
  • AA- from Standard & Poor’s
Due to the constant volatility of the stock market over the past several years, fixed index annuities have become extremely popular with investors as a way to both grow and protect principal, as well as to obtain an ongoing income in retirement. However, while these features may seem highly attractive at first glance, it is important that you look at the whole picture, because there is typically some type of “tradeoff” required.

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. Neither Lincoln Financial Group nor Lincoln National Life Insurance Company has 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 our perspective when breaking down the positives and the negatives of this particular annuity. Prior to committing to the purchase of any type of insurance and / or investment vehicle, it is critical that you do your own due diligence, and that you also talk with a properly licensed professional if you have any questions that relate to your specific situation. All of the names, materials, and marks that have been used in compiling this annuity review are the property of their respective owners. For additional information on how to compare fixed annuities so that you can decide which may be the best on for you, click here in order to obtain our free annuity report.

How Lincoln Life Describes the Covered Choice 5 Fixed Indexed Annuity

On it’s website, Lincoln Financial Group describes the Covered Choice annuity as a single premium deferred annuity that offers several features that can help you to meet both accumulation and retirement income needs. Some of the primary features of this annuity include:
  • A fixed account that offers a guaranteed interest rate for the first five contract years (after which subsequent interest rates will be declared annually)
  • Two indexed accounts that have the potential to earn interest that is tied to the performance of an outside index. In this case, the indexed accounts are the 1 Year S&P 500 Performance Triggered, and the 1 Year S&P 500 Cap
  • A five-year surrender charge, which matches the duration of the initial interest rate guarantee period (this, however, is subject to state availability)
This annuity offers some added “bells and whistles,” such as nursing home and terminal illness waivers that allow you to access the annuity’s accumulation value without a surrender charge or market value adjustment if you meet the qualifications for an illness diagnosis and / or a stay in a nursing home facility. You can check out the Lincoln Life Covered Choice 5 annuity facts at-a-glance HERE.

How an Insurance or Financial Advisor Might “Pitch” this Annuity

Over the past several years – especially since the 2008 U.S. recession, and the more recent COVID-19 virus stock market correction – safety of principal has been a key concern for many investors, particularly as they inch their way towards retirement. Unfortunately, even though the more traditional “safe” financial vehicles, such as CDs and regular fixed annuities, can offer safety, their interest rates are so painfully low that they can’t even come close to meeting future inflation, much less beating it. But enter the fixed indexed annuity. Because this product can offer the opportunity to return higher than a traditional fixed annuity, while also keeping principal safe – regardless of what happens in the stock market – insurance and financial advisors have been pitching these “best of all worlds” scenarios. The icing on the cake is the fact that, if the lifetime income option is chosen, the worry about running out of money in retirement has also been taken off the table. But even though this can make it sound like all of your troubles have been wiped away, there is some “small print” that you need to read over before your dive in head first. For example, because the return on the Covered Choice annuity is “capped”, it is essentially limited in so far as it can rise. As an example, if an indexed annuity has a cap of 5%, but the underlying index that the annuity is tracking has a stellar year and it returns closer to 10 or even 15%, the return that is credited to the annuity account will be capped at 5%. So, while you do have the opportunity to end up with a higher return than a regular fixed annuity with a set rate of interest, the reality is that the 7% or 8% returns that are touted by some of the annuity marketing websites are not all that likely – especially on an ongoing basis. Also, as with most other fixed indexed annuities, the index that is used is basically a price index, and it will not reflect the dividends that are paid on the underlying stocks in that index. And then there are the fees…

What About the Fees on the Lincoln Covered Choice 5 Fixed Indexed Annuity?

While fixed indexed annuities won’t typically charge you with an up-front sales commission (although that is not always the case), where you will find fees is on the back end, particularly if you try to access more than 10% of the annuity’s contract value during it’s surrender charge period. Luckily, the surrender period on the Lincoln Life Covered Choice 5 annuity is “only” five years. But the fee percentage is pretty steep – starting at 9% in Year 1, and then gradually grading downward until it reaches 0% in Year 6.

Lincoln Life Covered Choice 5 Annuity Surrender Charge Schedule

Contract Year123456+
Surrender %987650
For some people, this can be a long time to keep your money “locked up” – especially if an emergency comes up and you need to get your hands on your funds. In addition to the surrender charge, you could owe taxes on the withdrawal. And, if you happen to be under the age of 59 ½ when you make a withdrawal, you could also owe Uncle Sam an additional 10% “early withdrawal” penalty.

The Annuity Gator’s End Take on the Lincoln National Covered Choice 5 Advisory Fixed Indexed Annuity\

Where it works best: This particular annuity will usually work the best for those who are looking for:
  • Safety of principal
  • The opportunity for index-linked growth
  • Guaranteed lifetime income in retirement
Where it works the worst: The Lincoln National Covered Choice 5 Advisory Fixed Indexed Annuity may not be an ideal fit for you if you:
  • Need access to most or all of your money within the first several contract years
  • Do not intend to use the lifetime income feature of the annuity
In order to truly get an idea of whether or not a fixed indexed annuity such as the Covered Choice annuity or similar product is right for you, click here so that you can access our free annuity buyer’s report.

In Summary

There are many factors that should ideally be considered when you are considering the purchase of an annuity. In any case, an annuity should always be considered as a long-term financial decision – and because of that, it is truly important that you are confident about how the product may or may not fit in with your specific financial goals. When you are considering a fixed indexed annuity, you can be comfortable in that your principal will be safe from market fluctuations, as well as in that you can set it up to provide you with an ongoing retirement income in the future. Given that, you can also attain the security that you won’t run out of income during retirement. With regard to the Lincoln Life Covered Choice 5 Advisory fixed indexed annuity product, there certainly can be some advantages available. However, this annuity may still also fall somewhat short, and quite frankly, there may be some better options that are out there for you – primarily if you are in search of guaranteed lifetime income, along with the opportunity for growth.

Have Any Additional Questions on the Lincoln Life Covered Choice 5 Advisory Fixed Indexed Annuity? Did You Notice Any Mistakes in this Review?

We realize that this annuity review went a bit long, so we appreciate you sticking with us. However, in this regard, we would much rather that you have too much information on this product that to not have enough. So, if you found this annuity review to be beneficial, please feel free to pass it on and to share it with other people who could also find value in it. We also know that, just as with other financial products and services, the information about annuities can also change quite frequently. So, if you happened to see any information in this annuity review that may need to be updated or revised, then please let us know that, too, and we will be happy to make any of the needed updates. Are there any other annuities that you would like to see reviewed? If so, great! Just provide us with the name of the annuity (or annuities), and our team of highly trained annuity experts will get to it as quickly as we possibly can. Best, The Annuity Gator P.S. If you would like to read more of our Lincoln annuity reviews here are some links to check out:          

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