Independent Review of the Lincoln National Investor Advantage Fee-Based Variable Annuity
What’s Covered in this Annuity Review
In this review, we’ll cover the following information on the Lincoln National Investor Advantage Fee-Based Variable Annuity:
- Product Type
- Current rates
- Realistic long term return expectations
- How it is 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 seeking the opportunity for a higher return, along with a set stream of income in the future, then the Lincoln National Investor Advantage variable annuity could be a good option for you. But before you charge out and make a long-term commitment to this vehicle, it’s always a good idea to get a better understanding of how the product works, and what kind of “tradeoffs” you may need to make in order to boost your account.
The Investor Advantage variable annuity is designed primarily to do two things – grow your money over time, and then when you reach retirement, it converts your funds into an ongoing stream of income. But, even though ongoing income is a key concern of many retirees today, going this particular route could end up costing you more than you realize. With that in mind, be sure that you know exactly what all of the features – including any additional bells and whistles – do, and where they could end up taking away from your return.
In general, a variable annuity earns a return on stock and bond portfolios that are built right inside of the product. Unfortunately, the rate of return that is implied may be misrepresented. For example, even if the underlying investments in the annuity contract return somewhere in the neighborhood of 7 or 8%, once you’ve subtracted all the charges and fees, your return could end up only being half of that…or less.
We aren’t saying that variable annuities are bad things. In fact, in terms of adding a diversified component to your portfolio, they can actually be very good. And, they basically do something that no other investment can do – guarantee you income.
But the issue comes in that they are also very confusing products – even for well-educated consumers. That’s why we’re here. We offer in-depth annuity reviews on all types of annuity products so that consumers can really understand what it is that they’re getting into, and so that they know why they did or didn’t choose a particular annuity based on their overall financial goals.
Annuity and Retirement Income Planning Information That You Can Trust
If you have never visited our website before, you would like to thank you for stopping by and visiting AnnuityGator.com. We make up a team of experienced financial pros who are focused primarily on offering the most comprehensive and unbiased annuity reviews that can be found here on the Internet. We’ve been doing this for quite some time now – far longer than our competitors – and because of that, we are considered a highly trusted source of annuity information online.
We’ve also seen – particularly over the past few years – numerous “copycat” websites appearing online. In doing some research of our own, we’ve found that most of these sites just simply repeat very basic information that you’ve likely already heard.
There could be any number of reasons why you are looking for more details about annuities right now. You may be approaching retirement, and seeking a safe place to put your money. You may also be researching how you may be able to stretch out your retirement income to last throughout the rest of your life.
In your search for additional information, it’s possible that you may also have attended a seminar, where the presenter discussed the Lincoln National Investor Advantage annuity, or some other similar product. In fact, it may even have been your attendance at this event that has ultimately led you here to our website in search of additional details.
If you have spent any time at all online researching annuity products, then it is likely that you’ve come across some conflicting information on them. This, however, isn’t at all surprising. Although there are many good websites out there on the Internet that focus on advertising annuities, there are some that may also attempt to “lure” you in by making some pretty bold claims like:
- Highest income payouts
- Lowest fees
- Top-rated annuity carriers
- Guaranteed income for life
- Get your quote now!
Does this look familiar?
Even though these claims may sound very enticing, it is essential that you find out if they are really true. This is because once you are locked into an annuity if you later find that it really isn’t all that it was cracked up to be, it can be costly for you to get out of it.
The good news is that if you’re looking for the scoop on the Investor Advantage variable annuity products from Lincoln National, then you are in the right spot. We do things a bit differently here than our competitors – starting with the fact that we don’t just provide you with the great, rosy details about the advantages of annuities. We also lay out the bad – and yes, sometimes even the ugly. That’s because we feel this is really the only way to make a good decision regarding whether or not a particular annuity is right for you.
If you’ve already been presented this annuity by a financial or insurance sales person, you may have noticed that they highlight all of the positive features with regard to annuities, but they may leave out a discussion about the potential drawbacks.
This annuity review is here to take you by the hand and assist you in “decoding” the small print that is so often found in the sales literature about annuities. Here, you can uncover the information that is oftentimes overlooked due to big pretty pictures of retirees receiving their annuity or investment income.
So, if you’re ready to begin, let’s go ahead and dive in!
Lincoln National Investor Advantage Fee-Based Variable Annuity at a Glance
|Product Name||Investor Advantage|
|Type of Product||Variable Annuity|
|Phone Number||(888) 868-2583|
Opening Thoughts About the Lincoln National Investor Advantage Annuity
Lincoln Financial Group is one of the largest and financially strongest insurers in the country. In fact, based on its 2016 revenue, the company is ranked fourth, just under MetLife, Prudential, and AFLAC. The company is also ranked as #4 in variable annuity sales, #10 in fixed indexed annuity sales, #1 in universal life sales, and #3 in total life sales.
As of March 31, 2017, Lincoln reported assets under management of $236 billion, a total adjusted statutory capital of approximately $8.9 billion, and cash and invested cash of $551 million.
The company also had net income of $435 million and operating revenues of $3.6 billion as of that same time. So, needless to say, Lincoln has a strong financial foundation. Because of that, coupled with its timely payment of policy holder claims, the company has achieved high ratings from the insurer rating agencies, including the following:
- A+ from A.M. Best Company
- AA- from Standard & Poor’s
- A1 from Moody’s
- A+ from Fitch
These are all good attributes, as the strength of any annuity is really only as strong as the claims paying ability of the underlying insurance carrier. That’s the good news. But overall, variable annuities are also more prone to adverse market conditions – which can present you with more risk, and in turn, more sleepless nights, especially if you have a large chunk of your retirement savings invested in one.
In order to help with protecting your money from market losses, variable annuities offer their investors the opportunity to purchase pension-like guarantees. This protection, however, will cost you an additional fee, usually of around 1%.
This income guarantee works in a similar fashion to Social Security in that each year you don’t touch this money, the account will grow by a certain guaranteed percentage. This is oftentimes referred to as a “roll up” rate or a “step-up.” So, in that vein, it could sound like a good deal. However, it is still essential that you also take a close look at how the market-related risk of these investments works against the goal of having a guaranteed income.
You see, the insurance company that offers the annuity still has to somehow offset the risk of those market-related investments – and, the insurer knows that, in spite of all the market volatility, it will be responsible for guaranteeing you a certain amount of growth in your income account.
Therefore, the reality here is that as a result, a variable annuity like this one may actually end up promising lower income payout rates than you’d find on other annuities – annuities that will not incur nearly as much risk.
So what exactly does that all mean to you? Read on.
Before we get into the in-depth details, we have some legal disclosures to present…
This is an independent annuity product review. It is not a recommendation to purchase or to sell an annuity. Lincoln National 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 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 more details on how to compare fixed annuities so that you can decide which may be the best one for you, click here in order to obtain our free annuity report.
How Lincoln National Describes the Investor Advantage Annuity
Lincoln National describes the Investor Advantage variable annuity as a product that provides tax-deferred growth as well as options to build your portfolio via some of the industry’s most respected money managers and a diverse selection of both traditional and alternative investment options.
The literature for this product really hammers in on the tax-related benefits that you can get – especially in terms of other investments that do not offer tax-deferred growth. The annuity can also help you to take control of your retirement income when the time comes, via continued participation in the growth potential of the market.
The product also has some added bells and whistles, such as a death benefit, and the i4LIFE Advantage, which is a living benefit rider that can help you to get tax-efficient income when you are investing with non-qualified funds. As compared to even other variable annuities, the i4LIFE can continue to offer you tax advantages during the income phase through an exclusion ratio on non-qualified assets. This feature also allows a named beneficiary to take out any of the remaining cost basis in either a lump sum or through a series of payments over time.
How a Financial Advisor Might Pitch this Annuity
When you look at a variable annuity’s brochure, you’ll typically notice that all of the key benefits are stated boldly, with the possible drawbacks being presented in minuscule print. You’ll likely face a similar scenario when an advisor presents you with this type of annuity.
For example, the potential for high return, coupled with the ability to receive an ongoing income in your retirement years is usually discussed at great length – with the discussion of risk often being kept to a minimum.
This is not entirely surprising – especially if you are being presented the product by a commissioned sales person. With that in mind, it is important that you ask a lot of questions so that you know exactly what you may be getting into.
Yes, the long list of money managers can be enticing and impressive – but if you’re putting your money at risk, and you’re also being charged for the privilege – it could be that there is another product that’s better suited for you.
What About the Fees on the Investor Advantage Annuity from Lincoln National?
Variable annuities are known for being riddled with fees and charges and the Investor Advantage annuity is no different. Here you will find a plethora of expenses going out the proverbial door – both during the annuity’s accumulation period and when you’re receiving income.
For starters, there is an account fee of $50. And, there are also separate account annual expenses, such as 0.10% for the contract value death benefit (although this can be waived if your contract value is $50,000 or more on the contract anniversary).
If you opt for the Earnings Optimizer Death Benefit, your annual charge can be up to 1.4% (if you purchased the annuity at age 69 or before), or of 1.7% if you were age 70 to 75 when you made the purchase.
There is also the annual product charge of 0.10% to the daily asset value of the subaccounts during the time that you are receiving your annuity payout (this amount could be altered for those who opt for the i4LIFE rider).
There is also an added fee if you want to take advantage of the i4LIFE option. Here you will be charged an additional .40% above the standard contract expenses each year – which again, can ultimately have a negative impact on how much you end up receiving. (Note that if you are age 70 or older when you purchase the annuity, the i4LIFE charge bumps up to 0.70%).
In addition to the fees from the annuity itself, you’ll also face fees from the investments that are inside of the account. These can range anywhere from 0.49% to 2.88% – which again, can have a substantial effect on what you actually end up getting in terms of return.
Depending on the version of the Investor Advantage variable annuity that you choose, you could run into a surrender charge if you want or need to withdraw more than 10% of the contract’s value within the first several years. For instance, on the B-share version, there are 5 full years of surrender charges.
|Surrender Charge %||7||6||5||4||3|
The Annuity Gator’s End Take on the Lincoln National Investor Advantage Fee-Based Variable Annuity
Where it works the best:
- For investors who are seeking additional tax advantages
- For those who have a higher risk tolerance, and who want the opportunity for a higher return
- For those who are looking for an income stream in retirement
Where it works the worst:
- For those who do not plan to use the lifetime income feature
- For those who are seeking safety of principal
- For those who need access to their money within the first five years
The Lincoln National Investor Advantage annuity offers a great way to diversify your retirement funds, along with the opportunity to obtain a higher return as versus “safer” investments like CDs and even fixed annuities. But, if you are purchasing this annuity in order to help boost the return on your money, you will also have to have a fair risk tolerance in order to deal with the constant ups and downs of the market.
Given that, there are There are many factors that should ideally be taken into consideration if you are thinking about purchasing an annuity. These should include – but they are not limited to – how the annuity can produce a return, how safe your money will be, how the income will pay out, and whether or not there are any other optional features that may be added to the annuity (as well as any added costs).
Even with the potential benefits that can come along with the Investors Advantage annuity from Lincoln, there may be a better option out there for you. Yet, the only way to really know how this product – or any other annuity, for that matter – may perform in your specific situation is to have it tested. We can do that for you by running the figures through our annuity calculator and providing you with the spreadsheet of results.
Have Any More Questions on this Annuity? Did You See Any Mistakes?
We certainly realize that this annuity review was a bit on the long side. So for that, we thank you for staying with us. Our feeling is, though, that we would much rather provide you with “too much” detail than not nearly enough.
Therefore, if you found that this annuity review was helpful for you, then please feel free to forward it on to anyone else that you think may benefit from it. Alternatively, if this review led you to have even more questions, then please let us know that, too.
Are there any other annuities that you would like to see reviewed?
We’ll get on it! If you would like to see reviews on any other annuity, our team of annuity geeks will get on the ball and get them on our website. Just click here to let us know which products you are interested in seeing. And, be sure to check back soon.
The Annuity Gator