What’s Covered In This Review
In today’s review, I’ll be covering the following information on the OptiChoice Fixed Index Annuity from Lincoln National:
- 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 considering the purchase of an annuity because you want to make sure that your principal is safe, and you want to ensure that you have a guaranteed lifetime income in retirement, then the Lincoln National OptiChoice fixed index annuity could be a good option for you. This is especially true if you are also hoping to earn a higher return than that of a regular fixed annuity.
However, before you go out and make a long term commitment on this – or any – annuity, it is important that you first obtain a good, solid understanding of how the product works, and how it may or may not work to your benefit.
Throughout the past decade or so, fixed index annuities have catapulted in popularity. This is because, even though investors are able to earn a return that is based on the performance of an underlying market index, the principal is protected if the index has a negative return in any given year.
Because of the growth in interest of fixed index annuity products, the number of financial and insurance advisors who are offering these products has grown significantly. This, however, is not necessarily a positive thing. This is because, while most financial professionals will work to do what is best for their clients, they may not always fully understand all of the bells and whistles that are associated with fixed index annuities – and because of that, they may not be guiding you in the direction you thought you might be going.
This, in turn, makes it all the more important that you know how these products work – and that you also know that if you do end up going with such a product, it should be considered a long term financial endeavor. (And, a commitment that could be quite expensive to get out of, due to surrender charges).
Annuity and Retirement Income Planning Information that You Can Trust
If you have not been to our AnnuityGator.com website before, please allow us to officially welcome you here. We comprise a team of financial pros who are focused on offering our site visitors non-biased, yet comprehensive, annuity reviews. We’ve been at this for a number of years now, much longer than our competitors have – and because of that, we are considered to be a highly trusted source of annuity information online.
So, if you’ve been researching the Internet in the hopes of finding more in-depth details about the Lincoln National OptiChoice Fixed Index Annuity, then you are certainly in the right place. You may, however, have found in your quest for information that there are other websites that will tout some fairly bold claims with the sole purpose of obtaining your contact information. These may come in the form of:
- Low fees
- Higher income payments
- 7-8 percent return
- Guaranteed income for life
While these claims may initially sound enticing, it is critical to keep in mind that when something sounds too good to be true, it usually is. With that in mind, before you move forward with buying an annuity, be sure that you have checked out all of the product’s “small print” and that you know exactly how the annuity may – or may not – work to your advantage.
There are also a number of websites out there online that just simply repeat what they’ve read from authority sites like ours. And, while you may be able to attain at least some of the information you need from such “copycat” websites, we dare say that you’ll get the most comprehensive information right here.
In order to be perfectly clear before we move forward, we do feel that an annuity can be a very attractive financial vehicle for many investors – provided that it fits in well with your overall current and future financial goals.
The annuity review you are currently reading is offered here to help you ensure that you are going in the right direction, as well as to provide you with a guide in terms of what to look for regarding both advantages and drawbacks.
So, if you’re ready to begin, let’s dive in!
Lincoln Financial Lifetime Income Edge Fixed Index Annuity at a Glance
|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
The Lincoln Financial Group was initially founded back in 1905. Throughout the past century, Lincoln has grown into a well-respected financial and insurance provider. Lincoln Financial Group consists of several entities, including:
- 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
The company has been ranked highly among its peers, and it is also considered to be strong and stable from a financial standpoint. Because of that, as well as the company’s timeliness in paying out its policy holders’ claims, it has been provided with high ratings from the insurer rating agencies, including a(n):
- AA- from S&P
- A1 from Moody’s
- A+ from Fitch
- A+ from A.M. Best Company
Because of 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 legal disclosures…
This is an independent product review, not a recommendation to buy or 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 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 National Describes the OptiChoice Fixed Index Annuity
Lincoln National describes the OptiChoice fixed index annuity as a product that offers “a flexible premium, along with several features to help meet accumulation and income needs.”
Some of the key features that you’ll find in this particular annuity include:
- A fixed account that offers a set rate of interest for one year.
- Three indexed accounts that have the potential to earn interest that is tied to the performance of an underlying market index.
- An optional rider that offers a guaranteed withdrawal amount for life.
The interest accounts include a performance triggered indexed account, a 1-year monthly cap indexed account, and a 1-year monthly average indexed account.
The annuity also has some additional features on it such as a nursing home and terminal illness benefit. Here, the product allows access to the contract value without incurring a surrender charge or a market value adjustment (MVA), provided that certain conditions have been met.
There is also a death benefit, whereby is the annuity contract owner or annuitant passes away, a named beneficiary (or beneficiaries) may receive the greater of the contract value or the guaranteed minimum cash surrender value.
How a Financial Advisor Might “Pitch” this Annuity
In most cases, financial or insurance advisors will “pitch” just about any fixed index annuity as being the best of all worlds. That is because you have the opportunity to attain a higher return than that of a fixed annuity, while at the same time keeping your principal safe, regardless of what occurs in the market.
Also, as with other annuity products, the OptiChoice annuity from Lincoln National provides you with several different income options – which includes a guaranteed lifetime income that cannot be outlived, regardless of how long you need it.
In the case of the Lincoln OptiChoice fixed indexed annuity, you may also have the option of electing the Lincoln Lifetime Income Edge, which is a guaranteed lifetime withdrawal benefit.
But, while it seems like there is a long list of great features here, don’t go running to the nearest annuity sales person just quite yet – at least not until you’ve read over all of the fine print. That’s because the intricate details could end up making this product something very different than it was made out to be.
As an example, just like with most other fixed index annuities, the OptiChoice from Lincoln National will have its return “capped”. This means that, even if the underlying market index has a stellar return in a given year, your return will be limited to whatever the cap amount is that’s stipulated in the contract.
In addition, while many financial advisors may tout the fixed interest rate guarantee on this annuity, the truth is that both the initial and the ongoing subsequent guarantee periods are all only for one year.
Also, even though the Lifetime Income Edge guaranteed lifetime withdrawal benefit can be beneficial in terms of income, this option comes at an additional premium charge of 0.95% – which could essentially end up impacting your overall return on the annuity.
What About the Fees on the Lincoln National OptiChoice Fixed Index Annuity?
While most annuities will have at least some type of charges and fees, it is imperative that you know how and when you will be charged, because these can impact the value of the annuity – both now and in the future.
In the case of the Lincoln National OptiChoice annuity, you will find that optional features like the Lifetime Income Edge will come with added premium charges. There is also a varied surrender charge, depending on which version of this annuity you choose.
For example, there is a five-year, seven-year, or nine-year surrender charge schedule. The surrender charge is incurred if you withdraw more than 10 percent of the contract value during the annuity’s surrender period. If for instance, you chose the 7-year option, the surrender charges are outlined as follows:
7-Year Surrender Period
|Surrender Charge %||9||8||7||6||5||4||3||0|
The Annuity Gator’s End Take on the Lincoln National OptiChoice Fixed Index Annuity
Where it works best:
The Lincoln National OptiChoice 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
Where it works worst:
This particular annuity may not be your best alternative if you:
- Want access to more than 10% of your contract value within the first several years of owning the annuity (in this case, either five years, seven years, or nine years)
- Do not plan to use the guaranteed lifetime income feature
In order to really know how this annuity may (or may not) work for you, feel free to check out our free annuity report here.
When considering the purchase of an annuity, there are many factors that should ideally be considered. One reason for this is because you want to make sure that the annuity is the right product for you. If it isn’t, it can be quite costly to get yourself out of any annuity, given the likelihood of being assessed a surrender charge.
If you’re still leaning towards the Lincoln National OptiChoice fixed index annuity, you can be assured that your principal is safe from the volatility of the stock market. You will also be able to count on a guaranteed income in the future when you need it.
But, even though this annuity has some enticing benefits, it could actually still fall somewhat short – especially given some of the other annuities that are available in the market place today. With that in mind, you may want to consider some better alternatives.
Have Any Questions? See Any Mistakes in this Review?
While we certainly do realize that this annuity review was a tad lengthy, we also feel that it is better to provide “too much” information in a review as versus not enough. This can help you to better determine whether or not to pursue this particular product or to consider one that could be a better fit.
If, after reading over this annuity review, you still have any additional questions, please feel free to reach out to us directly via our secure online contact form here. Also, because annuity product information can change with great regularity, if you happened to notice any mistakes in this review, please let us know that, too so that we can make corrections as soon as possible.
Are there any other annuities you would like to see reviewed?
If so, no problem! Just contact us via our online form right here and let us know which annuity (or annuities) are of interest to you, and our team of annuity geeks will get moving on them.
The Annuity Gator