Independent Review of the Pacific Life Pacific Index Choice 6 Fixed Indexed Annuity
What’s Covered In This Review
In 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
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 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 Trust
If 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
Does this look at all familiar?
Unfortunately, as nice as these claims may sound, it is absolutely essential that you first verify their validity before you move forward with a long-term financial commitment, just like you would likely do before purchasing any other type of “high ticket” item.
The good news is that if you are seeking more details regarding the Pacific Index Choice 6 fixed indexed annuity from Pacific Life, you are certainly in the right place. In fact, we dare state that our website is the only place on the Internet where you will be able to obtain all of the key details that you need for making a well-informed decision as to whether or not this is the annuity for you.
In doing so, you will notice that we don’t just provide all of the nice, rosy details about how great this annuity can be. We will also give you information pertaining to items that may be considered drawbacks. This is because we feel that this is the only real way to make a good, solid purchasing decision (or alternatively, to determine that this particular annuity may not be the right one for you).
Just to be clear here before we move on – we do want to state that we fully believe that annuities can be wonderful products for some people, provided that they fit in with both your short- and your long-term financial goals.
So, if you are ready to begin this annuity review, let’s go ahead and dive in!
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 Annuity
Pacific 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
As of the end of 2016, Pacific Life stood as the number one seller of both regular and indexed universal life insurance. It was also ranked as the 8th largest company in terms of total life insurance sales, as well as the 13th largest for variable annuities, and the 16th largest for fixed annuity sales.
Over the past few years, fixed indexed annuities, in particular, have become much more popular with investors. One of the key reasons for this is because these products can provide the opportunity for growth, while also keeping the account value safe and sound, no matter what occurs in the stock market. And, like other types of annuities, a fixed indexed annuity will also be able to pay out a lifetime income in retirement so that you don’t have to worry about your income stream running out.
However, while this may sound like a win-win-win scenario, the truth is that whenever something sounds too good to be true, it very well may be. In any case, it can be beneficial to at least check the information further, in order to ensure that you know all of the advantages, as well as any potential drawbacks.
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 Annuity
Pacific 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
Like other deferred annuities, the funds that are in the Pacific Index Choice 6 account are allowed to grow tax-deferred, meaning that there is no tax due on the gain of these funds until the time of withdrawal.
The Pacific Index Choice 6 offers an initial interest rate guarantee period that lasts for six years. This means that the interest rates earned on the fixed account option and the declared index interest option will be guaranteed for this time period.
The initial guaranteed period also determines the caps that are applied to the index-linked options, as well as when you will have access to your entire contract value without incurring a withdrawal charge or a market value adjustment (MVA).
This annuity also comes with some other features, such as a standard death benefit (at no added cost), as well as an optional death benefit that guarantees the benefit will grow each year by the amount of interest that is credited to the contract – plus an additional 2%, for either 20 years or until your age 85, whichever comes first.
Another feature that you can add to the Pacific Index Choice 6 annuity is the optional guaranteed minimum withdrawal benefit. With this option, a 7% annual credit can continue for up to ten years, provided that certain parameters are met.
How an Insurance or Financial Advisor May Pitch this Annuity
If 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 Life
As 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
With this in mind, it is always important to consider that annuities are long-term financial commitments. So, be sure that if you are leaning towards purchasing one, that you do so with money that you won’t likely need in the near future.
The Annuity Gator’s End Take on the Pacific Life Pacific Index Choice 6 Annuity
Where 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)
Where it works the worst:
It is also important to consider the potential drawbacks of this annuity. This particular product will not likely be a good option if you:
- 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
There can be a long list of factors to consider if you are looking for the ideal annuity for your short- and long-term financial goals. These criteria should include how the annuity earns a return, as well as what you plan to do with it when you are ready to convert the contract to an income stream. Certainly, any additional fees and charges should also be considered, as these can have an effect on how much you are able to earn, and in turn, the amount of income you may receive.
If you are still leaning towards the purchase of the Pacific Life Pacific Index Choice 6 fixed indexed annuity, you can be assured that your principal will be safe, while still having the opportunity to grow based on the performance of an underlying market index. You will also be able to count on a regular income for life – regardless of how long you may need it.
But, even with all of these great benefits, the Pacific Choice 6 annuity from Pacific Life could still fall short – and there just may be some better alternatives out there for you. The only want to truly be able to tell how this product may perform based on your specific goals is to have it tested.
We can assist you with this by running the appropriate figures through our annuity calculator, and then come up with a personalized spreadsheet for you. If you are interested in obtaining this information, then just simply contact us through our secure online form here.
Have Any Additional Questions? Did You Happen to See Any Mistakes in this Review?
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