Independent Review of the Pacific Life Secure Income Deferred Income Annuity as a QLAC
What Will Be Covered in this Review?
In this review, we will be discussing the following information regarding the Pacific Life Secure Income QLAC:
- Product type
- Current rates
- Realistic long term investment 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 have been getting closer to retirement, but you aren’t sure that you’ll have enough income to get you through, then it could be time to consider some unique income generation strategies.
Over the past several years – and particularly as life expectancy has increased overall – one of the biggest worries that retirees and pre-retirees have is not having income when they need it during their golden years.
With today’s uncertain market and economic environment, there are many people who just simply do not know what to do with their money in order to help ensure that they will have an ongoing income in retirement. This is especially the case as many people could live for 20, 30 or more years in retirement.
One income generating strategy that some have started turning to is the QLAC or Qualified Longevity Annuity Contract. Doing so can provide you with a regular, guaranteed income, in addition to some nice tax advantages.
A QLAC is a deferred annuity that is funded with an investment from a qualified retirement plan or an IRA (Individual Retirement Account). The annuity provides guaranteed monthly income for the remainder of your life – regardless of how long that may be – and, provided that the annuity you choose is in compliance with IRS requirements, it will also be exempt from the RMS (required minimum distribution) rules until the income payouts start (following the set income start date).
QLACs were actually created by the Internal Revenue Service (IRS) as a way to allow retirees enjoyment of lifetime income, while at the same time following the Required Minimum Distribution rules of qualified retirement plans and IRA accounts, which typically require that you begin taking income from the account(s) at age 70 1/2.
But, as nice as these benefits might sound, prior to going out and setting up a QLAC, there are some things that you need to know – starting with whether or not the annuity you go with will be the right fit for you.
This is where the Annuity Gator comes in.
Annuity and Retirement Income Planning Information You Can Trust
If this is your first visit to our website, then please allow us to personally welcome you here to Annuity Gator. We are a team of experienced annuity professionals who focus on offering comprehensive and unbiased annuity reviews online.
We’ve been at this for quite some time now – and far longer than our competitors. Because of this, we have come to be known as a highly trusted source of annuity information. Over the past several years or so, though, many “copycat” websites have started to spring up, mimicking what we do. While that can be somewhat confusing for consumers, we take it as “imitation being the highest form of flattery.”
As you’ve spent time on the Internet researching annuity information, you may very well have come across some highly conflicting details about these products. This is particularly so if you have been looking for details on QLACs.
This, however, really is not all that surprising. There are a lot of annuities out there today, and nearly everyone has an opinion about them. The reality is, though, none of that matters – as long as you know whether or not a particular annuity is or isn’t right for YOU.
If you want to know more about the Pacific Life Secure Income QLAC, then you are certainly in the right place. In fact, dare we say that our website is the only place that you’ll be able to secure all of the details you need, which includes the good, the bad, and yes even the ugly. This, however, is the only way to make a good, solid decision about whether or not to purchase it.
In order to be perfectly clear here, we want to state for the record that we at Annuity Gator feel that annuities can be good products for some people – as long as they fit in with your overall financial needs and goals.
So, if you’re ready to start the review, let’s get started!
The Pacific Life Secure Income QLAC at a Glance
|Product Name||Secure Income QLAC|
|Type of Product||Qualified Longevity Annuity Contract (QLAC)|
|Phone Number||(800) 772-4448|
Opening Thoughts on the Pacific Life Secure Income QLAC
Pacific Life has more than 145 years of experience in helping its clients to grow and protect wealth. The company works with individuals, families, and businesses – and it provides a long list of financial and insurance products.
As of year-end 2016, Pacific Life held roughly $143 billion in total assets, and for the year 2016, it paid out $2.3 billion in insurance and annuity benefits to its clients, policyholders, and beneficiaries.
The company has received very high ratings from the insurer rating agencies, including a(n):
- 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
Pacific Life, at the end of 2016, stood as the #1 seller of indexed universal life and universal life sales, and it was the 8th largest company in terms of total life insurance sales. The company also ranks as #13 in terms of variable annuity sales, and the #16 largest fixed annuity seller.
As more and more of the Baby Boomer generation starts to retire, ensuring an ongoing income has become a key concern for both consumers and financial advisors alike. Yet, with longer life spans today, ensuring a regular income stream can be difficult – particularly in light of a volatile market.
A QLAC could provide you with a solution. However, before you commit to this (or any type of annuity contract), you should ideally gather as much information as you possibly can, as this strategy could require a large chunk of your savings. And, if you find out after you’ve made a commitment that this just isn’t for you, it could be much too late to get your money back.
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 Secure Income QLAC
Pacific Life describes the Secure Income Deferred Income Annuity as a QLAC as a product that can generate guaranteed income for life that begins on a future date that is chosen by you, the contract owner.
Back in July of 2014, the Internal Revenue Service (IRS) released its final regulations on QLACs. In doing so, it made DIAs (or deferred income annuities) more accessible to retirement plans such as IRAs. This provided investors with more options for managing retirement income so that assets are not outlived.
Prior to the IRS’s QLAC regulations, IRA assets that were used to purchase a deferred income annuity like the Pacific Life Secure Income annuity were included in the calculations for required minimum distribution (or RMD) amounts. This, in turn, meant that a retiree had to begin taking income from the deferred income annuity at age 70 1/2, regardless of whether or not he or she needed the income at that time. However, when you have a deferred income annuity, the longer you defer the income payments, the greater those payments will be (in terms of dollar amount) when you do begin to take them.
Also, the longer you leave money inside of an annuity contract to grow, the longer you are also able to defer the payment of taxes on the gain – and in turn, can continue your money growing tax-deferred, and compounding exponentially over time.
Now that the QLAC regulations are in place, IRS regulations state that the assets that are in a fixed, deferred income annuity that is specifically designated as a QLAC will not be included in the calculation of RMSs at one’s age 70 1/2. Rather, payments can now be deferred up to age 85.
The income payments from a fixed, deferred income annuity like the Pacific Life Secure Income QLAC, are steady and guaranteed for life. You can allocate a portion of your qualified assets from an IRA – which also includes a SEP and/or a SIMPLE IRA), as well as funds from a 401(k), a 403(b), and a government 457(b) plan to purchase a Pacific Life Secure Income annuity as a QLAC. (Funds that are inside of a Roth IRA or a defined benefit pension plan, however, are not allowed to be contributed to a QLAC).
There are several different income payout options that are allowed with the Pacific Life Secure Income QLAC. These include the following:
- Single, Joint Life, and Joint and Survivor Life Only
- Single, Joint Life, and Joint and Survivor Life with Cash Refund
- Single, Joint Life, and Joint and Survivor Life with 100% Return of Purchase Payments
*Note that with this annuity, only spouses are allowed to elect the joint life options, and they must be named as joint annuitants.
The Secure Income QLAC from Pacific Life also offers some other features of note, such as a death benefit. Here, if death occurs before the annuity payments begin, then the surviving spouse or other named beneficiary will receive an amount that is equal to 100% of your purchase payments. (This is referred to as a return of purchase payments death benefit).
The Return of Premium death benefit can be rolled to a surviving spouse beneficiary’s own IRA, or rather transferred by a non-spouse beneficiary to an inherited IRA. This, however, can only occur if death occurs before the required beginning date (i.e., before April 1st of the year following attainment of age 70 1/2).
If you’d like to see more of the in-depth details about the Pacific Life Secure Income QLAC, you can check out the full product brochure HERE.
How an Insurance or Financial Advisor Might “Pitch” this Retirement Income Option
One of the top fears on the minds of those who are retired and approaching retirement is running out of money before “running out of time.” With that in mind, deferred income annuities that qualify as QLACs can provide both income and tax benefits, and can, therefore, be mighty appealing.
Because of that, it is likely that an insurance or financial advisor would key in on the lifetime income benefit you can get with this contract – as well as the added tax-deferred compounding that can occur with your savings, which can remain in the annuity long past your age 70 1/2.
Yet, even with all of the nice income and tax-related benefits that the Pacific Life Secure Income QLAC may offer, there are some additional things that you should know about. That is because, just like most things in life, if you’re getting some cool features, it is likely that you’ll need to make some type of tradeoffs in order to get them.
In this case, you need to be aware that a QLAC does not allow you to withdraw money from the contract – or other similar benefits, such as payment acceleration.
Also, with regard to the return of purchase payments death benefit, this feature is only available with the Life with Return of Purchase Payments, or the Life with Cash Refund annuity income options, and not with the Single Life Only, Joint Life Only, or Joint and Survivor Life Only annuity income options. (This, in turn, means that you will likely end up with a smaller dollar amount of regular income payments if you do choose to include the death benefit option on your QLAC).
The Annuity Gator’s End Take on the Pacific Life Secure Income QLAC
Where this product works the best:
The Secure Income QLAC from Pacific Life can provide some nice benefit to those who:
- Anticipate a long lifespan
- Need lifetime income (for themselves and/or themselves and a spouse)
- Want tax-deferred compounding for a longer period of time (i.e., beyond age 70 1/2)
- Do not need income until later in life
Where this product works the worst:
On the other hand, this product may not fare so well for those who:
- Do not anticipate a long life (i.e., who may already have serious health issues)
- Want or need to start taking income at or before age 70 1/2
- Do not intend to use the lifetime income feature
In order to truly know how to compare the best annuity options for you, click here so that you can download our free annuity report.
If you’ve been considering the purchase of a deferred income annuity as a QLAC – or any financial vehicle, for that matter – it is always important that you consider several factors prior to moving ahead. That way, you will have a much better idea as to whether or not the product is right for you and your specific needs.
If the Pacific Life Secure Income QLAC appears to be the best option for you, then you can be assured that it will provide you with tax advantages, as well as a guaranteed income that you (and possibly your spouse) cannot outlive.
But even so, it is also possible that this financial vehicle may fall somewhat short – and that an alternative could be a better option for you. The only way to really know how this annuity could work for you is to have it tested. We can perform this testing for you, and provide you with a spreadsheet of the results. If this is something that you are interested in (free and with no obligation), then please just simply contact us here via our secure online form.
Any Additional Questions Regarding the Pacific Life Secure Income QLAC? Did You Notice Any Mistakes?
We realize that this review of the Pacific Life Secure Income QLAC was a tad bit longer. Given that, we would like to thank you for sticking with us to the end. In offering our reviews, however, we would much rather provide our website visitors with “too much” detail, rather than not enough. This is particularly the case with a confusing product/concept like QLACs. So, if you felt that this annuity review was helpful, then please feel free to forward it and share it with others who you think may also find it beneficial.
We also realize that the available information with regard to annuity products like QLACs can – and often does – change over time. With that in mind, if you happened to run across any details in this review that needs to be corrected or updated, please let us know and we will be happy to get them corrected immediately.
Are there any other annuity product you would like to see reviewed?
If so, great! We are always happy to take suggestions of the annuity product that our site visitors would like to see reviewed. That being the case, just let us know the name (or names) of the products, and our team of annuity “geeks” will get right on it.
The Annuity Gator