Lincoln Financial Group Annuities Review

The MYGuarantee Plus fixed annuity from Lincoln Financial Group has a maximum issue age of 85 and a minimum initial payment of $10,000, which is standard for the annuity market. Like any other fixed annuity, account holders are given a prespecified interest rate for a five-, seven- or ten-year initial guarantee period. You can choose which term length you prefer depending on your personal financial situation. Generally speaking, the longer the term you select, the better the rate you receive.

The death benefit associated with this annuity allows beneficiaries to receive the full accumulation value of the contract upon the annuitant’s death. Taxes will apply to this payment, and it is only available before the contract has been annuitized.

Fees

There are no annual fees associated with the Lincoln MYGuarantee Plus annuity. But Lincoln Financial does institute withdrawal fees, which are listed below:

If you absolutely need to withdraw money from your account, Lincoln Financial allows customers to take out up to 10% of their accumulation value annually. Should doing this pull your account value below $5,000, the company may view it as a full withdrawal, though.

The IRS may charge you a 10% income tax surcharge if you begin payments from your annuity before 59.5 years old. You’ll also need to pay standard income taxes.

Realistic Return Expectations

The interest rate of your contract will vary depending on how much you invest with Lincoln Financial. For those who invest $100,000 or more, the rate will be “premium,” according to the company’s paperwork. Below are the rates currently offered as of February 2021:

• 5-Year Term: 1.05%
• 7-Year Term: 1.15%
• 10-Year Term: 1.25%

The maximum issue age for the Lincoln New Directions® annuity is 85 years old, with an opening premium of at least $10,000. This is a fixed indexed annuity, meaning you’ll receive an account that earns interest at a fixed rate along with up to three others that earn interest according to the performance of separate market indexes. For the former, your fixed rate will be guaranteed for either a six- or eight-year period, depending on which version of the annuity you open. After this time period passes, annuitants will be handed a new rate once a year.

When it comes to the indexed accounts, they will each follow a different iteration of the S&P 500 index. More specifically, these are the “1 Year S&P 500 Performance Triggered,” the “1 Year S&P 500 Cap” and the "1 Year S&P 500 7.5% Daily Risk Control Participation." 

• The 1 Year S&P 500 Performance Triggered index earns interest based on the value difference between two set points in time that are exactly a year apart.
• The 1 Year S&P 500 Cap index utilizes a cap rate, meaning that over any one-year period, returns can only go as high as a certain amount.
• The 1 Year S&P 500 7.5% Daily Risk Control Participation index is heavily focused on volatility, using algorithms to rebalance the index in an effort to hit certain volatility targets.

Lincoln Financial allows annuitants who meet certain conditions to take out money from their contract value if they are placed in a nursing home or have a terminal illness. The standard death benefit for this annuity affords beneficiaries a payout equal to the greater of the contract value and the guaranteed minimum cash surrender value (GMCSV) at the time of the contract holder’s death, minus any withdrawals.

Fees

You will not be charged an annual fee if you open a New Directions annuity with Lincoln Financial. Although there are withdrawal fees, they only apply to withdrawals that surpass the allotted 10% that the company affords you annually. If you go past this, here’s what you can expect to pay:

For annuitants younger than 59.5 years old, withdrawals may be subject to a 10% income tax surcharge. You’ll still need to pay standard income taxes as well.

Realistic Return Expectations

Because this is a fixed indexed annuity, your returns will be based on both a fixed interest rate from Lincoln Financial, as well as the three S&P 500 indexes listed above. For these indexes, returns are impossible to gauge, as they are entirely reliant on market performance.

For the fixed account, here are the rates as of February 2021:

• 6-Year Term: 1.00%
• 8-Year Term: 1.00%

As a single-premium immediate contract, the Lincoln Insured Income annuity calls for at least a $25,000 opening payment, unless you choose a period certain contract, which shrinks the minimum to $10,000. A similar policy applies to the maximum issue age, which goes as follows:

• Lifetime-based payment options: 80 years old
• Lifetime-based payment options with a minimum guaranteed amount of payments: 85 years old
• Period certain: 95 years old

To clarify, a period certain contract ensures that you’ll receive payments for a specific amount of time. Should you pass away during this time frame, the payments will continue to your beneficiaries. If you choose another option, the death benefit is dictated by what you chose.

Upon issue of your contract, you can add on a free cost-of-living adjustment (COLA), though this will decrease your initial scheduled payment. COLAs come in the form of either a 1%, 2% or 3% annual compound increase beginning on the first anniversary of your payment start date.

Fees

Immediate annuities usually don’t come with annual fees, and the Lincoln Insured Income annuity is no exception. The same goes for withdrawal charges. However, if you withdraw before age 59.5, you'll be subject to a 10% income tax penalty from the IRS.

Realistic Return Expectations

The payments of an immediate annuity are difficult to gauge without knowing the specifics of your financial situation. However, what we do know is that you can defer them for up to 12 months, with payments coming in monthly, quarterly, semiannual or annual variations.

The Lincoln Investor Advantage® B-Share variable annuity offers annuitants access to a plethora of investment funds and products. This selection includes dividend-centric funds, stock funds, bond funds, real estate investment trust (REIT) funds and more. You have complete control over which investments to include in your portfolio.

Should your contract be jointly owned upon your death, the death benefit will be paid to your co-owner. If this person happens to be your spouse, they can also choose to continue the contract instead of receiving payment. Otherwise, your designated beneficiary will receive the death benefit.

The only exception to the aforementioned death benefit policy is if you choose to annex the earnings optimizer death benefit onto your contract. This rider comes with an extra fee, but affords you some protection by providing your beneficiaries a death benefit that’s equal to the greater of:

• Your current contract value
• The sum of all your purchase payments (minus withdrawals)
• Your current contract value on the date your death claim is approved, plus an additional amount equal to a predetermined enhancement rate multiplied by the lesser of your contract earnings or your earnings limit

Fees

If you open an Investor Advantage B-Share annuity, you’ll need to pay a $35 annual fee, unless your account’s value is $100,000 or higher. There’s also a 0.95% combined administrative and mortality and expense risk fee that’s due annually as well.

Annuitants that add riders to their contract will need to pay for them annually. For example, the account value death benefit comes with a 1.35% fee. If you select the earnings optimizer death benefit, your rate will vary from 0.40% to 1.70%, depending on your age at issue.

If you withdraw more than 10% of your account’s value during your first five years of ownership, you’ll be subject to a withdrawal fee. They go as follows:

You’ll be charged a 10% income surtax if you withdraw money from your account before you turn 59.5 years old. The IRS also requires you pay the standard income tax on top of this.

Realistic Return Expectations

Because variable annuity returns are based on the investment decisions you make, they are nearly impossible to predict. Lincoln Financial offers annuitants a large selection of funds to invest in that each differ in securities choices and management styles.

The Lincoln OptiBlend® annuity is a fixed indexed contract, which means it comes with a fixed interest account and an index-following account that offers a choice of four different index strategies. These include the 1 Year S&P 500 5% Daily Risk Control Spread, the 1 Year S&P 500 Performance Triggered, the 1 Year S&P 500 Cap and the 1 Year S&P 500 Participation. You are given full control of how much of your money is allocated to each account/strategy.

Should you pass away before you annuitize this contract, Lincoln Financial will pay out your remaining contract value to your beneficiaries. Otherwise, the death benefit payout will be affected by which annuitization payout option you choose (life only, life with a guaranteed period, life with installment refund or life with cash refund).

To open this annuity, you'll need to have at least $10,000 ready to invest in it. The maximum issue age is 80. You also have three iterations of this annuity to choose from, each with a different initial guarantee period for your fixed rate. Your choices are a 5-year, 7-year or 10-year term.

Fees

There are no annual or rider fees associated with this annuity. There are, however, withdrawal charges you'll need to contend with if you take out more than 10% of your contract's value before it's annuitized.

Remember that if you withdraw money from your annuity before you turn 59.5, the IRS will hit you with a 10% income surtax. This is in addition to your standard income tax rate.

Realistic Return Expectations

When it comes to the index-related returns of this annuity, there is no way to project out what you might earn. That's because these returns are entirely reliant upon the performance of the market. On the other hand, here are the annuity's fixed rates as of February 2021:

• Lincoln OptiBlend 5: 1.00%
• Lincoln OptiBlend 7: 1.00%
• Lincoln OptiBlend 10
  • $10,000 minimum: 1.00%
  • $100,000 minimum: 1.25%