Pacific Life Annuities Review

The Pacific Choice® variable annuity from Pacific Life has a $10,000 minimum initial premium for non-qualified annuitants and a $2,000 minimum for qualified annuitants. The maximum issue age is 85 years old.

The core of any variable annuity is its investing capabilities. For the Pacific Choice annuity, you can either pick from pre-built asset allocations or build your own. Automatic rebalancing is also available on a quarterly, semiannual and annual basis, and you can cancel it at any time.

If you’re looking to expand your benefits, Pacific Life will allow you to buy riders at an additional cost. It has a few living benefits that can help you protect your income if the market experiences a downturn. Although the annuity comes with a standard death benefit, you can purchase two upgraded versions of it that will help you leave more for your beneficiaries when you pass away.

Fees

Like many comparable products, the Pacific Choice variable annuity comes with a $50 annual fee, though it’s waivable if your net contract value is more than $50,000. Additionally, you’ll need to pay a 0.25% annual administrative fee and a 0.95% annual mortality and expense risk fee.

Any money you earn through this annuity can be withdrawn, but you can only take out up to 10% of your purchase payments annually on a fee-free basis. Should you surpass that 10%, you’ll be subject to the withdrawal fees below. These charges are waived if the account holder is diagnosed with a terminal illness or is placed permanently in a nursing home.

As is mentioned above, there are a few death benefit riders available through this annuity. If you purchase them, you may need to pay additional fees.

The IRS may charge you a 10% income tax surcharge if you begin taking payments from your annuity before turning 59.5 years old. This is on top of the standard income tax rate you’ll have to pay.

Realistic Return Expectations

Variable annuities are highlighted by their ability to allow account holders to invest in various investment products. With the Pacific Choice annuity, there are a number of investment funds that track specific sectors of the market, including ones from Fidelity, Blackrock, JPMorgan and American Century. Because you can customize which investments you want in your portfolio, returns will vary on a customer to customer basis.

The Pacific Index Foundation® deferred fixed indexed annuity comes in 5-, 7- and 10-year variations. This means that you can choose how long you want your initial interest rate period to last before you receive a new rate. This must be decided on at contract issue.

If you want to open an account, you must be no more than 85 years old and have at least $25,000 ready to invest. You can make up to $100,000 in additional cash payments during the 60-day window after your contract becomes active.

Because this is a fixed indexed contract, you can earn interest based on both the fixed interest rate from Pacific Life and index-linked rates. Should you decide to utilize the indexes, you can pick from the S&P 500® Index and the MSCI EAFE® Index, which tracks large- and mid-cap stocks in markets throughout Europe, Asia and Australia.

Fees

This annuity product is devoid of most fees, including annual, administrative and mortality and expense charges. However, should you decide to add on Pacific Life's upgraded death benefit, you'll incur a 0.40% annual fee. This will increase your death benefit by the amount of interest your contract has earned, plus an extra 2%. This will apply for a maximum of 20 years or until you turn 85.

Your withdrawals may be subject to fees if you make a withdrawal prior to the end of your interest rate period. These will vary depending on the term you select at the outset of your contract.

You can make fee-free withdrawals from your annuity within 30 days of opening it. During your first year of ownership, though, you can only withdraw 10% of your total purchase payments without incurring a fee. After that, you can withdraw as much as 10% of your previous anniversary’s contract value fee-free.

Don’t forget that if you begin taking withdrawals from your account before you turn 59.5, you’ll not only need to pay income taxes, but also a 10% income surtax.

Realistic Return Expectations

The interest rate and returns you receive as part of this annuity will vary depending upon when you open it. When you sign your contract, your rate will be specified to you, and it is guaranteed for the entirety of your term length. While indexed returns will vary, below are the fixed rates being offered by Pacific Life as of February 2021:

• 5-Year Contract: 1.00%
• 7-Year Contract
  • Less than $100,000: 1.00%
  • Above $100,000: 1.20%
• 10-Year Contract
  • Less than $100,000: 1.15%
  • Above $100,000: 1.35%

If you have at least $25,000 to invest, are no more than 90 years old and need to begin receiving payments as soon as possible, the Pacific Income Provider® immediate fixed annuity might be for you. You can choose one of two additional features for your account, though this must be done at contract issue:

• Future Adjustment Option: This provides you with a chance to make either a one-time increase or decrease to your income payments. Increases can be made by up to three times the initial payment and decreases can be made by up to half of the initial payment.
• Inflation Protection Option: This offers you annual payment increases in 2%, 3% and 4% intervals. You must select this when you buy your annuity.

Once you’ve been an account holder for a year, there are two other benefits you can take advantage of:

• Income Payment Acceleration: If you are over 59.5 years old, receiving monthly payments and are in need of additional income, you can accelerate your payments. Should you do this, you’ll receive three- to six-times your typical monthly payment that month. Because of this, your normal monthly payments will pick back up in the fourth or seventh month. You can use this feature twice.
• Withdrawal of Guaranteed Income Payments: Non-qualified contract holders can request a lump sum withdrawal from their account. This can be as much as 100% of the present value of your remaining guaranteed income payments.

Fees

Pacific Life does not have any annual contract, administrative or mortality and expense fees for this annuity contract. When it comes to withdrawals, you must be at least 59.5 years old to gain eligibility.

Realistic Return Expectations

Like all immediate annuities, the returns of a Pacific Income Provider are subject to the specifics of your personal situation. You can choose to receive payments on a monthly, quarterly, semiannual or annual basis.

The Pacific Secure Income® annuity is a fixed, deferred contract that’s fee-free and requires a buy-in payment of no less than $15,000. This product can be purchased by anyone that’s at least 22 years old, though its maximum issue age varies by account type:

• Traditional IRA: 70 years old
• Non-qualified and Roth IRA: 85 years old
• Qualified longevity annuity contract (QLAC): 82 years old

There are more than 10 different income options that you can select from with this annuity. You can also choose whether your payments are monthly, quarterly, semiannual or annual. Because of this, the Secure Income annuity can be easily customized to fit your needs.

If you’re in need of money and have begun receiving annuity distributions, Pacific LIfe will let you accelerate your payments in the form of a lump sum that’s worth anywhere from three to six months of typical payments. Furthermore, non-qualified contract holders can take out the entirety of their remaining guaranteed income payments, though an interest rate adjustment charge will apply.

Fees

Annual contract, administrative and mortality and expense fees are completely nonexistent with the Pacific Secure Income annuity. There are also no withdrawal charges, as you can make a 100% lump sum withdrawal of the current value of your remaining guaranteed income payments provided you are at least 59.5 years old.

If you’re forced to withdraw money from your contract before turning 59.5 years old, you may be charged a 10% income surtax by the IRS. This doesn’t even include the standard income tax rate, so be mindful of this when making an early withdrawal.

Realistic Return Expectations

Like the Pacific Income Provider immediate annuity above, these contracts’ returns are difficult to predict because they are so dependent on the specifics of your personal situation. These include how much money you decide to invest, the income options you select, your age and more.