Pacific Life Index Foundation 5 Annuity guarantees the safety of the principal just as a traditional fixed annuity does and combines it with growth potential linked to market-based indexes.
It is not a security and does not participate directly in the stock market or any index, so your money is not invested in the market.
However, you have the potential to earn interest based on the positive performance of an index.
The amount of interest credited depends on the option selected.
What This Means for You
Never lose the principal due to market performance.
Even during market downturns, your principal will not be affected, and you will not lose money.
Lock in earned interest.
Any interest gains as a result of positive index performance are locked into the contract value and protected from any future stock market downturns.
Find the highest annuity rates for your retirement.
While some fixed indexed annuities guarantee rates or caps only for a short term, with Pacific Life Index Foundation 5 Annuity, your guaranteed rates and caps remain the same until the end of your chosen initial guaranteed period.
WHY CHOOSE A FIXED INDEXED ANNUITY
What is a fixed index annuity? A fixed indexed annuity is a long-term contract between you and an insurance company that helps:
- Protect the principal.
- Provide the opportunity for growth based on the positive movement of an index.
- Generate guaranteed lifetime retirement income.
As you develop your retirement strategy, you may be concerned with how you will grow your assets while keeping principal protected against loss during market downturns.
You also may be looking to generate guaranteed income to last your entire life or to secure your financial legacy for loved ones.
Pacific Life Index Foundation 5 Annuity is a deferred, fixed indexed annuity and may be right for you if you are looking for:
- Safety of principal.
- Growth potential without being invested in the market.
- Tax deferral.
- Access to your money.
- Lifetime income.
- A death benefit for beneficiaries.
The Power of Tax Deferral
Because an annuity is tax-deferred, interest will compound without current income tax. Your money grows faster because you don’t pay taxes on the interest earned until you withdraw it or it is distributed to you.
Related Reading: How much to save for retirement?
ACCESS TO YOUR MONEY
If you make a full withdrawal of your contract value, or upon death or annuitization, you will receive the greater of your contract value or the Guaranteed Minimum Surrender Value.
The Guaranteed Minimum Surrender Value is equal to 91% of your total purchase payments (minus any withdrawals) accumulated at a fixed interest rate.
The interest rate is declared at the contract issue date and guaranteed to be no less than the minimum stated in your contract.
Because you can never predict the future, you still have the ability to access your money when you need it. Withdrawals may begin as soon as 30 days after contract issue and are available through:
- Systematic withdrawals: Withdraw at least $500 either monthly, quarterly, semiannually, or annually.
- Partial withdrawals: Withdraw $500 or more at any time.
Because Pacific Life annuities are intended for retirement, if you are younger than age 59½, an additional 10% federal tax may apply on withdrawals. Withdrawals of taxable amounts are subject to ordinary income tax. For nonqualified contracts, a 3.8% federal tax may apply on net investment income. Withdrawal charges and a market value adjustment (MVA) also may apply.
Market Value Adjustments (MVAs)
If either of the following occurs during the withdrawal charge period (see the table on the next page), an MVA may apply in addition to any applicable withdrawal charge fees:
- Withdrawals in excess of 10% of the prior anniversary’s contract value (10% of purchase payments in the first year).
- Annuitization of the contract value.
The MVA is based on a formula designed to respond to interest-rate movements.
As a general rule, if interest rates have stayed the same or risen since the contract was issued, the MVA can reduce the amount withdrawn.
If interest rates have fallen, the MVA can increase the amount withdrawn up to a specified maximum.
In no event will an MVA cause total amounts withdrawn to be less than the Guaranteed Minimum Surrender Value.
There is no MVA assessed on withdrawals made after the withdrawal charge period has expired.
The MVA may not apply in all states.
HELP PROVIDE FOR YOUR SPOUSE AND HEIRS
For Your Spouse
You may wish to base your annuity contract on the lives of both you and your spouse.
This way, no matter who dies first, income payments will continue for the life of the surviving spouse.
With the Joint and Survivor Life annuitization option, periodic payments are made during the lifetime of the primary annuitant.
After the primary annuitant dies, periodic payments will be made for the remainder of the surviving secondary annuitant’s life.
For Your Heirs
The standard death benefit can help protect an amount for your beneficiaries and may avoid the cost and delays of probate.
If death occurs before you begin taking income payments, the standard death benefit, which is equal to the greater of the contract value or the Guaranteed Minimum Surrender Value, will pass directly to your designated beneficiaries.
Additionally, if you die during an index term, your heirs do not lose out on potential interest crediting.
They may receive an adjusted amount of interest based on the change in index price from the beginning of the term to the day Pacific Life receives, in satisfactory form, proof of death and instructions regarding payment.
The death benefit is not life insurance and is considered ordinary taxable income to your beneficiaries when paid.
Pacific Life Insurance is also an inexpensive way to leave a death benefit to beneficiaries, tax-free.
INTEREST ENHANCED DEATH BENEFIT (optional)
Guaranteed Growth for Your Loved Ones, Regardless of Market Performance
Is Interest Enhanced Death Benefit Right for You?
You may purchase only one optional benefit with your fixed indexed annuity contract, so consider an Enhanced Death Benefit if you:
- Want to leave as much to your loved ones as possible by ensuring your Death Benefit Base will grow each year.
- Feel it’s more important to maximize your financial legacy for your loved ones than to maximize income withdrawals for your own use in retirement.
HOW IT WORKS
The optional Interest Enhanced Death Benefit will increase the Death Benefit Base in both up and down markets based on interest earned on the contract plus a 2% roll-up, compounded annually.
Even for years in which no interest is credited to the contract, the Death Benefit Base will still increase by 2%.
Related Article: How to avoid paying taxes on an inherited annuity?
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