Lincoln Choice Plus Assurance L Share with Lifetime Income Advantage 2.0 Income Rider Variable Annuity
How do Agents Typically Pitch This Product?
- Guaranteed lifetime income for retirement
- Guarantee of Principal death benefit for loved ones.
- 5% Guaranteed growth?!
- A tax efficient way to grow money.
- Tax deferred growth.
Is any of this True?
Well, in a sense it is, but it’s important we dive into the details because there are a few catches. The 5% Growth Guaranteed is the typical sales pitch lie. We’ll walk through how the 5% Guarantee is typically much less than 5%. It’s important to understand this concept before you buy or even if you own this annuity already. It may still be possible to rescue your annuity. The Lincoln Choice Plus Assurance Series L-Share Annuity limits your investments when you select one of the income riders. For this reason it you own this Annuity you may have noticed that the performance has been pretty weak, and it’s likely that your contract is Upside Down(income base is higher than your cash value). In this review you’ll also learn about that the fees are much higher than you may realize especially when you add them all up.
This review will show you the pros and cons of the Lincoln Choice Plus Assurance Series L-Share Variable Annuity. As with every investment, variable annuities have their strengths and weaknesses. Each company and annuity has unique features, so to make an informed decision on whether this annuity is suitable for your needs it is important you understand how this annuity works as their sales pitches aren’t always what they seem. We’ll walk through the Lincoln Assurance L Share Annuity rider, its features, potential returns and the details of this Lincoln Choice Plus Annuity Review so you understand more about how it works.
This Lincoln Choice Plus Variable Annuity review will cover:
- Product Type
- Investment options
- Understanding the income rider
- How it can best help your financial plan
- How it is most poorly used as part of your financial plan
Lincoln Choice Plus Assurance Series L-Share Quick Facts
|Product Name||Lincoln Choice Plus Assurance Series L-share|
|Issuer||Lincoln Financial Group|
|Type of Product||Variable Annuity|
|Standard & Poor’s Rating||“A-” (Good)|
Before we go into more detail, please read this legal disclosure.
This review of the Lincoln Choice Plus Assurance Series L-Share Annuity is an independent review at the request of readers. This review explains my perspective when breaking down the positives and negatives of this model annuity. This is an independent product review, not a recommendation to buy or sell an annuity. Lincoln Financial Group has not endorsed this review in any way, nor do I receive any compensation for this review. Before purchasing any investment, product be sure to do your own due diligence. Consult a properly licensed professional, should you have specific questions as they relate to your circumstances. Furthermore, this is not intended to give specific advice. In any event, your advisor may know more about your circumstances to make the recommendation for you. All names, marks, and materials used for this review are property of their respective owners.
Information about Lincoln Financial Group
Founded in 1905 Lincoln Financial Group is a large diversified life insurance company endorsed by Abraham Lincoln’s son Robert Todd Lincoln. The company is one of the top leaders for insurance and annuities in the US and its family of companies aim to help people to confidently plan their financial futures. Lincoln Financial Group base their work on dependability, honesty and service. For over a century the Lincoln Financial Group have celebrated the importance of corporate citizenship and improving the quality of life not only for their customers but also for their employees. In 2017 they were listed on the Forbes Best Employers list.
You can learn more about this from www.LFG.com
Let’s Look further into the details…
This annuity starts with the M&E fee at 2.05%
Mutual Fund operating expenses: 0.82%-1.66%
Contract maintenance charge: 0.1%
Income for Life or other Lincoln Income Rider: 1.25% Single 1.5% Joint
Assuming a 1% average mutual fund fee the Lincoln total annuity fee’s are 4.4% annually and 4.65% annually with the joint income rider.
“But My Advisor said it was worth it because they are guaranteeing me 5% for life net of fees?!”
Let’s breakdown exactly how this income rider works. In this review we’ll be covering the Lincoln Income for Life income rider, it could be that you have or are being recommended a different income rider. Conceptually they all work the same so this review will still help but if you have questions about your specific income rider, contact us.
In this example a male named John, age 60 purchases a Lincoln L share Assurance with Income for life income rider with $1,000,000. His plan is to defer for 5 years and then take income to retire at age 65.
In the 5th year his income base is now 1,250,000 and due to the high fee’s and limited investments selection his cash value is at 1,150,000. He now wants to take income for life at retirement and his pay-out rate at 4.5%. Remember this base isn’t something you can just away with you have to take lifetime income to receive the 5%. This makes a big difference in the rate of return as you will see in the example below.
$56,250 per year is his guaranteed annual income, after 20 years he’s taken total payments of 1,125,000 but over 25 years that’s 0.45% annually. At This point John is age 85. Is it worth paying over 4% in fees for a guarantee with an intrinsic value of 0.45% annually? Yes as he lives longer the return will increase but can you afford to make 0.45% annually for the first 20 years of Retirement?
Can this rider increase income?
This annuity does indeed offer lifetime income for retirement but the odds of getting an increase are very low. Without increases these annuities will perform like the example above and offer a very low internal rate of return which is the real return it delivers to you over your lifetime.
Surrender Charge percentage reduces over a 4-year period at the rate of: 7%, 7%, 6%, 6%
This Annuity works Best:
- Guaranteed Lifetime Income
- Those who can afford very low returns in retirement
- For sales Agents, looking to awe with a 5% guaranteed Return Pitch
This Annuity Works Worst:
- Guaranteed Lifetime Income, that can increase
- Those who need more than 3% return in Retirement to maintain their lifestyle
- For Retiree’s who are looking for growth their capital
The Lincoln Choice Plus Assurance Series L-Share Annuity does offer lifetime income however with this income rider’s and limited investments options, it’s up there with one of the worst annuities I’ve seen. While this product has a relatively short 4 year surrender schedule. The short schedule forces you to pay more annually in fees then you would in a longer surrender product. If you have an income rider, you’re truly committing to the annuity for life anyways so this typically isn’t the best product choice for clients looking for guaranteed lifetime income.
In terms of growth potential due to certain “investment requirements and features” and all the costs, this annuity offers little growth potential. 5% is not an amount that you can withdraw as a lump sum. Therefore, if your financial plan says you need 5% annually in retirement, don’t think that you can buy the Lifetime Income Rider and earn 5% guaranteed. We saw in the example above that the income rider earns much less than 5%. Your investing and retirement planning are not done. You’ll need a comprehensive retirement income analysis that factors the fees, inflation, taxes, and your investment positioning to see if the annuity adds value to your retirement. The income rider is not as valuable as it seems. Test it and see if it’s worth it for you.
Put it to the test!
To be sure, Click here to request a complementary, no obligation Annuitycheck® Report to test an existing annuity or an annuity before you buy. If your agent was honest with you, the numbers will match up – if not, at least you know before you buy.
If you have an existing Annuity, you may need an Annuity Rescue, to rescue you from being upside down or rescue your annuity from drowning in fees. You may think you’re trapped, but there are options to increase your Guaranteed lifetime income and reduce your fees. Contact us and request an Annuitycheck® Rescue Report on your current Annuity.
Have Questions on the Lincoln Choice Plus Assurance Series L-share Annuity? Have any comments?
We hope you found it helpful as you’re conducting your own research on Lincoln Assurance Plus Annuity. Cheers to a Prosperous Retirement!
All the best,