Pacific Life just introduced an innovative indexed annuity that could be right for certain clients or for structured attorney fees.
Pacific Life’s Index-Linked Annuity Payment Adjustment Rider sets payments based on positive S&P 500 Index returns. When the S&P 500 Index increases over a 12-month period, the injured party’s payments can increase in a range from 1 percent to 5 percent. If the S&P 500 Index decreases over a 12-month span, the injured party’s payments are unaffected. Once payments increase, payments can never go down. The rider must be added when the annuity is purchased.
The IRS approved the rider enabling the income from the indexed-linked annuity to be tax-free for injured parties.
The Pacific Life indexed-linked annuity presents one of the first truly new options in years for injured parties and attorneys. While still offering the same safe, guaranteed returns of traditional structures, the rider takes advantage of market movement previously unavailable with other structured annuities.
This Pacific Life offering raises a number of questions. Is an annuity with this new variation better for a client than the standard lifetime annuity (with a fixed annual 3 percent growth factor)? What clients would best benefit from an annuity tied to the S&P 500 Index? Give me a call with questions. We can run the numbers and compare annuities.