Consider a Pacific Life Variable Annuity
A variable annuity is a long-term contract between you and an insurance company that helps you grow, protect, and manage retirement savings in a tax-advantaged way. It can help you:
- Grow retirement savings faster through the power of tax deferral.
- Manage your investment strategies by transferring among a diverse selection of investment options free of tax consequences.
- Convert your assets to guaranteed, lifetime retirement income.
- Leave a financial legacy through a guaranteed death benefit.
Talk with your financial advisor about the important role a Pacific Life variable annuity could play as part of your retirement strategy.
Help plan for your retirement and protect your family with Pacific Life Variable Annuities.
NEW! Introducing Enhanced Income Select
Enhanced Income Select is an optional guaranteed minimum withdrawal benefit available for an additional cost with certain variable annuities that provides:
- An enhanced amount of guaranteed income as high as 7.5%.1
- Guaranteed lifetime income of 3% if the contract value goes to zero.
- Opportunities to increase income by capturing market gains through annual resets.
This optional benefit allows you to choose from a wide variety of eligible investment options.
|Enhanced Income Select Brochure||When Do You Need the Most Income?|
1Lower rates apply to joint life contracts and where first withdrawals occur prior to age 70. An enhanced amount of guaranteed income may be withdrawn annually, for single and joint life beginning as early as 59½, as long as the contract value is greater than zero. The maximum Enhanced Income Percentage (as a percentage of the protected payment base) that can be withdrawn annually is based on the age when the first withdrawal is taken after 59½ or after a reset takes place. If the contract value goes to zero, then the Guaranteed Lifetime Income Percentage is 3%.
Click on each topic below to learn more about how a Pacific Life variable annuity can help you in retirement.
Below are a few challenges and needs clients face leading up to and during retirement. See how variable annuities can help address these concerns.
Under current law, a nonqualified annuity that is owned by an individual is generally entitled to tax deferral. Guarantees, including optional benefits, are subject to the issuing company’s claims-paying ability and financial strength and do not protect the value of the variable investment options, which are subject to market risk.
When invested in a variable annuity, it’s important to know that the value of the underlying variable investment options will fluctuate and, when redeemed, may be worth more or less than the original cost. After you convert your contract value to annuity income payments, those payments may no longer be subject to market volatility depending on the payout options chosen (fixed, variable or a combination of both).
A variable annuity is a tax-deferred investment. In a taxable investment, part of the earnings—including dividends, interest, and capital gains—may be lost to taxes each year. But in a tax-deferred variable annuity, there are no taxes on earnings until funds are withdrawn or a guaranteed stream of retirement income is received.
Grow Savings Faster
Imagine that you start pouring water into two empty glasses—but one has a leak. In which glass will the water rise faster? Annual taxation is like a leak in your retirement savings. Every year, taxes drain away a portion of those savings. However, a variable annuity is tax-deferred. Taxes are not due until you withdraw funds or use them for retirement income. This can help the account value to rise faster than money in a taxable investment, as illustrated by the example below.
Make Time Work for Your Client
The longer you allow tax deferral to work, the more powerful it can be. In our hypothetical example, the after-tax difference between the two investments is approximately $3,000 after 10 years ($142,136 - $139,029). But if held for 20 years, the difference is more than $17,000 ($210,771 - $193,290).*
Make Decisions without Tax Consequences
Transfers among variable annuity investment options are tax-free. So as your life and needs change, your investment strategy can change also. Rebalancing your portfolio is also tax-free, enabling you to keep your investments in-line with your original asset allocation strategy.
The glasses above illustrate how $100,000 would grow taxed vs. tax-deferred if each investment:
- Earns 5% per year.
- Is taxed at a 33% ordinary income tax rate.
*Tax-Deferral Assumptions: Hypothetical example for illustrative purposes only. Assumes a nonqualified contract with a cost basis of $100,000. The full amount before taxes equals the purchase payments plus interest. The amount withdrawn after taxes are paid is calculated by taking the full amount and subtracting cost basis, it is then multiplied by 0.67 (33%) and adding back in the cost basis.
Actual tax rates may vary for different tax payers and assets from those illustrated (for example, capital gains and qualified dividend income). Actual performance of your investment will also vary. Lower maximum tax rates on capital gains and dividends would make the investment return for the taxable investment more favorable, thereby reducing the difference in performance between the examples shown. Consider your personal investment time horizon and income tax brackets, both current and anticipated, when making an investment decision. Hypothetical returns are not guaranteed and do not represent performance of any particular investment. If variable annuity charges were included (withdrawal charges, mortality and expense risk charges, administrative fees, and other contract charges), the tax-deferred performance would be significantly lower.
Variable annuities are long-term investments designed for retirement. The value of the variable investment options will fluctuate and, when redeemed, may be worth more or less than the original cost. Annuity withdrawals and other distributions of taxable amounts, including death benefit payouts, will be subject to ordinary income tax. For nonqualified contracts, an additional 3.8% federal tax may apply on net investment income. If withdrawals and other distributions are taken prior to age 59½, an additional 10% federal tax may apply. A withdrawal charge also may apply. Withdrawals will reduce the contract value and the value of the death benefits, and may reduce the value of any optional benefits.
IRAs and qualified plans—such as 401(k)s and 403(b)s—are already tax deferred. Therefore, a deferred annuity should be used only to fund an IRA or qualified plan to benefit from the annuity’s features other than tax deferral. These include lifetime income, death benefit options, and the ability to transfer among investment options without sales or withdrawal charges.
Invest for the Long Term
When investing for the long-term, there is a way to help manage the market’s unpredictable behavior. It’s called diversification - and it’s considered to be an important factor in affecting long-term investment returns.
Diversification is based on the fact that different types of assets generally react differently to changes in the markets. By strategically diversifying your investment options among a variety of asset classes, you can help smooth out the impact of market volatility on your portfolio’s total return and help reduce the risks of long-term investing. At Pacific Life, we not only believe in diversification, we’ve created a way to help make it easier to achieve.
We offer a selection of more than:
- 100 Investment options
- 30 well-known and respected investment managers
- 40 investment styles
- 50 investment options with net fund expenses1 of less than 1%
Your financial advisor has tools to help you assess your financial needs, investment time horizon, and risk tolerance. Use your advisor’s help to determine which option - or combination of options - may be right for you.
1Net expense ratios are as of the most recent fund prospectus (adjusted for any fee waivers/reimbursements). For more information, including the gross expense ratio, waivers, and/or expense reimbursements, see the applicable fund prospectus. Expenses are subject to change, and there is no guarantee that the advisor will continue to waive and/or reimburse fund fees beyond their current terms as outlined in each fund prospectus. In addition, please refer to the variable annuity product prospectus for additional product fees and charges.
Asset allocation and diversification do not guarantee future results, ensure a profit, or protect against loss.
To maintain a comfortable lifestyle in retirement, you’ll need to ensure you’ll always have income, no matter how long you live. Social Security benefits and a pension (if you have one), provide life-long income. But will they be enough to cover all your basic living expenses, such as groceries, utilities, healthcare, and housing?
An Income You Cannot Outlive
With a variable annuity, you can elect to receive income payments guaranteed to last for:
- Your life.
- Two lives.
- Your life, but not less than a fixed time period that you choose. (If you die before the period ends, remaining payments may go to your beneficiary.)
- A fixed time period that you choose.
This means your variable annuity can help protect you from the possibility of outliving your retirement payments, supplement other forms of guaranteed income like a pension or Social Security, and may provide the steady, predictable income.
After you convert your contract to an annuity income payments, you cannot switch payout options. Amounts will differ based on the payout option and period selected. Usually, the longer the payout period, the lower the periodic payment amount. The minimum periodic income payment is $250 ($20 in New York), and your contract value must be at least $10,000 ($2,000 in New York).
Average Lifespan of a 65-Year-Old in the United States
Source: Calculators: Life Expectancy. Social Security Administration, March 2015.
Annuity Income Options
Systematic Withdrawals - You may elect to take withdrawals from your annuity contract without annuitizing. Certain contracts may permit free withdrawal of earnings without any withdrawal charges. However, annuity withdrawals will be subject to ordinary income tax. For nonqualified contracts, an additional 3.8% federal tax may apply on net investment income. If taken prior to age 59 ½, an additional 10% federal tax may apply.
Optional Withdrawal Living Benefits - Optional living withdrawal benefits focus on providing income for life or over a certain period through withdrawals without annuitizing, if certain conditions are met. These benefits are available for an additional cost.
Guaranteed Lifetime Income - You may elect to receive income payments on your full contract value that are guaranteed to last for life or a certain period of time. Annuitized portions of the contract value may not be subject to market volatility depending on the payout options chosen (fixed, variable or a combination of both).
Flexible Income - Similar to Guaranteed Lifetime Income except only a portion of the contract value is converted to income payments. Once you start annuity income payments, you cannot start or stop them. However, you may continue to take Systematic Withdrawals from the amount which has not been annuitized. Amounts not annuitized are still subject to market volatility.
Tax-Advantaged Income - An account that can earn dividends, interest, and capital gains that are not subject to annual income tax. Only when distributions are taken from the accounts are taxes due. Under current law, a nonqualified annuity that is owned by an individual is generally entitled to tax deferral. Contracts that are annuitized receive a tax benefit due to the exclusion ratio. The portion of the payment that will be considered "return of principal" and, therefore, not taxable. When the principal (initial investment) is depleted, subsequent annuity income payments will be fully taxable.
Providing for Your Loved Ones
Part of any prudent retirement strategy is planning for the unexpected, and taking care of the people you care for. The guarantees your beneficiaries receive will depend on the death benefit you choose. Certain Pacific Life variable annuities offer standard and optional death benefits that can help protect your original investment, lock in investment gains, or help your beneficiaries offset the impact of taxes.
Help Protect and Provide
This short video shows how a variable annuity death benefit can help protect and provide a financial legacy for your loved ones.
Pacific Life Variable Annuity Death Benefits:
- Standard Death Benefit: Protect the amount of your original investment for no additional cost.
- Optional Stepped-Up Death Benefit: Locks in investment gains on contract anniversaries to help increase the financial legacy you leave for your beneficiaries for an additional charge of .20% per year of each subaccount's assets (deducted daily).
- Optional Earnings Enhancement Death Benefit (EEDB): Designed to provide an additional percentage of earnings added to the death benefit amount to help your beneficiaries offset the impact of taxes for an additional annual fee of 0.25% of the contract value (deducted annually). Not available in CA or NY.
- Optional Earnings Enhancement Guarantee (EEG): Only available in California. Like the EEDB, the EEG is designed to provide an additional percentage of earnings added to the death benefit amount to help your beneficiaries offset the impact of taxes for an additional annual fee of 0.25% of the contract value (deducted annually).
|Enhance Your Financial Legacy||Enhance Your Financial Legacy for CA|
Optional death benefits are available with our variable annuities for an additional charge and are subject to state and firm availability.
Contract Form Series: 10 1252, ICC12:10 1252, 10 2252-13, 10 1253, ICC12:10 1253, 10 2253-13, 10 17800, 10 178OR, 10 278NY 1, 10 1221, ICC11:10 1221, 10 1221OR, 10 2221-13, 10 10300, 10 1128, 10 1130.
Rider Series: 20-1264, ICC12:20-1264, 20-2264-13, 20-13500, 20-23500, 20-1295, ICC14:20-1295, 20-1296, ICC14:20-1296, 20-14900.
This material is not intended to be used, nor can it be used by any taxpayer, for the purpose of avoiding U.S. federal, state, or local tax penalties. This material is written to support the promotion or marketing of the transaction(s) or matter(s) addressed by this material. Pacific Life, its affiliates, their distributors, and respective representatives do not provide tax, accounting, or legal advice. Any taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor or attorney.
Pacific Life is a product provider. It is not a fiduciary and therefore does not give advice or make recommendations regarding insurance or investment products.
You should carefully consider a variable annuity's risks, charges, limitations, and expenses, as well as the risks, charges, expenses, and investment goals of the underlying investment options. This and other information about Pacific Life are provided in the product and underlying fund prospectuses. These prospectuses are available from your financial advisor or by calling the toll-free numbers listed above. Read them carefully before investing.
Guarantees, including optional benefits, are subject to the issuing company's claims-paying ability and financial strength and do not protect the value of the variable investment options, which are subject to market risk. The value of the variable investment options will fluctuate and, when redeemed, may be worth more or less than the original cost. Annuity withdrawals and other distributions of taxable amounts, including death benefit payouts, will be subject to ordinary income tax. For nonqualified contracts, an additional 3.8% federal tax may apply on net investment income. If withdrawals and other distributions are taken prior to age 59 ½, an additional 10% federal tax may apply. A withdrawal charge also may apply. Partial annuitization and withdrawals will reduce the contract value and the value of the death benefits, and also may reduce the value of any optional benefits. Partial annuitization is treated as a withdrawal and will reduce the contract value by the amount that is annuitized. Additionally, for contracts that hold an optional living or death benefit rider, partial annuitization may reduce the benefits guaranteed under the rider, depending on each rider’s features and the amount that is annuitized.
Pacific Life refers to Pacific Life Insurance Company and its affiliates, including Pacific Life & Annuity Company. Insurance products are issued by Pacific Life Insurance Company in all states except New York and in New York by Pacific Life & Annuity Company. Product availability and features may vary by state. Each insurance company is solely responsible for the financial obligations accruing under the products it issues. Insurance product and rider guarantees, including optional benefits and any fixed subaccount crediting rates or annuity payout rates, are backed by the financial strength and claims-paying ability of the issuing insurance company and do not protect the value of the variable investment options. They are not backed by the broker/dealer from which this annuity is purchased, by the insurance agency from which this annuity is purchased, or any affiliates of those entities, and none makes any representations or guarantees regarding the claims-paying ability of the issuing insurance company.
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Variable insurance products are distributed by Pacific Select Distributors, LLC (member FINRA & SIPC), a subsidiary of Pacific Life Insurance Company (Newport Beach, CA) and an affiliate of Pacific Life & Annuity Company, and are available through licensed third parties.
Not all products are available at all broker/dealer firms.
No bank guarantee. Not a deposit. May lose value. Not FDIC/NCUA insured. Not insured by any federal government agency.