If you're like most people, you may have wondered whether you will have enough money to maintain your current standard of living during retirement, especially when you take into account increasing life expectancies. Limits on qualified plan contributions and caps on Social Security benefits may make it difficult to achieve the retirement income you will want and need.
A property funded cash value life insurance policy can help you supplement your current retirement savings. In the event of your death, it can also be a self-completing accumulation tool for your beneficiary. Here's how it works:
- You purchase a cash value life insurance policy and continue to fund it properly.
- The cash value in the policy accumulates interest on a tax-deferred basis. You have access to the surrender value for any purpose if the need should arise prior to retirement.
- At retirement, you can begin taking distributions from your policy, resulting in a tax-advantaged income stream.
- If the unexpected should occur, your beneficiary receives any remaining death benefit proceeds income-tax free*.
* Death benefit proceeds form a life insurance policy generally not inclued in the gross income of the taxpayer/beneficiary (Internal Revenue Code Section 101 (a)(1)). There are certain exceptions to this general rule including policies that were transferred for valuable consideration (IRC 101(a)(2)). This information should not be construed as tax or legal advice. Consult with your tax or legal professional for details and guidelines specific to your situation.
Retirement means something completely different than it used to. Gone are the days when a company pension and Social Security would provide you with the bulk of the income you need. It's now up to you to decide when you will retire, what you're going to do during your retirement years and, most importantly, how you are going to pay for it.
Greater choices for your retirement savings
Fixed Indexed Annuity
WE BELIVE... Your savings should be protected. Your savings should have the potential for grow for future income. Your income should not be affected by the market's ups and downs.
IT ALL COMES DOWN TO LIFESTYLE PROTECTION
Which would you choose?
When preparing for retirement, your aim is to preserve more and risk less. On the other hand, you may need some growth to meet long-term needs. If your only options are traditional financial products, then you often have to choose between risk and reward.
CDs, Savings, Money market
Longetivity risk due to rates/yields
Your retirement could last 20 to 30 years or more. One member of a 65-year-old couple today has a 50% chance of living to age 90 and a 25% chance of living to age 97. These products may not provide the growth you need to stretch your assets over the entire course of retirement.
Bonds, Stocks, Mutual funds
Growth potentiial, Returns
No one can predit what the market will do. The market has experienced annual returns ranging from greater than 50% to less than -40%.
To help bridge the gap between risk and reward, you should select a product that offers wealth preservation combined with opportunities for growth.
Increased protection with growth potential
Lincoln OptiChoice℠ fixed indexed annuity is a flexible premium deferred annuity that offers principal protection, a fixed rate interest option and the potential to earn interest based on the performance of the S&P 500® Index.
Accumulate interest across four account buckets
After purchasing a contract, your premium can be distributed among four different interest accounts. Think of these accounts as different buckets that hold a portion of your money. There is a fixed account bucket and three indexed account buckets tied to the performance of the S&P 500 Index.
As your needs change throughout the life of the contract, you also have the ability to reallocate money among the buckets at the end of each year.
If you leave your moeny in a Lincoln OptiChoice℠ contract until the end of the surrender charge period, and if you then surrender your contract, you are guaranteed to walk away with more than the initial premium (given that no withdrawals were made). This amound is known as the Guaranteed Minimum Cash Surrender Value (GMCSV).
The GMCSV is based on a guaranteed minimum rate of return. If a contract is surrendered during the surrender charge period, the surrender charge and a Market Value Adjustment (MVA) will apply and can result in the GMCSV being less than your premium. If surrendered after the surrender charge period, no surrender charge or MVA will aplly.
The Fixed Account
- Credits a fixed rate known in advance.
- Establishes an interest rate for each contract year, giving you predictable growth.
- Account value grows regardless of S&P 500 Index performance.
Fixed Account Interest is credited and is compounded daily. A new fixed rate is declared annually and will never be less than 1%.*
Gurantees are subject to the claims-paying ability of the Lincoln National Life Insurance Company.
* Interest rate, specified rates, monthly Indexed caps, and indexed interest spreads are declared by The Lincoln National Life Insurance Company at its discretion. Subsequent interest rates, specified rates, monthly indexed caps, and indexed interest spreads may be higher or lower than the initial ones and may be different from those used for new contracts.
Applicable indexed interest is credited at the end of the indexed term. Amounts withdraw (including amounts paid as a death benefit) before the end of an indexed term will not receive indexed interest for that indexed term.
The S&P 500 Index is a price index and does not reflect dividents paid on the underlying stocks. It is not possible to invest directly in an Index. During the surrender charge period, Lincoln reserves the right not to offer any one of the indexed accounts, but will leave at least two indexed accounts available. After the surrender charge period, Lincoln reserves the right not to offer any of the indexed accounts.
Performance Triggered Indexed Account
- If, after a one-year term, the S&P 500 Index has a positive change or remains flat, your account is credited a specific rate.
- If it's negative, your account is credited 0% -- no loss of principal, and gains from previous periods remain intact.
One-year S&P 500 Index percentage change
Positive - Credit specified rate
Zero - Credit specified rate
Negative - 0% credited - no loss
Indexed interest is credited at the end of the indexed term and is compounded annually. A new specified rate is declared for each one-year indexed term and will never be less than 1.25%.*
1-Year Monthly Cap Indexed Account
- Credits sum of monthly percentage changes in the S&P 500 Inidex over the one-year indexed term. There is a cap on positive monthly changes, but no floor on negative monthly changes.
- If sum of monthly percentages is positive, full percentage is credited to your account.
- If it's negative or zero, account is credited 0% -- no loss to the account and gains from previous periods remain intact.
Sum of 12 monthly capped percentage changes - Positive Credit full percentage or Zero or negative 0% credited (no loss)
Indexed interest is credited at the end of the one-year indexed term and compounded every year. A new monthly indexed cap, which can never be less than 1%, is declared for each one-year indexed term.*
1-Year Monthly Average Indexed Account
- Indexed interest is determined by comparing the average of twelve monthly index values of the S&P 500 INdex to the starting index value and then applying a spread to the percent change.
- If result is positive, account will be credited.
- If result is zero or negative, account will be credited 0%, so there is no loss.
S&P 500 Index monthly clossing values
PERCENTAGE CHANGE - SPREAD = INTEREST PERCENTAGE CREDITED
Indexed interest is credited at the end of the one-year indexed term and compounded every year. A new indexed interest spread, which can never be greater than 9%, is declared for each one-year indexed term.*
The Power of Zero
The indexed account buckets are able to help bridge the gap between risk and reward by providing the Power of Zero. Here is how it can work for you:
The Power of Zero
When the index percentage change is negative for a specific indexed term, your account is credited 0%.
When the index percentage change is positive for the specific indexed term, your account is credited a positive rate.
Gains locked in
Since the indexed accounts never earn a negative interest rate, you never have to recover from losses before seeing positive interest credited if the S&P 500 Index rebounds.
Protection in times of need
Lincoln OptiChoice℠ fixed indexed annuities offer benefits to help get you through uncertain times if the need should arise.
Protection for loved ones
Before a contract is annuitized, there is a death benefit that allows you to pass any remaining assets to your beneficiaries.
Guarantees for your health
If you experience qualifying medical issues after the first contract year, there are also nursing home and terminal illness benefit is not available for contracts issued in the state of Massachusetts.
How many ways can you take income?
Now that you've worked so hard to grow and protect what's important to you, how are you going to enjoy it? There are multiple ways to take income from a Lincoln OptiChoice℠ fixed indexed annuity.
Free withdrawal amount (10% free withdrawal amount)
10% of contract value is available each contract year during the surrender charge period -- without charge.
Withdrawals can be taken annually, semiannually, quarterly or monthly and must be taken from the Fixed Account.
Receive tax-advantaged payments for a period fo time or for life. Once income is started, it cannot be stopped.
Market Value Adjustment
If you take more than the 10% free withdrawal amount before the end of the surrender charge period, it may be subject to surrender charges and a Market Value Adjustment (MVA). The MVA is a positive or negative adjustment based on the current interest rate environment at the time of the withdrawal. The MVA does not apply to withdrawals after the surrender charge period, 10% free withdrawals, the death benefit, or annuitized contracts. See the Examples of Market Value Adjustment (MVA) and Surrender Charge Calculations fact sheet for additional details.
* Annuitization can occur after the fifth contract year or after the first contract year for Florida.
Guarantees are subject to the claims-paying ability of The Lincoln National Life Insurance Company.
Withdrawals (including amounts paid as a death benefit) and any charges are deducted first from the Fixed Account. Money taken from the Fixed Account will reduce the actual amount of interest credited. After the Fixed Account is exhausted, withdrawals (including amounts paid as a death benefit) and any charges are deducted pro rata from the Indexed interest accounts. Money taken from an indexed interest account will not receive any indexed interest for that indexed term.
You have a right to cancel your Lincoln OptiChoice℠ fixed indexed annuity contract within 20 days after you receive your contract (state variations apply). To cancel your contract, send a written request for cancellation to The Lincoln National Life Insurance Company Home Office. We will return your premium paid upon receipt of your written request. Cancelling your contract voids it from the beginning. If you cancel your contract, you will not be permitted to purchase another Lincoln fixed annuity product for a period of six month.