Pacific Life VA Rider Targets 5-Year Deferral Period

A new VA rider introduced by Pacific Life targets buyers who want “income soon.”

The company’s Core Protect Plus rider offers a five-year minimum deferral period for people 60 and older, the company said.

Many other VA riders offer minimum income deferral periods of 10 years or more before people can start drawing income.

“We think the five-year (income deferral period) was underserved so we chose to go down that path,” said Steve Goldberg, an assistant vice president with Pacific Life.

Shorter deferral periods offer annuity buyers more flexibility and more companies are offering annuities with shorter minimum deferrals, market analysts said.

An Advisor Guide

The rider is sold only through financial advisors, the company said.

Advisors play a key role in sifting through income riders to determine which makes the most sense for clients.

Core Protect Plus is a guaranteed lifetime withdrawal benefit, or GLWB, and is one of several riders offered by Pacific Life, a top-10 VA seller with $835 million in first quarter sales.

The rider is available with Pacific Choice, Pacific Odyssey, Pacific Value Select, Pacific Journey Select and Pacific Navigator families of VAs.

Pacific Life will pay agent commissions on Choice, Value Select, Navigator and Journey Select, but not on Odyssey, the company said.

Advisors will typically have a fee arrangement with a client when selling Odyssey, a VA targeted at fee-based advisors, the company said.

Pacific Life's commission paid to the broker-dealer is the same regardless of whether or not a client selects the optional rider when the VA is issued, the company said.

Another Pacific Life rider known as Enhanced Income Select delivers income immediately as part of an “income now” strategy, said Christine Tucker, vice president of marketing for Pacific Life Retirement Solutions Division.

Product Features

Core Protect Plus costs 1.2 percent of the protected payment base for the single life option and 1.35 percent for the joint life option, the company said.

The protected payment base is the amount from which clients will eventually draw income.

The price will not change for the life of the rider, adding to the product’s transparency and simplicity, Goldberg said.

For the first five years, the protected payment base will be equal to the greater of 7 percent simple interest credit each year or the highest anniversary value, the company said.

After five years, the 7 percent rate ends, the company said.
Core Protect Plus is offered only at contract issue.

VA contract owners who elect to buy Core Protect Plus can allocate their portfolios among 15 asset allocation strategies.

Owners are not required to participate in asset-transfer programs or managed-volatility portfolios to qualify for the rider, the company said.

Guaranteed lifetime withdrawals begin at 65.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at cyril.tuohy@innfeedback.com.

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