Pacific Life Index Advisory Fixed Indexed Annuity In-depth Review

The Pacific Life Index Advisory Annuity is almost identical for both policy tenures, except for the crediting period, surrender charge schedule, and indexing rates. For ease of discussion and better clarity, we will discuss the Pacific Life Index Advisory 5 for the rest of the article.

How does the Pacific Life Index Advisory Fixed Indexed Annuity work?

Any annuitant (maximum age at the time of policy issue: 85) can purchase the Pacific Life Index Advisory Annuity with a minimum initial purchase amount of $25,000. In return, they will earn a part of market index returns (calculated through a formula that we will discuss shortly), credited as per the chosen crediting period. Apart from the regular crediting period, various events may trigger earnings credit: On free withdrawals, for a long-term care/terminal illness/injury event, or when a death benefit is payable.

The Pacific Life Index Advisory Annuity offers the annuitant the ability to choose from one or more of the two indexes to determine their earnings crediting formula. Both of these indices have two crediting strategies each and a fixed-rate guaranteed interest strategy to choose from  (making a total of 5 strategy options). We will discuss each available index briefly:

S&P 500 Index: The S&P 500 index is one of the most popular and oldest indexes in the world. It tracks 500 large-cap publicly traded stocks listed in the United States, serving as a barometer for the overall U.S. equity market. It is a reliable index and has often succeeded in the test of time. 
MSCI EAFE Index: The MSCI EAFE Index is designed to represent the performance of large and mid-cap securities across 21 developed markets, including countries in Europe, Australasia, and the Far East, excluding the U.S. and Canada. The Index is available for a number of regions and market segments/sizes and covers approximately 85% of the free float-adjusted market capitalization in each of the 21 countries. 

It's important to understand that, like all fixed indexed annuities, the crediting strategies associated with the Pacific Life Index Advisory Fixed Indexed Annuity come with earning rate limiting mechanisms like cap rates, performance triggers, etc., meaning that you will be credited only a part of the index return to your annuity. These rates change frequently; I will discuss more on these rates more shortly.

Note: In addition to allocating the funds in the following indexes, the annuitant also has the option to allocate funds at a fixed interest. These Fixed Rates tend to change from time to time. The Fixed Value Rate for the 5-year withdrawal charge period at the time of writing this article was 4.25%.

Rates and Costs Associated with the Pacific Life Index Advisory Annuity

The earnings crediting formula

The earnings crediting formula is the most important part of this annuity discussion. It is important to know that we don’t simply get the index return credited to our annuity. There are a few rate limitations (in the form of cap rates, participation rates, trigger rates, and other rates) that the company has in place that affect our earnings. These rates tend to change over time, and the updated rates can always be checked on the company’s website or with your trusted financial advisor. You can view the latest indexing rates of this annuity here.

The Pacific Life Index Advisory Annuity uses five crediting strategies:

Let’s explore the Pacific Life Index Advisory Annuity rate chart to gain a better understanding of earnings crediting strategies. Please note that these rates were last updated in August 2025 and may change over time. For the most current Pacific Life Index Advisory Annuity rates, contact your trusted financial advisor.

The table above shows that the annuitant can choose from two underlying indexes - the S&P 500 Index MSCI EAFE Index, offering a total of 5 crediting options (4 index-based and 1 fixed). These indexes offer multiple interest crediting options, such as performance-triggered and cap rates. Additionally, there is an option to allocate funds to a fixed account with a declared interest rate. As an annuitant, you can allocate your premium to one or more of these crediting strategies.

Let’s now explore how each of these crediting strategies works.

Point to point with Cap: Cap rate is the most important terminology in an FIA. It means the rate at which your interest-earning capacity is capped. For example, if an index returned 13% but your contract’s cap rate is 7%. In this situation, you will be eligible for an interest credit of only 7%. It doesn’t matter how much the index goes above the cap rate; the maximum interest you can earn is the cap rate.

Performance-Triggered Index Option with Declared Rate: A flat or positive index return triggers the declared interest rate to be credited to the contract value. If the index return is negative, no interest is credited, but there will be no loss, and the contract value will remain the same. The declared interest rate is set at contract issue and applies for the 1-year indexed term. In this case, the performance-triggered rate for the S&P 500 Index is 8.00%. It means that if the S&P 500 Index doesn’t go negative for a given 1-year period (even if the growth is 0% and not negative), the interest credited will be 8.00% irrespective of the S&P 500's actual return. It is noteworthy that the company offers a good performance triggered rate for the S&P 500 Index when compared to other similar policies.

Fixed Account Option: If you opt for a fixed account option, you simply earn the fixed rate for a particular period specified by the company before your policy begins. These rates are usually low compared to other fixed avenues, such as CDs and MYGAs, so you should avoid fixed rates in a general scenario. The 1-year fixed rate on this policy at the time of writing this article was 4.25%. 

I believe that, at the current time, opting for the 1-Year S&P 500 Performance Triggered strategy, the MSCI EAFE point-to-point with cap, and the S&P 500 point-to-point with cap offers the most compelling value. These strategies provide a strong balance of growth potential and downside protection.

Accessing your Money

Each year, you are allowed a 10% free withdrawal of your contract value without incurring charges, fees, or penalties.

Should your needs change unexpectedly, and you need to take an excess withdrawal (a withdrawal above the free withdrawal amount available in a given contract year), you may be entitled to access additional monies. However, certain charges and penalties may apply. Any amount withdrawn over the remaining free withdrawal amount is subject to a Surrender Charge. Below is the Surrender Charge schedule for the Pacific Life Index Advisory Annuity.

In case you need to surrender your policy, a Market Value Adjustment (MVA) will be applied to the portion of the withdrawal or surrender that exceeds the free withdrawal amount during the withdrawal charge period.

This surrender charge schedule is only valid for select states (California usually has a different rate structure) for the Pacific Life Index Advisory Annuity product. For complete details about each state, you may contact your trusted financial advisor.

Once the surrender charge period ends, you can typically access your full account value without fees. However, any withdrawal reduces both your account value and, if applicable, the income base tied to optional riders, which may impact future guaranteed income.

An annuitant can also convert the contract into a stream of guaranteed income, known as annuitization. They can choose from various payout options designed to meet different needs.

Life Only – Provides income for as long as you live.

Joint and Survivor Life – Continues payments over two lifetimes, often used by couples.

Life with Period Certain (up to 30 years) – Pays income for life, but guarantees payments for a minimum period even if death occurs earlier.

Period Certain (up to 30 years) – Provides guaranteed payments for a set number of years, regardless of lifespan.

Single Life or Joint Life with Cash Refund – Ensures that if the annuitant(s) pass away before receiving payments equal to the original premium, the difference is refunded to beneficiaries.

Single Life or Joint Life with Installment Refund – Similar to the cash refund, but any remaining balance is paid out over time in installments.

These options allow flexibility in balancing lifetime income needs with legacy goals, offering a way to customize how and when funds are accessed in retirement.

Riders

In an insurance policy, riders are an additional provision that can be added to enhance the benefits of the base policy. The Pacific Life Index Advisory Annuity comes with an optional death benefit, enabling annuitants to help protect and enhance the legacy they leave to their beneficiaries.

Interest Enhanced Death Benefit

Interest Enhanced Death Benefit is an optional benefit that guarantees your death benefit will grow annually by the amount of interest credited to your contract, plus an additional 2%, for either 20 years or until age 85, whichever is earlier (different terms for different states). The charge for this benefit is 0.40% of the Death Benefit Base, deducted annually from your contract value (not the Death Benefit Base). Your beneficiaries will receive the greater of your Interest Enhanced Death Benefit Base or the standard death benefit amount upon your death. This optional benefit is subject to state and broker/dealer availability and variations. Please refer to the Interest Enhanced Death Benefits brochure for more information and work with your financial professional to determine if this optional benefit is appropriate for your financial needs.

Also, as with most annuities, the Pacific Life Index Advisory fixed-indexed annuity has free in-built nursing home and terminal illness waivers.

Qualified Nursing Care Benefit – After 90 days of contract, free withdrawal of up to 100% of the contract value is allowed if the owner is confined in a qualified care facility for a minimum of 30 days. Confinement must begin after the contract issue date, and written proof is required from both the qualified care facility and the recommending physician.

Terminal Illness Benefit – After the first contract year, free withdrawal of up to 100% of the contract value is allowed if the owner is diagnosed with a terminal illness. Diagnosis must occur after the contract is issued, and written proof with supporting documentation is required from a qualified physician. Contract/Administrative Charge

The Pacific Life Index Advisory Annuity levies no annual contract or administrative fees.

Note: You may only purchase a Pacific Life Index Advisory Fixed Indexed Annuity if you are a participant in an account established under a fee-based program that is sponsored and maintained by a broker/dealer or other financial intermediary approved by Pacific Life Insurance Company.

What Makes this Product Stand Out?

The Pacific Life Index Advisory Annuity offers some features that not many fixed-indexed annuities offer. The ones that I like the most are:

The plan offers well-known indexes with established histories

Free Enhanced Withdrawal Benefit: This no-fee rider is automatically included for owners under age 65 and includes both a Qualified Nursing Care and Terminal Illness Benefit.

High Guaranteed Minimum Surrender Value: The Guaranteed Minimum Surrender Value is equal to 91% of purchase payments minus prior withdrawals, accumulated at a fixed interest rate, which is set at contract issue. Meanwhile, for other popular annuities, this rate is usually 87.5%.

Multiple Payout Options: Life Only, Life with Period Certain, Joint and Survivor Life, Period Certain, Single Life or Joint Life with Cash Refund, and Single Life or Joint Life with Installment Refund.

What I Don’t Like

This product is generally good on all fronts for people looking for both growth and lifetime income; still, there are some features that could add more value for the annuitant. Some of the features that I don’t like about the policy are:

Less Number of Indexing Options

There is a limited number of riders to choose from

High Initial Payment: $25k vs. $10k on other popular plans

Company Details

You must always keep in mind that, unlike CDs, annuities are not guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other federal insurance agency. An annuity's "guarantee" is only as strong as the insurance company that issues the annuity, so it is always important to assess the issuing company before buying an annuity.

Pacific Life Insurance Company

Pacific Life Insurance Company has been in business since 1868. It has been one of the largest providers of annuities in the US for many years and has regularly been in the top ten Fixed Indexed Annuity Sales. It is one of the Fortune 500 companies, with a ranking of #272 (at the time of writing this article)

It is rated as follows by the rating agencies:

Pacific Life Insurance Company has managed to maintain decent ratings for many years. It is considered to be strong and stable financially. As of year-end 2024, some of the financial highlights for Pacific Life include its:

$16.01 billion in operating revenues

$15.99 billion of total stockholders’ equity

$1.47 billion in adjusted operating income

$238.90 billion in total assets

Thus, going by the operating history and financial numbers, we can safely gauge that you can trust your savings with Pacific Life Insurance Company.

Conclusion

With the advancements in healthcare and technology, the average American today lives longer than ever. So, it’s very important to have a stream of income that can grow safely and steadily and that has the ability to provide a fixed, guaranteed income during the retirement years. This helps you mitigate the risk of outliving your income and ensures that you continue to live a decent life even in your retirement.

The Pacific Life Index Advisory Annuity helps you grow your retirement savings with much less risk. Through its indexed annuity, it offers principal protection and the opportunity to participate in the market index without any downside risk. If you are considering buying a Fixed Indexed Annuity that works on the growth front, the Pacific Life Index Advisory Annuity might be an ideal product to look at. However, you must keep in mind that this is a growth annuity and may not be the best suited for people who are super-conservative or at later stages of retirement.

We understand that choosing the right annuity can be a complex decision, influenced by a myriad of factors such as market conditions, individual financial goals, and evolving life circumstances. To better serve you in this critical decision-making process, we regularly conduct in-depth reviews of various annuity products, examining features, costs, and potential benefits. To delve deeper into our extensive reviews, click here.