Pacific Life Protective Growth Registered Index-Linked Annuity (RILA) In-depth Review

How Does the Pacific Protective Growth Registered Index-linked Annuity (RILA) Work?

The Pacific Protective Growth is a Registered Index-Linked Annuity (RILA) that provides a combination of market-linked growth, downside protection, and customizable features. It allows policyholders to balance risk and reward by selecting from multiple allocation options, including indexed and fixed-rate accounts. Here’s a detailed breakdown of how it works:

Initial Setup and Funding

Minimum Payment: $25,000

Maximum Payment (Without Prior Approval): $1,000,000

Issue Age: 0 to 85 years old

Plan Types: Traditional IRA, Roth IRA, SEP IRA, Beneficiary IRA, Non-Qualified, Non-Qualified Beneficiary (Stretch)​

After making an initial payment, policyholders have the flexibility to choose how their funds will be allocated across various indexed accounts or the fixed rate account. These allocation choices play a major role in how the annuity performs over time. Apart from the regular crediting period, there are various events that may trigger earnings credit: On free withdrawals, for a long-term care event or terminal illness or injury event, or when a death benefit is payable. All these interest credits are credited to a bucket called “Account Value.” This bucket is your annuity account balance, and all your withdrawals take place from it.

The Pacific Protective Growth Index-linked Annuity (RILA) offers the annuitant to choose from one or more of the five indexes and ETFs (S&P 500 Index, MSCI EAFE Index, Invesco QQQ ETF, iShares Russell 2000 ETF, and First Trust Growth Strength Index) to determine their earnings crediting formula:

S&P 500 Index: The Standard & Poor's 500 (S&P 500) is a stock market index that tracks the performance of 500 large-cap U.S. companies across various industries. It serves as a key indicator of the overall health of the U.S. equity market and is widely used as a benchmark for investment performance.

MSCI EAFE Index: The MSCI EAFE Index is a widely followed benchmark that tracks large- and mid-cap stocks across 21 developed international markets in Europe, Australasia, and the Far East. It excludes the U.S. and Canada, making it a useful tool for diversifying beyond North American equities.

Invesco QQQ ETF: The Invesco QQQ ETF is one of the most popular exchange-traded funds, designed to track the Nasdaq-100 Index. It provides exposure to 100 of the largest non-financial companies listed on the Nasdaq, with a heavy tilt toward technology and innovation-driven sectors such as software, semiconductors, and consumer internet.

iShares Russell 2000 ETF: The iShares Russell 2000 ETF seeks to track the performance of the Russell 2000 Index, which represents approximately 2,000 small-cap U.S. companies. It offers investors access to more domestically focused, high-growth potential firms, albeit with higher volatility compared to large-cap indexes like the S&P 500.

First Trust Growth Strength Index: The First Trust Growth Strength Index is designed to identify U.S. companies that demonstrate strong growth characteristics combined with financial stability. It focuses on firms with robust earnings, revenue momentum, and durable balance sheets, aiming to capture sustainable growth leaders across sectors.

Choosing the right index for an annuity strategy depends on an individual's financial goals and risk tolerance. The S&P 500 provides steady and consistent returns, the iShares Russell 2000 ETF offers exposure to smaller, high-growth companies, and the Invesco QQQ ETF delivers opportunities for significant appreciation driven by technological innovation. By diversifying across these indexes, policyholders can achieve a well-balanced strategy that aligns with their long-term retirement objectives.

Account Options

The allocation can be spread across multiple risk-controlled accounts and one Fixed Rate Account. These include a mix of 1-year and 6-year term accounts. The 6-year accounts offer the potential for higher returns through cap rates, while the 1-year accounts provide more flexibility by allowing annual adjustments and lock-in gains.

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 earning rate limiting mechanisms like cap rates, participation rates, performance triggers, etc., meaning that you will be credited only a part of the index return to your annuity. 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.

Let’s have a look at the Pacific Protective Growth Registered Index-linked Annuity (RILA) rate sheet (as of August 2025) to understand how the earnings are determined.

From the above rate chart, you will notice that there are five indexes and multiple interest-crediting options tied to those indexes. Let’s have a look at different terms that are used by the company in the Pacific Protective Growth Registered Index-linked Annuity (RILA) rate chart:

Performance Mix Crediting Strategy: The Performance Mix crediting strategy calculates the weighted average of returns from three indexes (S&P 500, iShares Russell 2000 ETF, MSCI EAFE Index). Interest is determined according to the following weights: 50% for the highest-performing index, 30% for the second-highest-performing index, and 20% for the third-highest-performing index. The weighted average will be used with a participation rate (a percentage that determines how much of the index return is credited) to determine the interest that will be applied.

Tiered Participation Rate Crediting Strategy: The Tiered Participation Rate Strategy is a crediting method that applies two different participation rates depending on how much the index grows over a fixed term (typically six years). A “tier level” is first set, for example, 20%. If the index return at the end of the term is at or below that tier level, the first participation rate (say 100%) is applied to the entire return. If the index return is above the tier level, the return is split: the first rate applies to gains up to the tier, and the second, usually higher, rate (say 110%) applies to the portion above the tier.

Example: If the tier level is 20%, tier one rate is 100%, and tier two rate is 110%, then an index gain of 15% would credit 100% of that gain, or 15%. But if the index gained 50%, the first 20% would be credited at 100% (= 20%), and the additional 30% would be credited at 110% (= 33%). In total, the account would be credited 53% at the end of the term. This structure can reward investors with more than the actual index return in strong up-market scenarios.

Cap Rate Crediting Strategy: This refers to the rate at which your interest-earning capacity is capped for a fixed indexing term (typically 1 year). For example, over one year, if an index returns 12% but the contract’s cap rate is 8%, the annuitant will be eligible for an interest credit of 8% only. It doesn’t matter how much the index goes above the cap rate; the maximum interest that can be earned is the cap rate.

Dual Direction Crediting Strategy: The Dual Direction Crediting Strategy allows you to potentially earn interest whether the index moves up or down, provided the decline stays within your chosen protection level. At the end of the term, if the index posts a positive return, your account is credited with that gain, subject to any caps or participation rates. If the index posts a negative return but the decline is within the protection buffer (for example, –10%), instead of losing value, you are credited with a positive interest equal to the magnitude of the decline. However, if the index drops more than the protection level, losses are applied only to the amount beyond that buffer. For instance, with a 10% buffer, an index gain of +8% credits +8%, an index decline of –6% credits +6%, and an index decline of –15% results in a –5% loss. This strategy is designed to turn modest downturns into an opportunity for positive interest while still providing a cushion against deeper losses.

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 3.25%. 

Risk and Reward Control Customization

The Pacific Protective Growth Registered Index-Linked Annuity (RILA) offers a range of crediting strategies that allow contract holders to customize their balance between market risk and potential reward. In the rate chart, you will notice terms such as Buffer and Floor. Let us look at an example to better understand how these mechanisms function.

1. Buffer: The buffer is the percentage of market loss that Pacific Life absorbs during the crediting period. For example, a 10% buffer means that if the market declines by up to 10%, the annuity holder does not incur any losses. However, if the market loss exceeds the buffer, the policyholder’s account value will be reduced by the excess loss.

Example:

Market decline: 12%
Buffer: 10%
Loss incurred by policyholder: 2% (12% - 10%)

2. Floors: A floor sets the maximum amount of loss the policyholder is willing to absorb. Losses below this limit are absorbed by the insurer.

Example: With a -10% floor, if the market drops 30%, the policyholder only loses 10%, and the remaining 20% loss is absorbed by the insurer.

3. Performance Lock Feature: This feature allows policyholders to lock in gains by setting an Interim Value at any point during the crediting period, free of charge. Once the Return Lock is activated, additional index gains or losses will not affect the account until the next allocation anniversary. After the lock-in period, policyholders can reallocate to any available index strategy without having to wait for the end of the current crediting period.

The Return Lock is useful when you want to secure gains during favorable market conditions and protect your earnings from potential future market downturns, especially if you believe that the index has peaked for this crediting period, allowing you to lock in returns without waiting for the full term to end. The chart below provides a hypothetical example of how you might use Performance Lock.

An annuitant can allocate their premiums to one or more of these strategies. Among the available indexing strategies, the following options stand out to me.

Performance Mix: This strategy blends three different indexes and automatically weights more heavily toward the best performer over the term. It is a good choice if you want diversification across market segments without having to guess which index will lead, while still benefiting from buffer protection on the downside.

S&P 500 – 1-Year Point-to-Point with Cap and 15% Buffer: A short-term U.S. large-cap strategy that provides annual resets, making it suitable if you want frequent opportunities to capture market gains while limiting losses through a strong 15% buffer.

S&P 500 – 6-Year Point-to-Point with Cap and 15% Buffer: A longer-term option that offers higher growth potential due to a multi-year cap structure, while the 15% buffer provides a significant cushion against market declines. This strategy fits well for investors with patience and a longer time horizon.

MSCI EAFE – Tiered Participation with 10% Buffer: This strategy gives international developed market exposure with the added benefit of a tiered participation rate, which can potentially credit more than the actual index return in strong markets. The 10% buffer provides downside protection, making it attractive for diversifying outside the U.S. while balancing risk and reward.

S&P 500 – 6-Year Dual Direction with 10% Buffer: This unique approach can generate positive credits even in modestly down markets, as long as losses remain within the buffer. It works well if you want both long-term growth potential and the ability to turn slight downturns into gains.

Invesco QQQ ETF – Performance Trigger with 10% Buffer: This strategy credits a fixed rate if the Nasdaq-100 (via QQQ) finishes flat or positive for the term. It is particularly appealing if you want exposure to tech-heavy, growth-oriented companies, while the 10% buffer helps manage volatility often associated with the Nasdaq.

This mix balances growth potential (S&P 500 6-year, MSCI EAFE tiered, QQQ trigger) with defensive strategies (S&P 500 1-year, Dual Direction, Performance Mix), creating a well-rounded allocation across time horizons, asset classes, and market conditions.

You have the flexibility to allocate your premium across multiple crediting strategies, allowing you to diversify your growth potential based on different market indices and risk levels. This enables a balanced approach by combining strategies with varying buffers, participation rates, and cap structures.

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 Protective Growth 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 Protective Growth 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 and Built-In Benefits

Like most annuities, the Pacific Protective Growth Registered Index-Linked Annuity (RILA) includes several free benefits designed to provide financial flexibility and support during critical times. These features allow policyholders to access their funds without penalties under specific conditions, enhancing the overall value of the contract.

Nursing Home or Hospital Confinement Waiver: Policyholders may access their full contract value without incurring surrender charges or Market Value Adjustments (MVA) if they are confined to a nursing home or hospital for at least 30 consecutive days after the annuity is issued.

Terminal Illness Waiver: If the policyholder is diagnosed with a terminal illness with a life expectancy of less than one year, they can withdraw their entire contract value free of surrender charges and MVA.

Additionally, a Return-of-Purchase-Payment Beneficiary Benefit is included at no extra cost for policyholders up to age 80 (based on the age of the oldest owner or annuitant). For those aged 81–85 at the time of issue, this benefit is still available for an additional cost of 0.30%. This feature ensures that beneficiaries can recover the original premium if the contract owner passes away, adding an extra layer of protection.

It is also worth noting that a separate version of this policy exists with the Income Guard Rider, which comes with its own rate sheet and associated rider charges. Because it is structured differently and serves a distinct purpose, the Income Guard version is discussed in a separate, dedicated review.

Contract/Administrative Charge

The Pacific Protective Growth Registered Index-linked Annuity (RILA) does not impose any annual contract or administrative fees.

Who Is This Annuity Suitable For?

The Pacific Protective Growth Registered Index-linked Annuity (RILA) is designed to meet the needs of a diverse group of investors seeking both growth potential and protection from market losses. With its customizable blend of buffers, triggers, participation rates, and caps, it offers a level of control that appeals to a variety of financial goals and risk tolerances. Below, we outline who is most likely to benefit from this annuity.

Pre-Retirees and Retirees Seeking Customizable Risk and Reward: Ideal for those seeking protection against market losses, but with the potential for upside growth.

Investors with a Medium to Long-Term Investment Horizon: Best for those who can commit funds for 6 years to maximize growth potential through higher participation rates.

Those Seeking Tax-Deferred Growth: Provides tax-deferred growth, making it a good option for those looking to reduce current tax liabilities while growing wealth.

Who Might Not Find This Annuity Suitable?

While the Pacific Protective Growth Registered Index-linked Annuity (RILA) offers plenty of customization and protection features, it may not suit everyone. Here’s who might want to reconsider:

Individuals Seeking Maximum Growth: The use of caps and buffers may limit upside growth, which could be less appealing to those looking for unlimited market participation.

People With Short-Term Liquidity Needs: Withdrawals beyond the 10% free withdrawal limit are subject to surrender charges and interest adjustments, which may not work for those needing frequent access to funds.

Young Investors: Younger individuals with a longer time horizon may prefer more aggressive growth-focused investments, such as equities or ETFs, rather than a structured annuity.

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 Protective Growth RILA is designed for individuals who want equity-linked growth potential combined with built-in downside protection. With a wide selection of crediting strategies, including performance mix, tiered participation, dual direction, capped point-to-point, and performance triggers, it offers flexibility to align growth opportunities with varying market conditions and investor risk tolerances. The inclusion of buffer (and other protection levels) helps manage volatility, while the 6-year strategies provide the chance for enhanced long-term growth.

Beyond market-linked options, the contract includes meaningful built-in benefits such as nursing home, hospital confinement, and terminal illness waivers, along with a return-of-purchase-payment beneficiary benefit, strengthening its value as both a retirement growth and protection vehicle. While the annuity lacks optional income riders in its standard design, a separate Income Guard version exists for those who prioritize guaranteed lifetime income, which comes with its own costs and structure.

Overall, this annuity is best suited for investors with a medium-to-long time horizon who are comfortable with some market exposure but want clearly defined downside protection. For those seeking growth with guardrails and flexibility in how returns are credited, the Pacific Protective Growth RILA stands out as a competitive option within the RILA space.

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 dive deeper into our extensive reviews, click here.