Pacific Life Protective Growth (with Income Guard) RILA In-depth Review

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

The Pacific Protective Growth (with Income Guard) 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 “Contract Value.” This bucket is your annuity account balance, and all your withdrawals take place from it. Beyond this contract growth mechanism, the annuity also includes a Guaranteed Lifetime Withdrawal Benefit (Income Guard), which will be explored in detail later in this review.

The Pacific Protective Growth (with Income Guard) 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.

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, 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 (with Income Guard) 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 (with Income Guard) Registered Index-linked Annuity (RILA) rate chart:

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 with a 15% buffer is 9.00%. 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 9.00% 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 (with Income Guard) 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 contract 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.

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.

Invesco QQQ - 1-Year Point-to-Point with Cap and 15% Buffer: A short-term exposure to blue-chip technology companies 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 – 1-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.

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.

iShares Russell 2000 ETF - Performance Trigger with 10% Buffer: This strategy credits a relatively higher fixed rate if the Russell 2000 finishes flat or positive for the term. It is particularly appealing if you want exposure to small-cap companies, while the 10% buffer helps manage volatility often associated with the Russell 2000 Index.

This mix balances growth potential (S&P 500 1-year Cap, Invesco QQQ 1-year Cap, QQQ trigger) with defensive strategies (S&P 500 1-year Dual Direction), 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 contract value without fees. However, any withdrawal reduces both your contract 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

The main highlight of the Pacific Protective Growth is the optional Income Guard lifetime benefit rider it offers. The Income Guard rider provides policyholders with a reliable source of income for life, regardless of market performance or contract value depletion. This rider ensures that annuitants can withdraw a guaranteed amount annually, offering financial security and predictability in retirement.

How Withdrawals Are Calculated under the Income Guard Rider?

The amount that an annuitant can withdraw each year under the Income Guard rider is determined by the following formula:

Lifetime Withdrawal Percentage × Protected Payment Base = Annual Lifetime Withdrawal Amount

The lifetime withdrawal percentage is based on the annuitant’s age at the time withdrawals begin and the number of years since the contract was issued. It is calculated as Withdrawal % + Annual Deferral Credit %

The Protected Payment Base is the amount on which your lifetime withdrawals under the benefit are based. It initially equals your contract value at purchase and can increase with contract value, but is guaranteed not to decrease if the contract value goes down due to index-linked losses. The protected payment base will be reduced if you take early or excess withdrawals. Early withdrawals are those taken before you begin lifetime income. Excess withdrawals are those greater than allowed under the benefit.

Even if the contract value reaches zero, the annuitant will continue to receive the guaranteed withdrawal amount for life, given no excess withdrawals take place.

A key advantage of the Income Guard rider is its increasing withdrawal percentages if income withdrawals are delayed. For the first 10 years of the contract, the withdrawal percentage increases annually, allowing policyholders to optimize their retirement income by deferring withdrawals. The chart below shows deferral credits and withdrawal percentages for the Pacific Protective Growth RILA.

For example, consider Bob and Barbara, both age 57, who plan to retire in 10 years. They allocate $100,000 into the annuity with the Joint Life Income option and a 0.30% annual deferral credit. Over the 10-year deferral period, their protected payment base benefits from both deferral credits and several automatic resets, growing from $100,000 to $142,000. At that point, their withdrawal percentage locks in at 7.85% (4.85% + 3.00%). When they begin taking income in year 11, their protected payment amount equals $11,147 annually ($142,000 × 7.85%), and it will not go down for the rest of their lives.

Income Rollover Feature for Enhanced Liquidity

Once you begin taking lifetime income withdrawal payments, the income rollover feature allows the rollover of unused withdrawal amounts from one contract year into the next. If the maximum protected payment amount has not been withdrawn in a contract year, the unused amount (income rollover amount) is carried over to the following contract year. This can be done over multiple years, but note that the income rollover amount will never be more than the protected payment amount as calculated under this optional benefit. 

However, I see little tangible benefit to using this feature. The amounts that you choose not to withdraw do not continue to grow or earn interest within the contract. In practice, even if you do not need the money in a given year, you could withdraw it and deposit it into an interest-bearing account or another investment vehicle. That way, the funds would continue to work for you, rather than simply sitting as unused withdrawal capacity within the annuity.

Rider Charges

The Income Guard rider carries an annual fee of 1.50% of the Protected Payment Base, which is deducted each year from the contract value. This charge remains fixed throughout the contract duration. While this fee ensures the annuitant receives lifetime income, it is important to consider its impact on the overall contract value and potential growth. 

In my opinion, the rider charge is slightly higher than many competing products, which may reduce its overall competitiveness. That said, the rider does include additional features such as automatic resets and deferral benefits, which add value for certain investors. It is advisable to consult a qualified financial professional to determine whether this annuity aligns with your specific retirement goals and circumstances.

Also, like most annuities, the Pacific Protective Growth (with Income Guard) 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 without the Income Guard Rider, which comes with its own rate sheet. Because it is structured differently and serves a distinct purpose, the “without Income Guard” version is discussed in a separate, dedicated review.

Contract/Administrative Charge

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

Who Is This Annuity Suitable For?

The Pacific Protective Growth (with Income Guard) 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, I outline who is most likely to benefit from this annuity.

Pre-Retirees and Retirees Seeking Lifetime Income Withdrawals: This annuity is particularly well-suited for individuals who want market participation with a degree of downside protection, while also securing the option of guaranteed lifetime income through the Income Guard rider.

Investors with a Medium to Long-Term Investment Horizon: Best for those who can commit funds for a minimum of 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 (with Income Guard) RILA offers plenty of customization and protection features, it may not suit everyone. Here’s who might want to reconsider:

Those Wanting a Straightforward RILA: This product comes with a wide array of crediting methods, buffers, and rider options, which can make it somewhat complex. It may not be ideal for investors who prefer a simple, easy-to-understand RILA without the need to analyze multiple moving parts.

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 with Income Guard is designed for investors who want to participate in market growth while securing guaranteed lifetime income. With features such as deferral credits, automatic resets, and buffer protection, it helps grow and protect the protected payment base before withdrawals begin. Once income starts, the rider locks in guaranteed payments for life and provides flexibility through features like income rollover.

This version of the contract is best suited for pre-retirees and retirees who value both downside protection and a predictable income stream in retirement. By combining growth opportunities with the security of guaranteed lifetime withdrawals and important built-in benefits such as nursing home and terminal illness waivers, the Income Guard option strengthens the annuity’s role as a retirement planning tool for those seeking a balance between growth and long-term income security. However, annuitants should carefully consider the additional cost of the Income Guard rider, as higher charges may impact the overall competitiveness of the product relative to alternatives.