How it works
Lincoln Covered Choice Advisory Fixed Indexed Annuity: product description and policy
The Lincoln Covered Choice Advisory is a Fixed Indexed Annuity (FIA) plan that offers the annuitant (annuity investor) the opportunity to earn a portion of market index-linked returns without incurring the risk of market downside. This is a suitable plan for people looking for a plain-vanilla fixed-indexed annuity (with no optional riders such as enhanced lifetime income, enhanced death benefit, etc.) and who aim to grow and protect their retirement savings.
Let’s have a look at the high-level fine print of Lincoln Covered Choice Advisory Fixed Indexed Annuity, and then we will discuss each point in detail.
| Product Name | Covered Choice 5 Advisory |
|---|---|
| Issuing Company | Lincoln National Life Insurance Company |
| AM Best Rating | A (3rd of 13 ratings) |
| Withdrawal Charge Period(s) | 5 year |
| Maximum Issue Age | 85 Years |
| Minimum Initial Purchase Amount | $10,000 |
| Surrender Charge Schedule | 2%, 2%, 2%, 2%, 2%, 0% |
| Crediting Period and Strategies | 1-year point-to-point with cap rate, 1-year dual-trigger, 1-year performance triggered, and 1-year fixed with interest rate guaranteed |
| Plan Types | IRA, Roth IRA, Nonqualified Account, SEP IRA, SIMPLE IRA, 401(a) |
| Indexes | S&P 500 Index |
| Free Withdrawals | 10% of the annuity’s Accumulated Value; per year |
| Death Benefit | Upon the annuitant’s death, the beneficiary can either choose from (i) Account Value (Lumpsum) or (ii) Guaranteed Minimum Value *If death occurs after annuitization, payments will be consistent with the Settlement Option selected |
| Riders | Free Nursing home and terminal illness waivers -No optional paid riders |
| Surrender Value | Greater of Account Value (less any withdrawal charges/MVA) and the Minimum Guaranteed Value |
An annuitant (maximum age at the time of policy issue: 85) can purchase the Covered Choice Advisory Fixed Indexed Annuity with a minimum initial purchase amount of $10,000, and in return, they will earn a portion 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: free withdrawals, long-term care, terminal illness, injury, or when a death benefit is payable.
At the time of this review (Aug 2025), this was the published figure. For current rates, see Current Rates ↓.
The Lincoln Covered Choice Advisory Fixed Indexed Annuity offers the annuitant the option to choose from one or more crediting strategies tied to the S&P 500 Index to determine their earnings credit. The plan includes three indexing strategies and one fixed-rate, guaranteed-interest strategy, for a total of four strategy options.
- 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.
Note: In addition to allocating funds to the following indexes, the annuitant also has the option to allocate funds at a fixed interest rate. These Fixed Rates tend to change over time. The first-year fixed rate for the 5-year withdrawal charge period at the time this article was updated was 3.75%.
Rates and costs
Rates, bonus, surrender charges, and costs
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. Like any fixed indexed annuity, the company has a few rate-limiting mechanisms (such as cap rates, participation rates, etc.) 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.
The formula to calculate the earnings credited is as follows:
- For Point-to-point Strategies with Caps: Index return over a given crediting period with a maximum potential of earning the cap rate.
- For Trigger rate strategies: Trigger rate is credited if certain conditions are met (to be discussed shortly).
Let’s have a look at the Lincoln Covered Choice Advisory rate sheet (as of the date of updating this article) to understand how the earnings are determined.
The table above shows that the Covered Choice Advisory fixed indexed annuity offers the annuitant 4 crediting options. We can see that there are a number of crediting strategies, such as cap rate, performance-triggered, and dual trigger; Plus, there is also an option for a fixed account rate. Let's discuss these crediting strategies and see how they work.
- Cap Rates: This refers to the rate at which your interest-earning capacity is capped. For example, if an index returns 12% but the contract’s cap rate is 6%, the annuitant will be eligible for an interest credit of 6% 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.
- It is noteworthy that the company offers a relatively good cap rate (8.50%) for the S&P 500 Index when compared to other similar policies.
- At the time of this review (Aug 2025), this was the published figure. For current rates, see Current Rates ↓.
- 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. Suppose the change in the value of the index during that one year is zero or positive. In that case, the declared index gain interest rate is multiplied by the option’s account value to determine the index interest credits. The index interest credits pursuant to this option will never be less than zero. The declared interest rate is set at contract issue and applies for the entire withdrawal charge period. In this case, the performance-triggered rate for the S&P 500 Index is 8.00%. It means that if the S&P 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 very good performance triggered rate for the S&P 500 Index when compared to other similar policies.
- Dual Trigger: At the end of the one-year indexed term, if the index has a positive change or remains flat, your account is credited with the trigger rate. If the index change is negative but less than the value of the trigger rate, the difference is credited. If the index is negative by the value of the trigger rate or more, your account is protected from loss, but no interest will be credited. At first glance, this appears to be a more logical choice than selecting the Performance-Triggered index option; however, the trade-off is a lower trigger rate compared to the Performance-Triggered option (7.50% vs 8.00%).
- Fixed Account Rate/Declared Rate: If you opt for a fixed account rate, you simply earn the fixed rate for a particular period specified by the company before your policy begins. These rates usually tend to be very low as 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 3.75%.
I believe that choosing the 1-year S&P 500 performance trigger or the 1-year S&P 500 with caps is the best option at this time. For these two options, the company is offering relatively good rates when compared to the competitors.
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 that is above the free withdrawal amount available in a given contract year), you may be entitled to access additional monies, although certain charges and penalties may apply. Any amount withdrawn in excess of the remaining free withdrawal amount is subject to a Surrender Charge. Below is the Surrender Charge schedule for the Lincoln Covered Choice Advisory Fixed Indexed Annuity.
| Completed Contract Years | 1 | 2 | 3 | 4 | 5 | 6+ |
|---|---|---|---|---|---|---|
| Surrender Charge % | 2% | 2% | 2% | 2% | 2% | 2% |
Market Value Adjustments - 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. The surrender charge schedule is different for the different tenures of annuities and also changes for some states. For a quick comparison of surrender charges across different Lincoln products, you may visit their annuities product page here.
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 offer flexibility in balancing lifetime income needs with legacy goals, enabling you to tailor how and when funds are accessed during retirement.
Death Benefit
Upon the annuitant’s death, the beneficiary will get the greater of (i) Account Value or (ii) Minimum Guaranteed Value
Note: You may only purchase a Lincoln Covered Choice 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 Lincoln Financial Group.
Riders
The Lincoln Covered Choice Advisory is a plain-vanilla annuity that does not offer any optional paid riders. In my opinion, this actually appeals to many people who don’t understand or do not want to dive deep into the complex methodologies the riders often come up with. However, as with most annuities, the Covered Choice Advisory FIA has free in-built nursing home and terminal illness waivers.
Nursing Home Waiver: After the first contract year, an annuitant can withdraw up to 100% of the contract’s accumulated value if he is confined to a Qualified nursing home for at least 90 consecutive days. No withdrawal charge or MVA applies if the owner qualifies for this benefit. Diagnosis must occur after the contract is issued, and written proof with supporting documentation is required from a qualified physician.
Terminal Illness Waiver: After the first contract year, an annuitant can withdraw up to 100% of the contract’s accumulated value if he is diagnosed with a terminal illness with a prognosis of 12 months or less. No withdrawal charge or MVA applies if the owner qualifies for this benefit. Diagnosis must occur after the contract is issued, and written proof with supporting documentation is required from a qualified physician.
Contract/Administrative Charge
The Lincoln Covered Choice Advisory Fixed Indexed Annuity levies no annual contract or administrative fees
Carrier
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.
Lincoln National Life Insurance Company
Lincoln National Life Insurance Company has been in the business since 1905. It is one of the largest and oldest providers of fixed and fixed indexed annuities in the US and has been regularly in the top ten Fixed Indexed Annuity Sales.
It is rated as follows by the rating agencies:
| Rating Agency | Rating |
|---|---|
| AM Best | A (3rd of 13 ratings) |
| S&P | A+ (5th of 21 ratings) |
| Fitch Ratings | A+ (5th of 19 ratings) |
| Moody's Investors Service | A2 (6th of 21 ratings) |
Lincoln National Life Insurance Company has maintained decent ratings for many years. It is considered financially strong and stable. In 2025, the company paid out nearly $7.76 billion in claims and benefits. As of year-end 2025, some of the other financial highlights for Lincoln National Life Insurance Company include its:
- $18.21 billion in total sales
- $10.91 billion of stockholders' equity
- $1.18 billion in net income
- $417.2 billion in total assets
Thus, based on the operating history and financial numbers, we can safely say you can trust your savings with Lincoln National Life Insurance Company.
Pros
The plan offers the S&P 500 Index with decent crediting strategies
This is a very straightforward indexed annuity product
Free Confinement and Terminal Illness Waiver Benefit
This no-fee rider is automatically included for owners under age 65 and includes both a Qualified Nursing Care and Terminal Illness Benefit.
Multiple Payout Options
Lump sum or Annuitization option with Life Only, Life with Period Certain, Joint and Survivor Life, etc.
Cons
There are no optional riders to choose from
I couldn’t find any provision for Minimum Guaranteed Surrender Value in the product’s brochure
Conclusion
Conclusion
People are living longer, which means retirement savings may need to last longer too. A good annuity fit should protect principal, offer a reasonable path for growth, and make income options clear without hiding the trade-offs.
The Lincoln Covered Choice Advisory FIA helps you grow your retirement account with much less risk. Through its relatively higher cap and trigger rates, it offers faster growth with principal protection. The product’s plain-vanilla nature (no paid riders or complex calculations) might also appeal to people who don’t like deep-diving into the methodologies often associated with the riders. If you are considering buying a simple fixed-indexed annuity that is purely growth-oriented, the Lincoln Covered Choice Advisory FIA may be a decent option to consider.