How it works
Pacific Life Index Edge Fixed Indexed Annuity: product description and policy
The Pacific Life Index Edge Fixed Indexed Annuity (FIA) offers the annuitant (annuity investor) the opportunity to earn a portion of the market index-linked return without incurring the risk of market downside. This plan is suited for individuals who want to grow and protect their retirement savings through competitive participation and cap options. It also appeals to those seeking guaranteed lifetime income, offering a balance between income security and the opportunity for long-term growth.
Let’s look at the high-level fine print of the Pacific Life Index Edge Fixed Indexed Annuity, and then we will discuss each point in detail.
| Product Name | Index Edge |
|---|---|
| Issuing Company | [Pacific Life](https://annuityrateshq.com/reviews/pacific-life-annuity-reviews) |
| AM Best Rating | A+ (2nd of 13 ratings) |
| Initial Guaranteed and Withdrawal Charge Period(s) | 5, 7 and 10 years |
| Maximum Issue Age | 85 Years |
| Minimum Initial Purchase Amount | $25,000 |
| Surrender Charge Schedule | Varies for different tenure policies |
| Interest Crediting Options | - 1-year point-to-point with cap - 1-year point-to-point with participation rate and spread - 1-year performance-triggered index option - Fixed interest rate |
| Plan Types | Qualified and Non-qualified |
| Indexes | - S&P 500 Index - BlackRock Endura Index |
| Free Withdrawals | 10% after the first completed contract year through the end of the Surrender Charge period |
| Death Benefit | The death benefit will be equal to the greater of the contract value or the Guaranteed Minimum Surrender Value and is paid upon the death of the first owner or last annuitant. Pro rata index-linked interest is credited to the contract value on the Notice Date (the date Pacific Life receives the death benefit claim in good order) |
| Optional Riders | This policy comes with two optional riders: - Interest Enhanced Income Benefit - Interest Enhanced Death Benefit |
| Surrender Value | Guaranteed to receive the greater of the contract value (minus applicable optional benefit charges, a market value adjustment (MVA), and/or withdrawal charges) or the Guaranteed Minimum Surrender Value. |
| Guaranteed Minimum Surrender Value | The Guaranteed Minimum Surrender Value equals 87.5% of purchase payments (minus any withdrawals), accumulated at a fixed interest rate, which is set at contract issue. |
The Pacific Life Index Edge Annuity is almost identical for all three 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 Edge 7 (unless mentioned otherwise) for the rest of the article.
How does the Pacific Life Index Edge policy work?
Any annuitant (maximum age at the time of policy issue: 85) can purchase the Pacific Life Index Edge Annuity with a minimum initial purchase amount of $25,000. In return, they will earn 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.
At the time of this review (Aug 2024), this was the published figure. For current rates, see Current Rates ↓.
The Pacific Life Index Edge Annuity offers the annuitant the ability to choose from one or more of the two indexes to determine their earnings crediting formula. Each of these two indexes has different strategies and a fixed-rate guaranteed interest strategy to choose from (making a total of 5 strategy options). We will discuss each available index briefly:
1. S&P 500 IndexThe 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. It is a reliable index and has often succeeded in the test of time. It is very important to note that, similar to most other annuities, the Pacific Life Index Edge Annuity offers the S&P 500 index with par rates, spreads, and caps in place, meaning that your interest-earning capacity is capped. These rates change frequently; I will discuss the rates in detail shortly.
2. BlackRock Endura IndexThe BlackRock iBLD® Endura® VC5.5 ER Index is a financial index designed to offer potentially more consistent returns compared to traditional stock indices. It achieves this through a diversified portfolio that includes U.S. equities, U.S. government fixed income, and cash, all managed with daily volatility controls to mitigate downside risk. However, while these volatility controls may result in less fluctuation in rates of return when compared with indexes that don’t use them, they also may reduce the overall rate of return compared with those other indexes.
It is very important to note that the Pacific Life Index Edge Annuity comes with cap rates, participation rates, spreads, or performance-triggered options for these indexes, meaning that you will be credited only a part of the index return to your annuity. These rates change frequently; I will discuss these rates more shortly.
Note: In addition to allocating funds to the following indexes, the annuitant may also allocate funds at a fixed interest rate. These Fixed Rates change from time to time. The 1st year Fixed Value Rate for the 7-year withdrawal charge period at the time of writing this article was 4.25%.
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. There are a few rates and caps that the company has in place that affect our earnings.
The Pacific Life Index Edge Annuity uses five crediting strategies:
- Fixed Account Option
S&P 500 Index
2. Point-to-Point Option with Cap3. Point-to-Point Option with Participation Rate and Spread4. Performance-Triggered Index Option with Declared Rate
BlackRock Endura Index
5. Point-to-Point Option with Participation Rate and Spread
Let’s explore the Pacific Life Index Edge 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 Edge Annuity rates, contact your trusted financial advisor. You can also view the latest indexing rates of this annuity on the company's website.
The table above shows that the annuitant can choose from two underlying indexes - the S&P 500 Index and the BlackRock Endura Index, offering a total of 5 crediting options (4 index-based and 1 fixed). These indexes offer multiple interest crediting options, including participation, performance-triggered, and cap-rate crediting. 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.
- Point to point with Cap: Cap rate is the most important terminology in a Fixed Indexed Annuity. 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 entire withdrawal charge period. In this case, the performance-triggered rate for the S&P 500 Index is 6.75%. 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 to the annuity will be 6.75% irrespective of the S&P 500's actual return.
- Point-to-Point Option with Participation Rate and Spread: This indexing strategy applies BOTH the participation rate and the spread to determine the index interest credit. The formula to calculate the index credit in this strategy is: (Index Return x Participation Rate) – Spread = Interest Credited. Let’s take an example where the participation rate is 60%, the spread is 2%, and in a given year, the index returned 10%. In this case, the interest credited to the annuity account would be 60% of 10% (PR), less 2% (SP), i.e., 4%.
- Fixed Rate: If you opt for a fixed rate, you simply earn the fixed rate for a particular period specified by the company before your policy begins. These rates are usually very 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 4.00%.
At the time of this review (Aug 2024), this was the published figure. For current rates, see Current Rates ↓.
An annuitant can allocate different portions of their premium to various indexing strategies. For example, they could allocate 30% of their premium to the S&P 500 Index with a 1-year annual point-to-point with a cap rate, 20% to the S&P 500 Index with a 1-year point-to-point with a performance-triggered index option, 25% to the BlackRock Endura Point-to-Point Option with a participation rate and spread, and the remaining 25% to a Fixed Account. This flexibility allows annuitants to tailor their investment strategy according to their risk tolerance and financial goals.
Based on the index constituents, past performance, and volatility, I believe that combining the S&P 500 1-year point-to-point with the Cap and BlackRock Endura point-to-point with a participation rate strategy has the highest return potential.
Accessing your Money
Each year, you are allowed a 10% free withdrawal of your contract value without incurring charges, fees, or penalties.
At the time of this review (Aug 2024), this was the published figure. For current rates, see Current Rates ↓.
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 Edge Annuity.
| Completed Contract Years | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11+ |
|---|---|---|---|---|---|---|---|---|---|---|---|
| 5-yr | 9% | 8% | 8% | 7% | 6% | 0% | |||||
| 7-yr | 7% | 7% | 7% | 7% | 6% | 5% | 4% | 0% | |||
| 10-yr | 9% | 9% | 8% | 7% | 6% | 5% | 4% | 3% | 2% | 1% | 0% |
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 Edge 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 waivers
Riders and waivers
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 Edge Annuity comes with an optional death benefit, enabling annuitants to help protect and enhance the legacy they leave to their beneficiaries, and an enhanced income benefit that helps annuitants to withdraw an annual income payment that they cannot outlive.
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.
At the time of this review (Aug 2024), this was the published figure. For current rates, see Current Riders ↓.
Enhanced Lifetime Income Benefit
The Enhanced Lifetime Income Benefit is an optional guaranteed minimum withdrawal benefit. Before reaching the maximum annuity date, this benefit serves as an alternative to annuitization, allowing for guaranteed lifetime withdrawals starting at or after age 59½. It also offers a 5.50% Annual Credit, which is added to your withdrawal base for up to 10 years. Note that this credit is not added to your contract value and does not represent a rate of return. The current annual charge for both Single Life and Joint Life options is 1.00% of the Protected Payment Base, with a maximum charge of 1.50%.
Also, as with most annuities, the Pacific Life Index Edge fixed-indexed annuity has free in-built nursing home and terminal illness waivers.
Qualified Nursing Care Benefit – After the first contract year, 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 Edge 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.
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:
| Rating Agency | Rating |
|---|---|
| AM Best | A+ (2nd of 13 ratings) |
| S&P | AA- (4th of 21 ratings) |
| Fitch | AA- (4th of 19 ratings) |
| Moody’s | Aa3 (4th of 21 ratings) |
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.
Pros
Decent Caps, Performance-Trigger, and Fixed Rate
Pacific Life Index Edge Fixed Indexed Annuity provides decent caps, even for a very popular index like the S&P 500. Similarly, it also offers a performance-trigger rate higher than many of its competitors. It also offers competitive fixed rates.
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
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.
Cons
Less Number of Indexing Options
Above-average Optional Rider Cost - The cost of the enhanced lifetime income rider in the Pacific Life Index Edge annuity is slightly above average compared to peers offering similar benefits.
High Initial Payment
$25k vs. $10k on other popular plans
Conclusion
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 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 Edge Annuity helps you grow your savings with much less risk. Through its indexed annuity, it offers principal protection and the opportunity to participate risk-free in the market index. Additionally, it provides the option to add riders for enhanced benefits, such as a guaranteed income stream and an enhanced death benefit for leaving a legacy. If you are considering buying a Fixed Indexed Annuity that works on the growth front with optional income and death riders, the Pacific Life Index Edge Annuity might be an ideal product to consider.