American Legacy B-Share review

Yes, for the right buyer. This is a good annuity for someone who specifically wants the American Funds investment lineup inside a tax-deferred annuity and values the flexibility to add a living benefit, an enhanced death benefit, or care-support coverage at issue. It is less appealing for someone who is fee-sensitive, wants a built-in income guarantee without electing a rider, or lives in New York, where the contract is not approved.

The main reason to buy American Legacy B-Share is tax-deferred market participation through professionally managed American Funds portfolios. The secondary reason is optionality. In real-world terms, this is the kind of annuity someone buys when they already like the American Funds approach to investing, want to defer taxes on growth and reallocation, and want the ability to layer on a lifetime income rider or an enhanced death benefit without committing to those costs from day one. A buyer who wants long-term care support inside the same contract can also elect the long-term care rider.

I think American Legacy B-Share is best for a mid-stage accumulator — roughly someone in their 50s or early 60s — who is comfortable with market risk, wants the American Funds lineup in a tax-deferred wrapper, and is buying through a commission-based advisor. It fits both qualified and non-qualified money, though the tax deferral is most meaningful for non-qualified dollars since an IRA is already tax-deferred. It is a poor fit for someone who is highly fee-conscious, someone who wants guaranteed lifetime income as the primary purpose (a built-in income product would serve that more directly), or anyone shopping in New York.

You are buying access to roughly 36 variable subaccounts — managed through American Funds and LVIP American Funds — inside a tax-deferred insurance wrapper, with the option to add living benefit, death benefit, and care-support riders. The subaccounts carry their own fund expenses, and the contract layers a 1.40% annual insurance charge on top. The insurance wrapper buys you tax deferral and the right to elect guarantees; it does not, by itself, protect your principal. If you do not elect a rider, your account value rises and falls with the subaccounts you choose, just like a mutual fund portfolio, but with an extra annual cost.

American Legacy B-Share allocates your premium across the available variable subaccounts, which span the American Funds and LVIP American Funds families and cover a range of equity, fixed income, and balanced strategies. The brochure indicates roughly 36 subaccount options; the exact current count and individual fund expense ratios were not fully itemized in the available materials, so a shopper should request the current subaccount list and fee schedule directly before allocating.

Your returns are driven entirely by the performance of the subaccounts you select, minus the underlying fund expenses and the contract's 1.40% base charge. There is no index cap, participation rate, or buffer here — this is a true variable contract, meaning you take full market risk and full market upside within the funds you choose. The tax deferral is the structural benefit: gains and reallocations inside the contract are not taxed until you withdraw.

The most meaningful secondary feature is the optional rider menu, and the enhanced death benefit in particular. The standard death benefit pays the greater of account value or the highest contract anniversary value — a high-water-mark feature that locks in market gains for beneficiaries on each anniversary. For an additional charge reflected as a reduced M&E adjustment of about 0.05%, the Enhanced Guaranteed Minimum Death Benefit upgrades that protection further.

Beyond the death benefit, buyers can elect a ProtectedPay living benefit. The spec lists several versions — ProtectedPay Select Core (with Estate Lock) II, Select Core VII, Select Max VI, and Select Plus V — with a maximum annual benefit charge of 1.50% and a roll-up described as 6.00% simple interest on the benefit base. This is an optional guaranteed lifetime withdrawal benefit, not a built-in income feature, so it only matters if you elect and pay for it. The specific roll-up and benefit charge figures carried medium confidence in the source materials, so confirm the current rider terms before relying on them. A long-term care rider is also available for buyers who want care-support coverage inside the same contract.

This annuity is built for long-term retirement dollars, not short-term cash needs. Each year you can withdraw up to 10% of account value or 10% of total purchase payments without a surrender charge during years 1 through 7, and after the eighth year you have full access to the contract. Withdrawals above the free amount during the surrender period are subject to a 7-year charge schedule of 7%, 7%, 6%, 6%, 5%, 4%, 3%, then 0%.

A market value adjustment (MVA) also applies during the surrender period. An MVA means your surrender penalty can move up or down with interest rates — if rates have risen since you bought the contract, a large early withdrawal can cost more than the stated surrender charge alone. Combined with the seven-year ladder, that makes this a contract you commit to, not one you treat as accessible savings. There is a $35 annual contract fee, waived after 15 years or once account value exceeds $100,000.

The fee structure is the central tradeoff here. The base contract costs 1.40% per year — 1.30% mortality and expense (M&E) plus 0.10% administration — before you add any subaccount expense or rider. Layer on a typical actively managed subaccount and the all-in cost climbs further; the brochure did not itemize current fund expense ratios, so model these carefully. Add the ProtectedPay living benefit at its 1.50% maximum charge and total annual cost can approach 3% or more.

That is the trade to name plainly: the 1.50% rider charge buys a guaranteed lifetime income base with a 6.00% simple roll-up, but only if you actually turn income on and live long enough to draw it down. For a pure accumulator who never elects the rider, that cost never applies — but the 1.40% base charge still does, every year, which is the reason a fee-conscious buyer should compare this against lower-cost variable annuities or an advisory-share version. The $35 contract fee is a minor consideration and disappears for larger or longer-held contracts.

Legal Entity: The Lincoln National Life Insurance Company

Parent: Lincoln Financial Group

A.M. Best Rating: A