Investor Advantage Advisory (NY) review

It depends on why you want it. As a low-cost, tax-deferred investment shell for money managed by a fee-based advisor, it is a good annuity — the contract charge is minimal and you keep full liquidity. As a guarantee product, it is not, because the income and death-benefit protections that distinguish an annuity from a brokerage account are optional and carry their own fees. Buy it for the tax deferral and the rider menu, not for any guarantee that comes standard.

The rational reason to own this contract is tax deferral inside a fee-based account. If you have already maxed out other tax-advantaged space and you are working with an advisor who manages your money for a fee, this lets that money grow tax-deferred without the high insurance costs of older commission-based variable annuities. The optional i4LIFE Advantage rider also gives you a path to turn the account into lifetime income later, and advisory fee withdrawals up to 1.25% per year do not reduce the optional Guarantee of Principal death benefit base — a detail that matters in a fee-based account.

I think this is best for an investor in New York, likely in the wealth-accumulation phase before retirement, who already has a relationship with a fee-based (RIA) advisor and wants tax-deferred market exposure beyond their 401(k) and IRA. It suits someone comfortable with market risk who values liquidity and low cost over guarantees. It is a poor fit for someone who wants a guaranteed rate, a guaranteed income floor from day one, or a simple product they can manage themselves — this contract assumes an advisor is steering it.

Strip away the labels and this is a tax-deferred investment account in an insurance wrapper. You allocate among 144 variable subaccounts — the underlying funds — and your return is whatever those funds earn, minus expenses. The "I-Share" class means there is no surrender charge and no built-in commission, which is why the insurance cost is so low; you pay your advisor separately for managing it. The annuity part of the deal is really two things: tax deferral now, and the option to add a guarantee (lifetime income or principal protection) later. Without electing those riders, the insurance value is purely the tax treatment.

The core of this contract is the subaccount platform. You choose from 144 variable investment options, with net subaccount fees running 0.48% to 2.23% and an average fund expense around 0.96%. On top of the funds, Lincoln charges a 0.10% mortality-and-expense (M&E) fee assessed daily, plus a $50 annual contract fee that is waived once your account value reaches $50,000. There is one quiet upside feature: an Earnings Bonus of 0.0250% per quarter is added to the account value when the quarterly account value is at least $1,000,000 — a small reward for large balances. Because there is no surrender period, you can move money out at any time without a contract penalty, though taxes and any IRS early-withdrawal rules still apply.

The most meaningful optional feature is the i4LIFE Advantage (Advisory) II income benefit. Unlike a traditional roll-up income rider, i4LIFE does not grow a separate guaranteed base at a fixed percentage; instead, income is based on your account value divided by an annuity factor at the end of the Access Period, which keeps you invested while drawing income. It costs 0.50% annually (the current and maximum rate), charged daily, and that fee drops by 0.10% if your account value is $1,000,000 or more right before the Lifetime Income Period begins. There is also an Annual Persistency Bonus credited quarterly to the account value if you select a long Access Period (the longer of 20 years or years to age 85) and meet a threshold — 0.10% quarterly at $500,000 of account value, 0.20% quarterly at $1,000,000. The spec notes these rider bonus details at medium confidence, so confirm the exact thresholds and crediting on the current rider disclosure before relying on them. RMD withdrawals do not stop the Persistency Bonus, which is a helpful touch for older owners.

Liquidity is the easy part of this contract. There is no surrender period and no surrender charge, so you can withdraw or transfer money at any time without a contract penalty. The spec does not list a separate penalty-free withdrawal provision because there is nothing to be penalty-free against — the whole account is accessible. Twelve transfers per year between subaccounts are free, with a $25 fee after that. The usual tax rules still apply: withdrawals of gains are taxable, and the IRS 10% penalty can apply before age 59½. One practical note — the automatic withdrawal program for paying investment fees is not available if you elect the i4LIFE Advantage rider, so advisors will handle fee billing differently in that case.

The headline is that the contract is cheap: a 0.10% M&E charge and a $50 annual fee waived at $50,000. But the total cost of owning this is not 0.10%. You also pay the underlying fund expenses (averaging about 0.96%, ranging 0.48% to 2.23%) and your advisor's separate management fee, which is billed outside the contract and is not disclosed in the brochure because it is set by your advisor. If you add the i4LIFE income benefit, that is another 0.50% per year; the optional Guarantee of Principal death benefit adds 0.25% annually (with a stated 1.40% maximum), charged quarterly. So the real question is whether tax deferral and the optional guarantees are worth the stacked cost — for a fee-only advisory client in a high tax bracket with a long horizon, they often are; for a smaller or shorter-term account, the layered fees can outweigh the tax benefit.

Legal Entity: Lincoln Life & Annuity Company of New York

Parent: Lincoln Financial Group

AM Best Rating: A