Investor Advantage Pro B-Share review

It depends on what you want it to do. As a tax-deferred investment vehicle for someone who has run out of room in 401(k)s and IRAs and wants a wide fund menu, it is a reasonable option with a shorter-than-average surrender period. As a way to protect principal or guarantee income, it is a poor starting point, because the base contract does neither without paid riders. If you mainly want safety, an indexed or fixed annuity is the more direct tool.

The main reason to buy this is tax deferral on a fully invested portfolio you can't get more of in a 401(k) or IRA. The secondary reason is optionality: you can leave it as a straight accumulation account, add the i4LIFE Advantage income feature later, or elect an enhanced death benefit if legacy planning matters more than cost. The short 5-year surrender schedule also means you are not locking the money up for the eight to ten years that many variable annuities demand.

I think this is best for a higher-balance investor in their 50s or 60s, comfortable with market risk, who has already filled up other tax-advantaged accounts and wants additional tax-deferred space with a broad fund lineup. The large-account credits make it more sensible at balances of $250,000 or more, where the quarterly credit and earnings bonus help offset the cost. It is a poor fit for someone who wants principal protection, anyone uneasy about market losses, or a buyer whose main goal is guaranteed lifetime income from day one rather than an optional add-on.

You are not buying a guarantee. You are buying a tax-deferred container that holds mutual-fund-style subaccounts, and the value of that container rises and falls with the markets you choose. Strip away the brochure language and this is closer to a brokerage account than a fixed annuity: there is no cap, no floor, and no minimum guaranteed surrender value. What the insurance company adds is tax deferral, the option to convert to lifetime income later, and a death benefit. Those are the things you are paying the M&E and admin charges for.

The core of the contract is the subaccount lineup. There are 144 variable subaccounts available, with net expense ratios that the materials describe as ranging from roughly 0.48% to 2.23%, and an average fund expense around 0.96%. You allocate your premium across these funds, and your account value moves with their performance. Because this is a B-share, there is no upfront sales load, and the cost is recovered through ongoing charges plus the surrender schedule that applies if you exit within the first five years. There is no index cap or participation rate here, because this is not an indexed product. Your return is your funds' return, minus the contract and fund fees.

The most meaningful secondary feature is that income and death-benefit enhancements are optional rather than built in. The i4LIFE Advantage feature lets you turn the account into a stream of lifetime income for a fee described in the materials as 0.40% annually, but you only pay it if you elect it. On the death-benefit side, the standard contract pays the full account value, while the Guarantee of Principal benefit (0.25%, with a stated maximum of 1.40%) and the Earnings Optimizer benefit (0.30% under age 70, 0.70% at ages 70-75) can add protection or an earnings enhancement at extra cost. The point is that you are not forced to pay for guarantees you may never use, which is the opposite of a built-in income FIA.

For a variable annuity, the liquidity here is relatively friendly. During the first five years you can withdraw the greater of 10% of account value or 10% of premiums paid each year without a surrender charge, and beginning in year six you have full access with no early-withdrawal charge at all. There is no market value adjustment, which removes one layer of unpredictability that many fixed and indexed contracts carry. Surrender charge waivers are available for nursing-home confinement and terminal illness, subject to contract and state terms. Keep in mind this is still a tax-deferred vehicle, so withdrawals before age 59 1/2 can trigger IRS penalties on top of ordinary income tax on gains. The RMD treatment was not spelled out in the available materials, so if you plan to hold this in a qualified account, confirm how required distributions interact with the free-withdrawal amount.

This is where a variable annuity earns its skepticism, because the costs stack. The base contract charge is 0.95%, made up of a 0.85% mortality and expense (M&E) charge assessed daily and a 0.10% administration charge. On top of that you pay the underlying fund expenses, which average about 0.96% and can run as high as 2.23% depending on which subaccounts you pick. There is also a $35 annual contract fee, waived after year 15 or once the account value exceeds $100,000. Riders cost more: the i4LIFE income feature adds about 0.40% if elected, and the death-benefit enhancements add 0.25% to 0.70% depending on the option and your age. Working in your favor at higher balances are the large-account credits (0.10% or 0.15% quarterly on account values of $250,000 or more) and a small earnings bonus (0.0250% quarterly at that same threshold), which partially offset the M&E drag. Net of everything, a fully loaded version of this contract can easily cost 2% or more per year before the funds even earn anything, so the math works best for larger accounts that capture the credits.

Legal Entity: The Lincoln National Life Insurance Company

Parent: Lincoln Financial Group

AM Best Rating: A