Level Advantage 2 B-Share Principal Guarantee Death Benefit review

It depends on your risk tolerance. This is a good annuity for someone who wants index-linked growth potential that runs higher than a fixed indexed annuity and who genuinely understands that they can lose money in a down market depending on the protection level they pick. It is not a good fit for someone who wants full principal protection, guaranteed lifetime income, or quick access to all of their money during the first six years. If the words "you could lose part of your principal" are a dealbreaker, a fixed indexed annuity is the more appropriate category, not this one.

The main reason to buy Level Advantage 2 is to get a higher growth ceiling than a fully protected fixed indexed annuity offers, while still capping how much you can lose. A fixed indexed annuity gives you a 0% floor but usually a modest cap. A RILA like this one trades some of that downside protection for a meaningfully higher upside. The secondary reason is control: you choose your buffer or floor level, so you decide how much risk you are taking. For a buyer who finds fixed indexed annuity caps too low but is not willing to put the money fully in the market, this middle ground is the appeal.

I think Level Advantage 2 is best for a buyer in their 50s or 60s who has a six-year-plus time horizon, wants more growth potential than a fixed indexed annuity provides, and is comfortable taking on a defined slice of market risk to get it. It works well for non-qualified money or qualified accounts where the buyer is not relying on the contract for near-term income. It is less appealing for conservative buyers who cannot tolerate any loss of principal, for anyone who needs guaranteed lifetime income (this version has no income rider), and for buyers who might need full access to their money inside six years. The optional Guarantee of Principal death benefit specifically targets older buyers issued between ages 76 and 85, so a younger buyer drawn in by that feature in the product name should know it will not be available to them.

You are not buying a fully protected annuity, and you are not buying a direct stock market investment either. You are buying a structured insurance contract that links your interest to an index and lets you choose how much of a market drop the insurer absorbs before losses start hitting your account. That is the whole point of a RILA, and it is the most important thing to understand here. With a buffer, the insurer absorbs the first slice of a loss (for example, the first 10%, 15%, 20%, or 30%) and you take anything beyond it. With a floor, your loss is limited to a stated maximum and the insurer covers everything past that point. A 100% protection option is also available for buyers who want a fully shielded sleeve. So the real product is a set of risk dials, not a single guarantee. Your actual outcome depends entirely on which strategy you pick and how the index performs.

The core of Level Advantage 2 is its structured crediting menu. You choose a combination of three things: an index, a crediting method, and a protection level. The indices include the S&P 500, Russell 2000, MSCI EAFE, the Capital Strength Index, the First Trust American Leadership Index, and two Capital Group ETF strategies. The crediting methods include annual point-to-point with a performance cap, a performance trigger, a dual performance trigger, a participation rate, a Dual15 Plus strategy, an Annual Lock option, and a declared credit on dual performance. Protection levels run from 10% up to a fully protected 100% option.

Here is how the two protection styles behave. With a buffer, say a 10% buffer, the insurer absorbs the first 10% of an index loss and you absorb the rest. If the index falls 25%, you take a 15% loss. With a floor, your loss is capped at a stated number and the insurer covers anything worse, so a 10% floor means you cannot lose more than 10% no matter how far the index falls. On the upside, each strategy limits your gain through either a cap (a maximum credited percentage), a participation rate (a stated percentage of the index gain), or a trigger (a fixed credit if the index is flat or up). The more downside protection you take, the lower your upside potential tends to be. The current caps, triggers, and participation rates were described in the materials as varying widely by strategy and term (the spec notes a broad range from roughly 10% up to 100% depending on the option), so anyone shopping this should request the current rate sheet, as those numbers reset and drive the entire value of the contract.

The most meaningful secondary feature is the optional Guarantee of Principal death benefit, which is the feature this product version is named after. The standard death benefit on the contract is already reasonable: it pays beneficiaries the greater of the full account value or premiums paid, adjusted for withdrawals. The optional Guarantee of Principal benefit strengthens that protection so the death benefit cannot fall below principal even if the structured strategies have taken a market loss, which matters precisely because this is a product where the account value can drop.

The catch is the eligibility window. According to the spec, this optional benefit is only available for buyers issued between ages 76 and 85, and it carries a 1.00% annual charge; there is no charge for ages 0 to 75 because the feature is not offered to them. So the death-benefit enhancement is really a tool for older buyers using the product as a legacy vehicle, where locking in principal for heirs justifies giving up 1.00% of return each year. For a younger accumulation buyer, the feature in the product name simply does not apply, which is worth knowing before the name does any persuading.

This is a six-year commitment, and the surrender schedule reflects that. The withdrawal-charge schedule runs 7%, 7%, 6%, 5%, 4%, 3%, then 0% after year six. You can take up to 10% of the current contract value each year without a surrender charge, which gives you a reasonable release valve for income needs or required minimum distributions, but a withdrawal above that 10% during the first six years triggers the charge. There is no market value adjustment on this contract, which is a genuine plus, since it means your surrender penalty is the stated schedule and nothing more, with no extra adjustment tied to interest-rate movements.

The contract also waives the surrender charge in two hardship situations: a nursing home stay of 90 or more consecutive days, and a terminal illness diagnosis. A chronic illness waiver is also noted as available. You must leave a minimum of $1,000 in the account. The spec did not confirm specific RMD handling beyond the free-withdrawal amount, so a buyer planning to satisfy required minimum distributions from this contract should confirm with Lincoln that RMD-driven withdrawals above the 10% free amount are not penalized. Either way, this is long-term money, not an emergency fund.

As a B-share RILA, this contract does not carry an explicit ongoing base-contract fee that the materials disclosed; the insurer's compensation is built into the cap, participation, and trigger terms instead. That is the structural tradeoff to understand: the real cost of a RILA is not a line-item fee but the gap between the index's gross return and what your strategy actually credits. A lower cap or a lower participation rate is the price of the downside protection you selected.

The one explicit charge is the optional Guarantee of Principal death benefit at 1.00% per year, and it only applies to buyers issued at ages 76 to 85. For an older buyer using this as a legacy contract, that 1.00% buys a principal floor on the death benefit. For everyone else, there is no death-benefit fee because the feature is not offered. The larger tradeoff is not a fee at all: it is the possibility of losing principal. Choose a 10% buffer and a 30% index drop costs you 20% of that sleeve. That is the cost most worth weighing, because it is the one a fee schedule does not show.

Legal Entity: The Lincoln National Life Insurance Company

Parent: Lincoln Financial Group

AM Best Rating: A