Level Advantage 2 Income B-Share review

Yes, for the right buyer. This is a good annuity for someone who wants to build future lifetime income, is comfortable taking on some market downside in exchange for higher growth potential, and likes the idea of a built-in income rider with a relatively short surrender. It is less appealing for someone who wants full principal protection, the simplest possible annuity, or short-term access to all of their money.

The main reason to buy Level Advantage 2 Income is to create future protected lifetime income while keeping more growth potential than a fixed indexed annuity typically allows. The secondary reason is the structure itself. By using buffers and floors instead of full protection, the contract is designed to give up less of the index's upside, which can help the account value, and the income base it supports, grow faster in a positive market.

I think this annuity is best for someone in the pre-retirement or early-retirement window who wants to use long-term money to build future income, expects to defer withdrawals for several years, and understands that a registered index-linked annuity carries real market risk. It is less attractive for someone who wants guaranteed principal protection, expects to need frequent access to principal above the free amount, or wants a simple contract without layered features.

You are not buying a principal-protected annuity, and you are not buying direct ownership of the stock market. You are buying a structured income framework. Your money is linked to an index through a crediting strategy that caps your upside and limits, but does not eliminate, your downside through a buffer or floor. Wrapped around that is the ProtectedPay Select income rider, which builds a separate benefit base used to calculate guaranteed lifetime withdrawals. The heart of the contract is that income guarantee, with the structured growth feeding it.

The income engine is the Lincoln ProtectedPay Select rider, which is built into this version of the contract. The rider establishes a benefit base that is used to calculate how much you can withdraw for life once you activate income. While you defer, your payout rate can grow: the spec shows an annual payout increase of roughly 0.10% to 0.60% per year depending on your age, applied for up to 15 years or until age 85. When you turn income on, your age at activation and your benefit base determine the guaranteed annual withdrawal amount, which can continue for life even if the account value is eventually drawn down.

The rider is not free. It costs 1.45% of the benefit base for single coverage or 1.55% for joint coverage, and the contract allows that charge to rise to a maximum of 2.75% over time. That fee is deducted from your account value, which is worth keeping in mind because it comes out of the same value that is already exposed to market downside through the buffers and floors. (I would treat the exact roll-up percentages as medium-confidence figures from the spec and confirm them against the current rider disclosure before relying on them.)

The most meaningful secondary feature is the structured crediting menu, which is what separates this from a fixed indexed annuity. The contract offers multiple crediting methods, including Annual Point-to-Point, Performance Trigger, Dual Performance Trigger, Term End Point, and Annual Lock, across indices such as the S&P 500, Russell 2000, Capital Strength Net Fee Index, MSCI EAFE, and several Capital Group and First Trust strategies.

The tradeoff is the downside mechanism. A buffer absorbs the first slice of a market loss, while a floor caps how far your loss can go, but neither makes you whole. The spec shows buffer levels ranging from 10% to 30% depending on the strategy and term. A 10% buffer, for example, means the contract absorbs the first 10% of a decline, but you take any loss beyond that. A floor works the other way, limiting your loss to a stated maximum while you absorb everything above it. In a sharp down market, your account value, and the value that supports your income, can fall. That is the central reason this product carries more risk than a fixed indexed annuity, even with an income rider attached.

This annuity is built for long-term retirement dollars, not short-term cash needs, but it is more flexible than many income contracts in a couple of ways. There is no market value adjustment, which removes one of the more confusing penalties that can apply to large withdrawals in other annuities. Each year you can take up to 10% of the current contract value penalty-free, and the contract requires you to leave at least $1,000 in the account. Protected Annual Income withdrawals under the income rider and required minimum distributions are not subject to surrender charges, which is helpful for buyers using qualified money.

Withdrawals above the free amount during the first six years are subject to a declining surrender charge that starts at 7% and falls to 0% after year six. Surrender charge waivers are available for certain situations, subject to contract and state terms. Even with the no-MVA structure and the relatively short six-year schedule, this is not a contract to treat like emergency cash, and pulling money out early can also reduce the income base the rider is built on.

The first and largest fee is the income rider. ProtectedPay Select costs 1.45% of the benefit base for single coverage or 1.55% for joint coverage, and the contract allows that charge to rise to a maximum of 2.75%. That fee is deducted from the account value every year.

The death benefit also carries a cost depending on which option you choose. The Estate Lock death benefit runs 0.45% annually. The Guarantee of Principal death benefit is free for ages 45 to 75 but costs 1.00% annually for ages 76 to 85, and the Account Value death benefit is available at no extra cost but only for ages 76 to 85. So an older buyer who wants both income and an enhanced death benefit can end up stacking meaningful annual charges.

Beyond explicit fees, the real tradeoff is structural. Because this is a registered index-linked annuity, your downside is only buffered or floored, not eliminated, so a bad market year can reduce both your account value and the income base. This is also a B-share commission product sold through advisors, which means the surrender schedule is how the carrier recovers the upfront commission. None of that makes the contract bad, but it does mean the costs and risks here are higher than a plain fixed indexed annuity, and a buyer should be comfortable with that exchange before committing.

Legal Entity: The Lincoln National Life Insurance Company

Parent: Lincoln Financial Group

A.M. Best Rating: A