Pacific Choice 2 Variable Annuity review

Yes, for the right buyer. This is a solid variable annuity for someone who wants a broad subaccount menu, a shorter surrender structure, and the flexibility to add optional floor protection or a death benefit upgrade. It is less appealing for someone who wants the lowest possible annual fee, needs a lifetime income guarantee, or is buying outside of New York.

The main reason to buy Pacific Choice 2 is market-based growth potential inside a tax-deferred structure. The secondary reason is optional protection. In real-world terms, this is the kind of annuity someone buys when they want access to a wide range of investment options — equity funds, balanced portfolios, bond strategies, and specialty allocations — while keeping the option to add a principal floor or an enhanced death benefit that a standard taxable brokerage account cannot provide.

I think Pacific Choice 2 is best for someone who is accumulation-focused, wants genuine investment breadth inside a tax-deferred annuity, and values the optional ability to add downside protection through the Protected Investment Benefit rider or to leave a more meaningful legacy through an enhanced death benefit. It is less attractive for someone whose primary goal is guaranteed lifetime income, who is very fee-sensitive, or who lives outside of New York and is working with the Pacific Life & Annuity entity specifically.

You are buying access to 99 variable subaccounts inside a tax-deferred insurance wrapper, with the option to layer on principal protection or an enhanced death benefit at issue. The underlying subaccounts include strategies from well-known managers — BlackRock, American Funds, Fidelity, PIMCO, Franklin Templeton, T. Rowe Price, and Pacific Life's own fund advisors — which gives this contract real investment flexibility. The insurance wrapper adds tax deferral, the optional riders add protection, and the surrender schedule is the cost of accessing those features over a shorter-than-average window.

Pacific Choice 2 allocates premium across any of 99 variable subaccounts, which cover a wide range of asset classes and risk profiles. Subaccount expense ratios range from 0.28% for a low-cost index portfolio up to 2.38% for a specialty commodity strategy, so fund selection meaningfully affects total cost.

In addition to the subaccounts, buyers have access to two Dollar Cost Averaging Plus options: a six-month DCA+ at 6.00% and a 12-month DCA+ at 3.00%. These let buyers stage new money into the subaccounts over a fixed period while earning a crediting rate in the interim.

The base contract also allows up to 25 free transfers per year among subaccounts, with asset rebalancing available quarterly, semiannually, or annually. That combination of breadth, flexibility, and optional systematic features is what makes the investment side of this contract genuinely usable.

The most meaningful secondary features are the optional protection riders. Two death benefit upgrades are available at issue:

The **Return of Purchase Payment Death Benefit** (0.10% per year of account value) guarantees that beneficiaries receive at least the premiums paid, adjusted for withdrawals, if that amount exceeds the account value at death. This is meaningful for buyers who are concerned about leaving their beneficiaries with a depleted account.

The **Stepped-Up Death Benefit II** (0.40% per year of account value) goes further. It provides a death benefit equal to the greater of premiums paid, account value, or the highest anniversary value recorded before the oldest owner reaches age 81 — adjusted for additional premiums and withdrawals. This ratchet feature is the more valuable of the two for buyers who expect meaningful market appreciation and want that high-water mark locked in for beneficiaries. It is available to issue ages 0–75.

The two optional accumulation benefits — the **Protected Investment Benefit 5-Year** and **Protected Investment Benefit 7-Year** — are also worth understanding. These are guaranteed minimum accumulation benefits that protect the account value floor after the waiting period. The 5-year version guarantees at least 90% of first-year premiums on the fifth anniversary; the 7-year version guarantees 100% of first-year premiums on the seventh anniversary. Both carry a 1.20% annual charge based on first-year premiums paid, and both restrict investments to a defined list of balanced and managed-risk subaccounts. Only one optional accumulation benefit may be elected.

This annuity uses a purchase-payment-based surrender schedule, which means each payment has its own five-year clock. The withdrawal charges are 7%, 7%, 6%, 5%, 3%, then 0%. That structure is relatively standard for a B-share variable annuity.

Free withdrawals are available immediately — the contract allows access to earnings plus 10% of remaining purchase payments without surrender charge. That provision gives buyers more early access than many comparable contracts.

Withdrawal charges are also waived in several situations: terminal illness (after the first contract anniversary), confinement to a nursing home (after 90 days from issue), death, annuitization, and RMDs if enrolled in the Pacific Life RMD program. These waivers are consistent with what a buyer should expect from a well-designed variable annuity.

The fee structure here deserves careful attention. The base contract already costs 1.10% per year — 0.85% M&E and 0.25% administration — before touching subaccount expenses. Add a midrange subaccount (say, 0.85%) and the all-in cost is roughly 2.00% per year before any optional riders. Add the Stepped-Up Death Benefit II (0.40%) and a Protected Investment Benefit (1.20%) and the total can reach 3.60% or more annually.

That fee load is one of the main reasons this product earns a good rating rather than a stronger one. The optional features are real and can be meaningful in the right situation, but each layer of cost reduces the net growth advantage of the variable subaccounts. Buyers should model total expenses carefully before adding multiple riders.

The $50 annual contract fee applies for contracts under $50,000 and is a minor consideration for most buyers. The M&E breakpoints — 0.80% at $500,000–$999,999 and 0.75% at $1,000,000 or more — provide modest relief for larger contracts.

Pacific Choice 2 is issued by Pacific Life & Annuity Company, the New York-licensed subsidiary of Pacific Life. Pacific Life has been in business since 1868 and carries an A+ rating from A.M. Best and an AA- rating from Standard & Poor's, both of which reflect strong financial strength. The carrier is organized under a mutual holding company structure, operates for the benefit of policyholders and contract owners, and has earned recognition from Ethisphere as one of the World's Most Ethical Companies. These are meaningful signals of stability for a buyer evaluating the long-term claims-paying ability behind the contract guarantees.