Pacific Life’s Entry into RILAs Highlights Growth in Modern Annuities

Annuities have seen a notable surge in popularity, with record sales surpassing $100 billion for seven consecutive quarters through mid-2025. This uptick is attributed to increasing market volatility and the development of innovative annuity products that better suit modern investors’ needs. Among these innovations, Registered Index-Linked Annuities (RILAs) have emerged as a significant growth segment, exceeding $65 billion in sales in 2024 and overtaking traditional variable annuities for the first time. Pacific Life entered the RILA market in 2024 with its Pacific Protective Growth product, designed to offer customizable features including growth potential tied to market indexes without direct market investment exposure. This product incorporates options for downside protection such as buffers and floors, as well as various crediting strategies that influence how interest is credited based on index performance. The downside protection options include buffers that absorb a portion of negative index returns and floors that cap the maximum loss an investor can experience. Diverse crediting strategies like Performance Mix, Tiered Participation Rate, Cap Rate, Dual Direction, and Performance Triggered provide tailored growth opportunities and risk management according to investor preferences. Growth potential for these RILAs is linked to a range of indexes and ETFs including the S&P 500®, Nasdaq 100 (Invesco QQQ ETF), Russell 2000, MSCI EAFE, and Pacific Life's exclusive First Trust Growth Strength™ Net Fee Index, alongside fixed account options that guarantee interest rates. Pacific Protective Growth’s flexibility allows financial professionals to align product features with client-specific retirement planning and market risk management objectives. The annuity provides tax-deferred growth, though it carries standard considerations such as potential withdrawal charges, market value adjustments, and tax implications on distributions. Advisors should note that index-linked growth is not a direct investment in the underlying indexes and that product features, availability, and benefits vary by state and issuing company. Prospective investors must review detailed prospectuses and consider individual tax and financial circumstances when evaluating RILAs. In summary, modern annuities like RILAs represent evolving solutions in retirement planning, offering enhanced customization, market-linked growth opportunities, and structured risk mitigation against downturns. These products require careful evaluation regarding their features, costs, and tax impacts but provide alternative risk-managed investment vehicles responsive to contemporary market conditions and investor demands.