by John Darer® CLU ChFC MSSC RSP CLTC
The dog days of summer have certainly been dog days in the stock market. How does the stock market swoon affect someone who is receiving payments from an indexed linked structured settlement offered by Pacific Life Insurance Company or Pacific Life and Annuity Company, in New York, through its licensed agents?
As I wrote earlier this month, those that took an indexed linked structured settlement payment from Pacific Life when it was introduced in April 2014, enjoyed a 5% increase in payments when the first contract anniversary rolled around. If the S&P 500 declines and ends up down for the year, the good news is that those receiving payments from Pacific Life index linked structured settlements WILL NOT see any reduction in their payments. They keep increases already received.
As Pacific Life clearly states in its brochure for the Index-Linked Annuity Payment Adjustment Rider "Increases Settlement Payments if the Market Rises. No Losses if the Market Declines"
Index measurement periods are not calendar years. They are defined according to when your annuity payments begin. Increases in the index are measured by the percentage difference between the index on the first and last day of each measurement period. Payment increase take effect on the anniversary of when payments started.
If you are receiving indexed linked structured settlement annuity payments from Pacific Life, here are the possibilities:
Market up between measuring points Upward adjustment in payments with 5% cap
No change between points Payments stay the same until next year
Market decline between points Payments stay the same until next year