Blog Post

Index Linked Annuity Payment Adjustment Rider | 5 Things To Know

John Darer • Nov 22, 2017

Five Facts About Pacific Life Structured Settlement Annuity with ILAPA

What is indexed with Pacific Life ILAPA Rider on a Structured Settlement?
The structured settlement payments are indexed, not the amount funding the indexed linked structured settlement

What index are annuity payment adjustments linked to?
The S&P 500

How are payments adjusted when there are changes in the S&P 500 index?
If there there is a year over year change in the S&P 500 between annual measuring points , then structured settlement payments increase by that percentage, up to a 5% cap. If there is a 3% increase in the S&P 500 between the annual measuring points, structured settlement paymnets increase by 3%. If there is a 15% increase in the S&P 500 between the annual measuring points, then payments increase by 5%, which is the cap on increases. If there is a downward change in the S&P 500 between the annual measuring points then the payments remain at the then current level until the following year and the process continues.

When is the ILAPA Rider best used?
As an allocation on long duration structured settlements for plaintiffs and structured attorney fees. It is not appropriate for a short duration structure.

Illustrating Pacific LIfe's ILAPA Rider
Given that the performance of an index is not certain the software provided by Pacific Life does not make forward hypothetical projections of how the product might perform for a prospective plaintiff annuitant. Pacific Life has published an excellent informational brochure http://structuredsettlements.typepad.com/files/index-linkeded-structure-pl-brochure.pdf. We have observed others in the structured settlement industry illustrating exemplar fixed percentage returns which are projected out 40, 50, 60 and 70 years. Such illustrations are highly misleading because the index never performs in a straight line. Even if one looks at a long term average for the S&P 500, it's still misleading to illustrate a level fixed COLA to project the performance of a structure with an ILAPA Rider. One must take into account that in some years the return could be zero because there has been a downward change in the S&P 500 between the two annual measuring points.

Learn more about index linked structured settlements through Resources Provided by 4structures.com LLC
Help With Structured Settlements
John Darer's video introduction to Pacific LIfe's ILAPA rider
Index Linked Structured Settlement Payments Compared to Equity Index Annuity
How Was Pacific Life Indexed Structured Settlement Annuity Affected by Market Crash?


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