A Lifetime Income rider guarantees the client's retirement income for his or her entire lifetime. It also allows the retiree to dip into his principal, should the need arise. Of course, any withdrawals affect the future monthly annuity payments.
The key feature is the client has the flexibility they did not have with annuitization of their annuity contract. Almost all Lifetime Income riders also guarantee the client an annual "roll-up" rate of interest.
If you're researching lifetime income riders, there are many factors to consider to accurately evaluate their respective performances. These include, but are not limited to:
- Bonuses are not all created equally. Does the income rider use the premium bonus in the income account value?
- Does the income rider utilize a rider bonus? This is a bonus that is ONLY credited to the income account value.
- Roll-up rates are not all created equally. Some use simple interest, and some use compound interest.
- Some Roll-up rates are "stacked" meaning they combine contract growth and a lower roll-up rate to calculate the income account value.
- Some roll-up rates actually vary by contract year.
- Rider fees are not all created equally. Some fees are calculated on the annuity contract value, while most riders calculate the fee against the income account value, and THEN they reduce the contract value.
A Fixed Indexed annuity with the Guaranteed Lifetime Income Rider is one of the best, safest and smartest financial vehicles for your client's retirement dollars.