How Do Income Riders Work Video Course

An income benefit provides you with guaranteed, annual income for life when you add an income rider to your annuity contract. Take this course to learn how income riders work and if their features are something you should consider. Or enroll in the interactive online course with virtual quizzes on our consumer-friendly education center.


What Is An Income Benefit Rider?

An income benefit provides you with guaranteed, annual income for life when you add an income rider to either your annuity or sometimes your life insurance contract. This benefit provides more flexibility than simply annuitizing your contract.


Who Is Eligible For The Income Rider Benefit?

As the owner of the contract, you receive the benefit payments of the income rider. Because your income benefit rider guarantees a minimum lifetime withdrawal amount, you must identify the person this benefit will be based upon when your contract is issued. This can be you or a person you designate. We sometimes call this individual the “covered person” of the income benefit rider.


Receiving Guaranteed Income Payments

Generally speaking, you choose the date your guaranteed income payments begin. We call this "exercising your rider". Some income benefit riders allow you to exercise your rider shortly after the contract is issued, while others may require you to wait at least one year before exercising. The covered person may have to be at least a certain age, such as fifty or sixty years old, before payments can begin.


What Is An Income Benefit Base?

Your income benefit base is the amount used to determine your income benefit payments and sometimes your rider fee. It has no actual cash value, so you can’t withdraw it from your annuity.


What Happens If I Withdraw Money?

Any income benefit payments provided by your rider are considered withdrawals. You can continue to receive income benefit payments for life, even if your contract value is depleted, as long as you continue meet the terms of the rider. Income benefit payments do not change the value of your income benefit base. You can withdraw additional money from your annuity however, withdrawals that are not income benefit payments can reduce your income benefit.


How Do Significant Events Impact Income Benefits?

For the “Single Life Option”, payments continue as long as the covered person is alive. Once the covered person dies, income payments stop, and the rider terminates. No more rider fees are assessed.


Do Income Riders Cost Money?

Income benefit riders are usually available for an annual fee. The rider fee is expressed as a percentage of either your income benefit base or your contract value. The fee is deducted from your contract value on each anniversary. It is important to note that as the value of your income benefit base or contract value grows, so too will the amount of the rider fee. If your income benefit base or contract value decreases, your fee decreases too.