Annuity Rider Options
Several of the top annuity riders available-
Riders allow for your annuity plan to be tailored to your unique needs. Below are some of the most popular riders used in conjunction with annuities.
Guaranteed Withdrawal Benefit - (GMWB) / Commuted Payout Rider
The Guaranteed Withdrawal Benefit rider gives you another method of access to the money contained in the plan. Rather than Annuitizing the fund (beginning to take regular distributions) or making a withdrawal and paying surrender charges... just as the name implies, the rider provides a guaranteed method of withdrawing funds. The amount withdrawable is typically contingent on a percent of funds within the annuity.
Lifetime Income Benefit Rider
Annuities are typically purchased as a sort of insurance against running out of money during the owner's lifetime. The lifetime income benefit rider takes this benefit one step further and rather than following a typical payment schedule, payments are guaranteed until death even if the balance within your annuity goes negative.
Death Benefit / Enhanced Death Benefit Rider
A commonly cited downside of annuities is that they function as a living benefit contract. This meaning, the family of the owner does not stand to benefit from the funds contained by it. It's clear that if you die 10 years earlier than expected your family will miss out on a large windfall. This rider works to correct that by ensuring heirs receive a death benefit.
Often times, but not always, the total paid out splits the difference between the premium paid to fund the annuity and the total amount paid out thus far. Premium paid - Benefit paid to owner = Death Benefit
Long-Term Care Rider
This offers a substitute to long term care insurance. It essentially grants an increased amount of flexibility. The increase in monthly benefit paid out to the owner allows them to more easily handle the costs of long term care.
Impaired Risk Rider
If an annuity was purchased, but the owner found that they have a medical condition which could shorten their life the payment schedule could provide a higher monthly benefit over a potentially shorter period of time. Depending on the structure of the plan and rider this could take into account only preexisting conditions, future conditions, or both.
Guaranteed Minimum Accumulation Benefit Rider
Just as the name implies, this rider guarantees the minimum accumulation of the rider, in effect protecting it from negative effects ongoing in the stock market.
Guaranteed Minimum Income Benefit Rider
Rather than defending the balance within the annuity, this rider defends the income paid out to the owner. This can be based on several factors.
Terminal Illness Rider
In the event of a terminal illness (typically leaving an expected 1 year to live) this annuity rider will provide the owner with access to a percentage of their funds and in addition to this waive the surrender charge.
Other less common riders do exist
If you'd like a better idea of how an annuity can be tailored to fit your needs as an individual please click below to schedule a complementary consultation with with Michael Romanello, PRO Financial Network's Chief Planner.
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