Annuity Riders: Customizing Your Contract for Lifetime Income Guarantees

**Annuity Riders** are optional benefits added to an annuity contract (Article 11) for an extra annual fee. These riders are designed to enhance the contract’s protective features, particularly concerning growth, death benefits, or, most commonly, the security of a lifelong income stream, regardless of market performance.

The Most Common and Valuable Rider

The most popular add-on is the **Guaranteed Minimum Withdrawal Benefit (GMWB)**. This rider guarantees that the policyholder can withdraw a certain percentage (e.g., 5% to 7%) of their initial investment base every year for the rest of their life, even if the annuity’s account value drops to zero due to market losses.

Other common riders include:

**Guaranteed Minimum Accumulation Benefit (GMAB):** Guarantees the annuity’s value will reach a certain minimum amount by a specified date.
**Enhanced Death Benefit:** Guarantees that the policy beneficiary will receive a minimum amount, even if the annuity has lost money.
**Long-Term Care Rider:** Allows the policyholder to withdraw extra funds from the annuity to pay for qualified long-term care expenses.

The Cost vs. Benefit Analysis

While riders provide valuable security, they come with a significant cost, often adding 1% to 2% to the annuity’s annual expenses. This can substantially impact the overall rate of return. Consumers must carefully weigh the cost of these **Annuity Riders** against the peace of mind offered by the **Guaranteed Income** features.

Read the Fine Print: Annuity riders often calculate the income base (the amount used to determine the guaranteed withdrawal percentage) differently from the cash value. Ensure you understand which number the guarantee is based on.

**Annuity Riders** transform a standard investment tool into a sophisticated instrument for longevity and legacy planning.