It’s an annuity that credits a one-time bonus—typically 10% of your initial premium—on day one. Depending on the contract, the bonus may increase the account value (used for cash value and surrender) or an income benefit base (used to calculate future lifetime income). Some products credit both, but most favor one bucket.

Not always. Many contracts have a vesting schedule or “recapture” provision during the surrender period. If you surrender early, the unvested portion can be forfeited. Read the vesting grid to see how much of the bonus is yours in each policy year.

Most 10% bonuses apply to the initial premium only. A few allow subsequent-year contributions with smaller bonuses or none at all. Check whether add-on premiums are permitted and how they’re treated.

Common trade-offs include longer surrender periods, higher surrender charges, lower caps/participation rates on indexed strategies, and stricter liquidity. Some income riders with large bonuses carry ongoing rider fees. Always compare net value over time—not just the day-one number.

Surrender charges apply to withdrawals above the contract’s free amount during the surrender period. Many fixed and indexed annuities also include a Market Value Adjustment (MVA) that can increase or decrease surrender values based on interest rate movements. After the surrender period, charges and MVA typically end.

Typical free withdrawals are up to 10% of the account value annually after the first contract year, though some allow day-one access. Nursing home and terminal illness waivers may permit additional penalty-free access if eligibility rules are met.

If the bonus is credited to the income benefit base tied to a lifetime income rider, it can increase the payout calculation. If the bonus is only to the account value, the effect on income depends on growth, rates, and timing. Verify which bucket receives the bonus.

Yes. Qualified funds can be moved via trustee-to-trustee transfer or rollover. The annuity then follows tax rules for IRAs, including Required Minimum Distributions when applicable. Non-qualified funds retain tax-deferred growth inside the annuity.

In both qualified and non-qualified annuities, growth is tax-deferred. When you withdraw, earnings are generally taxed as ordinary income. For non-qualified contracts, partial withdrawals are usually LIFO (earnings first). Consult a tax professional for your situation.

Usually not. Bonus contracts often pair the incentive with longer surrender periods. They’re better suited for medium-to-long-term goals like future income, principal protection, or legacy planning.

Compare against high-rate MYGAs (no bonus, simple fixed rate), non-bonus fixed indexed annuities with potentially higher caps/pars, and immediate or deferred income annuities if guaranteed income is the primary goal. The “best” choice depends on timeframe, liquidity, and income targets.

Confirm where the bonus is credited, the vesting/recapture schedule, surrender period and MVA, free withdrawal rules, rider costs, and state availability. Ask for a side-by-side illustration showing total value over time with and without a bonus.