Understanding Annuity Bonuses: What They Are and How They Work
When researching annuities, one of the first terms that grabs attention is the “bonus.” It sounds simple—free money just for opening a contract—but like everything in financial planning, there’s more to it. Understanding how annuity bonuses work can help you avoid confusion and potentially maximize your income in retirement.
An annuity bonus is an upfront percentage—often 5% to 20%—added to your premium when you open a new fixed indexed annuity. That means if you invest $500,000 into a contract with a 10% bonus, the insurance company credits an additional $50,000 to your income or accumulation value on day one. It’s a powerful tool that gives your retirement a head start, but you need to understand where that bonus applies.
Different Types of Bonuses
Most annuity bonuses fall into one of two categories:
-
Income Value Bonus: Increases the value used to calculate your lifetime income payments, not the cash value you can walk away with.
-
Account Value Bonus: Boosts your contract’s actual accumulation value, which may be accessible for withdrawals (depending on the contract and surrender schedule).
Some contracts also offer roll-up bonuses or enhanced payouts in exchange for keeping the funds in place for a longer period. At Diversified Insurance Brokers, we evaluate these details carefully—making sure the bonus isn’t offset by higher rider fees or unfavorable crediting terms.
Are Bonuses Always a Good Idea?
Not always. While they can add significant upfront value, they may also come with trade-offs—like longer surrender charge schedules, lower caps, or limitations on how the bonus is applied. That’s why working with an independent expert is essential.
If you’re looking to build a lifetime income stream or boost guaranteed growth, a bonus annuity could be the perfect fit—as long as the contract fits your overall strategy. View current Bonus Annuity Rates.
Contact Us Today: Want to see which bonus annuities offer the highest value right now?
📞 Call us at 770-662-8510
📅 Schedule a free consultation: Book with Jarad
Or visit our Contact Page: https://www.diversifiedquotes.com/contact-us/