Bonus Annuity Comparison
Jason Stolz CLTC, CRPC
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Bonus Annuity Comparison Guide: Bonus annuities can give your retirement dollars an initial boost while protecting principal and deferring taxes. The important detail is that “bonus” does not always mean the same thing from one contract to the next. Some bonuses credit value you can later access as cash value (subject to surrender rules). Others are designed primarily to enhance an income base used to calculate future guaranteed lifetime withdrawals. This guide explains what a bonus annuity is, how common bonus structures work, what trade-offs to watch, and how bonus fixed indexed annuities compare to traditional fixed annuities and standard FIAs.
At Diversified Insurance Brokers, we help clients evaluate these products the way they should be evaluated: by the outcome they’re meant to produce. If you want future income, the best comparison is the guaranteed withdrawal amount at the age you actually plan to start income, net of rider costs and withdrawal rules. If you want accumulation, the best comparison is the projected account value and surrender value over time, along with the liquidity you’ll have if plans change. The bonus percentage is simply one lever in a larger design.
Before we get into the details, it helps to align terminology. A traditional fixed annuity typically credits a declared interest rate for a set period, with principal protection and tax-deferred growth. A fixed indexed annuity also protects principal, but credits interest using index strategies, typically subject to caps, participation rates, or spreads. A “bonus” annuity is usually a type of FIA that adds an additional value feature—such as an upfront premium credit or a contractual value step-up—to make the contract more compelling for long-term money.
Because the bonus is an incentive, the carrier typically balances it with other parts of the contract. That balancing can show up as a longer surrender period, different index crediting terms, rider charges (if you elect income features), or bonus vesting/recapture rules. None of that is automatically negative. It simply means the right question is not “Which bonus is highest?” but “Which contract produces the best net result for my goal and timeline?”
✅ Current Bonus Annuity Offers (as of Feb 2026)
These offers are shown as a quick snapshot of what’s currently available. Use this table as a starting point, then compare the fine print: where the bonus applies (cash value vs. income base), whether it vests, and how withdrawals affect the bonus during the surrender period. Rates, bonuses, and product availability can vary by state and can change over time, so it’s smart to confirm details with a current illustration.
| Term | Bonus | Provider | Product | AM Best Rating |
|---|---|---|---|---|
| 5 Years | 12% | Axonic | Trailhead Plus | A- |
| 7 Years | 17% | Am. Life | American Select Bonus | B++ |
| 8 Years | 3% | Nationwide | New Heights Select | A+ |
| 9 Years | 5% | Americo | Ultimate One | A |
| 10 Years | 25% | Heartland | Secure Retirement 10 | B++ |
| 14 Years | 27% | North American | NAC Charter Plus | A+ |
| 15 Years | 29% | Athene | Performance Elite Plus | A+ |
Bonus amounts apply to the initial premium and may vary by state availability, rider selection, and contract terms. Some products include lifetime income riders, enhanced death benefits, or additional liquidity features.
What is a Bonus Annuity?
A bonus annuity is most commonly a fixed indexed annuity (FIA) that includes an additional value feature designed to improve the starting math of the contract. That feature may be an upfront premium bonus, a contractual growth floor to a future value, or a rider-specific credit that increases how lifetime income is calculated. You still generally get principal protection against market losses and tax-deferred growth, but you also take on a structured timeline (the surrender period) and a set of rules that determine how the bonus is treated if you make withdrawals or surrender early.
Carriers offer bonuses for a simple reason: they want long-term premium. When an insurance company can predict that money will stay in the contract for a multi-year period, it can invest those reserves more efficiently. In exchange, the carrier may provide an upfront credit or other bonus-style feature. The “catch,” if you want to call it that, is that the contract may be less liquid in the early years and may include pricing trade-offs in crediting terms. The right approach is to evaluate the bonus as part of the overall contract economics.
If you’re comparing bonus FIAs to the broader annuity market, it helps to anchor your comparison with the basics. You can start with our annuities overview and then review today’s current annuity rates to see how non-bonus options compare over common time horizons.
Types of Annuity Bonuses
Not all annuity bonuses are built the same. Most “bonus” marketing falls into three practical categories, and understanding the category tells you what to look for in the contract and illustration.
1) Upfront premium bonuses that affect accumulation value. With this design, the carrier credits a percentage of your premium to a value bucket that may influence your cash value and surrender value. Some contracts vest these bonuses over time, which means you could lose part of the bonus if you surrender early. This structure can be useful when the goal is a larger starting value for future withdrawals, but you still want to review how the crediting terms compare to a non-bonus FIA.
2) Income-base bonuses tied to an income rider. Some contracts credit the bonus primarily to a separate income base used to calculate future lifetime withdrawals. This can be helpful if you want guaranteed income later, because it can lift the starting income base and potentially improve the payout math. The important nuance is that the income base is not the same as cash value. You may not be able to “take” that income base as a lump sum, and withdrawals can reduce it under rider rules.
3) Contractual step-ups or growth floors. Some bonus-style annuities highlight a defined future value (for example, a guaranteed increase over a stated period) while still allowing index-linked interest crediting. These can be compelling for long-range planners, but they should be evaluated carefully to understand how the guarantee interacts with index performance, rider costs, and liquidity.
If you want a more technical explanation of how crediting mechanisms can influence long-term results—especially on bonus designs—review what an annuity spread rate is. Spread-based designs are one common way carriers balance contract economics, and they frequently show up in bonus-oriented product lines.
Bonus Annuity Comparison Chart
Bonus annuities are often compared to two other choices: traditional fixed annuities and “standard” non-bonus FIAs. The table below highlights the practical differences so you can see what the bonus feature is trying to accomplish. The best way to use this comparison is to identify which column best matches your priority—simple guaranteed interest, protected index-linked growth, or enhanced income math—then narrow down products inside that lane.
| Feature | 40% Bonus Annuity | Traditional Fixed Annuity | Standard Bonus FIA |
|---|---|---|---|
| Guaranteed Growth | 40% guaranteed increase over 10 years (140% of premium) | 2–6% annual fixed interest, varies by term | 5–15% upfront bonus, usually rider-only |
| Principal Protection | 100% protected | 100% protected | 100% protected |
| Upside Potential | Yes — index crediting options plus guarantee | No — fixed interest only | Yes — index crediting with caps/spreads |
| Liquidity | 7% free withdrawals annually | 10% free withdrawals annually | 10% free withdrawals annually |
| Income Rider Impact | Boosted account value enhances lifetime income | Based only on fixed accumulation | Bonus may enhance income base, varies by carrier |
| Best For | Retirees wanting long-term growth and upside | Conservative savers seeking steady returns | Those who value upfront bonus for income planning |
If your goal is a cleaner, simpler guaranteed-rate approach, you may also want to compare against rate-focused options like highest guaranteed annuity rates and highest annuity rates. Bonus annuities can make sense, but the best choice depends on what you want the annuity to do inside your plan.
Key Trade-offs and Fine Print
Bonus annuities can be excellent tools, but they are also the category where “fine print” matters most. If you evaluate these products the right way, the trade-offs become easy to spot.
Confirm where the bonus applies. The first question is whether the bonus credits the accumulation value, the income base, or both. This impacts what you can access later and how income is calculated. When a bonus is rider-focused, it may improve income math without improving surrender value.
Review vesting and recapture rules. Many bonus designs vest over time. If you surrender early, the carrier may recapture the unvested portion. Even if you don’t plan to surrender early, you should understand how “excess withdrawals” can reduce the bonus or the income base.
Compare index crediting economics. Larger bonuses are often paired with more conservative crediting terms. Over a long horizon, index crediting mechanics can matter more than the upfront bonus. If you want a consumer-friendly overview of why FIAs are used for protection, read how fixed indexed annuities protect against market downturns.
Understand liquidity during the surrender period. Most contracts allow free withdrawals (often 7%–10% annually), but withdrawals above the free amount can trigger surrender charges and may reduce rider benefits. If liquidity is a top priority, a simpler structure may be a better fit.
Know how distributions are taxed. Annuities grow tax-deferred, and distributions are generally taxed as ordinary income. If you want to understand how payout taxation is commonly explained, you can reference our annuity exclusion ratio guide.
Who a Bonus Annuity Fits Best
Bonus annuities tend to fit best when the contract’s timeline matches your planning horizon. If you are comfortable committing funds through a multi-year surrender period and you value principal protection, bonus designs can be worth comparing—especially when the bonus improves the exact outcome you care about.
Income-focused planners. If your main goal is a future paycheck you can’t outlive, a bonus that credits the income base (paired with strong payout factors at your target age) can improve the math. The key is to model income at the age you intend to start, not “someday.”
Principal-first investors who still want upside. Many retirees like the idea of a floor (no market loss crediting) with index-linked growth potential. If you fall into this category, bonus FIAs can be attractive as long as the crediting terms and surrender schedule are competitive.
Longer-term savers. If you can hold the contract long enough for the bonus to vest and the strategy to play out, you’re far more likely to benefit from the bonus feature. If you need short-term flexibility, a bonus structure can be more restrictive than necessary.
Illustrative Example (10-Year Horizon)
Here’s a simple way to think about comparisons over a 10-year horizon. Assume a single premium deposit and no additional contributions. The point of the example is not to “promise” a result, but to show which levers matter most in each product type.
Traditional fixed annuity: You typically have a declared rate for a set period. The value of the contract is clarity and predictability. If your goal is straightforward growth for a defined term, this can be a clean fit.
Standard FIA (non-bonus): You trade a declared rate for index-linked crediting. Over time, the crediting method (caps/participation/spreads) has a major impact on outcomes. If the crediting terms are strong and the contract is competitive, a non-bonus FIA can outperform a bonus design that has tighter crediting terms.
Bonus FIA: The bonus can lift the starting value or improve income-base math, but you must evaluate the “net” results. The best test is to compare income at your target age (if income is the goal) and surrender value at and after the surrender period (if liquidity matters). This is why illustrations are so important: they show whether the bonus creates a meaningful advantage or just looks good on day one.
Next Steps
If you want to compare bonus annuities the right way, start with your timeline and goal, then narrow the options. A few helpful resources to explore as you refine your criteria include:
• Annuities overview for basic categories and how they fit different goals
• Current annuity rates for a baseline comparison against non-bonus options
• Best fixed indexed annuity to compare bonus vs. non-bonus FIA structures
• What is an annuity spread rate? for a deeper understanding of crediting economics
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FAQs: Bonus Annuities, Fixed Annuities, and FIAs
What exactly is a bonus annuity?
A bonus annuity is usually a fixed indexed annuity that includes an extra value feature—such as an upfront premium credit or a contractual roll-up—while still providing principal protection and tax-deferred growth.
Does the bonus increase my cash value or only the income base?
It depends on the contract. Some bonuses increase accumulation value (cash value), while others apply only to an income base used to calculate lifetime income. Always confirm which value bucket receives the bonus.
Are there vesting schedules on the bonus?
Often yes. Many bonus features vest over time and can be reduced or recaptured if you surrender early or take excess withdrawals during the surrender period.
How do caps, spreads, and participation rates affect growth?
These features determine how much index interest can be credited in positive index years. Bigger bonuses are sometimes paired with tighter index terms, so it’s important to compare net outcomes over your timeline.
What liquidity will I have each year?
Most FIAs allow free withdrawals up to a stated percentage each year (often 7%–10%). Withdrawals above that amount can trigger surrender charges and may reduce rider benefits or bonus values.
Is my principal protected from market losses?
Yes. With FIAs, negative index years typically credit zero rather than a market loss, though contract fees (if any) still apply.
How are bonus annuities taxed?
Annuities grow tax-deferred, and withdrawals are generally taxed as ordinary income. Tax rules differ between qualified and non-qualified money, so confirm how your account type impacts distributions.
Are bonus annuities available in every state?
Availability varies by carrier and state approvals. If a specific product isn’t available in your state, there are usually comparable alternatives with similar bonus structures.
How do bonus annuities compare to traditional fixed annuities?
Fixed annuities typically credit a declared rate and are simpler and more predictable. Bonus FIAs can improve starting value or income math but come with index crediting rules and more fine print to review.
Who is the best fit for a bonus annuity?
People who want principal protection, are comfortable with a multi-year surrender schedule, and are aiming for either future guaranteed income or protected long-term growth where the bonus improves the intended outcome.
About the Author:
Jason Stolz, CLTC, CRPC, is a senior insurance and retirement professional with more than two decades of real-world experience helping individuals, families, and business owners protect their income, assets, and long-term financial stability. As a long-time partner of the nationally licensed independent agency Diversified Insurance Brokers, Jason provides trusted guidance across multiple specialties—including fixed and indexed annuities, long-term care planning, personal and business disability insurance, life insurance solutions, and short-term health coverage. Diversified Insurance Brokers maintains active contracts with over 100 highly rated insurance carriers, ensuring clients have access to a broad and competitive marketplace.
His practical, education-first approach has earned recognition in publications such as VoyageATL, highlighting his commitment to financial clarity and client-focused planning. Drawing on deep product knowledge and years of hands-on field experience, Jason helps clients evaluate carriers, compare strategies, and build retirement and protection plans that are both secure and cost-efficient.
