Bonus Annuity with Lifetime Income
Over 100 Carriers to Quote From. Here are a few of them!
A bonus annuity with lifetime income blends an upfront premium bonus with the security of guaranteed paychecks you can’t outlive. It’s designed for retirees and pre-retirees who want protection from market losses, tax-deferred growth, and reliable income. We compare options from 100+ highly rated carriers and tailor illustrations so you see exactly how your bonus, roll-up rates, and income guarantees work for your situation.
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What Is a Bonus Annuity With Lifetime Income?
A bonus annuity is typically a fixed indexed annuity (FIA) that credits an upfront bonus—often between 5% and 20%—to your premium on day one. When paired with a lifetime income rider, you can later convert the contract into guaranteed paychecks (single or joint life). Your principal is protected from market losses, and growth is tax-deferred.
How It Works
- Fund the Contract: Use IRA/401(k) rollovers or non-qualified savings.
- Day-One Boost: A premium bonus increases your contract (or income) value immediately.
- Growth Without Market Losses: Choose index crediting strategies for upside potential with downside protection.
- Turn On Lifetime Income: Start guaranteed paychecks when you’re ready—now or in future years.
Who It’s Best For
- Pre-retirees (5–10 years out) who want an upfront boost and strong future income.
- Retirees seeking predictable paychecks to cover essential expenses.
- Conservative savers who want principal protection and tax-deferred growth.
- Couples who value joint lifetime income and beneficiary options.
Key Advantages
- Upfront Bonus: Immediate head start on day one.
- Guaranteed Income: Personal-pension paychecks for life (single or joint).
- Downside Protection: No losses due to market declines.
- Tax-Deferred Growth: Keep more working for you each year.
- Flexible Options: Liquidity features, enhanced income, and legacy choices vary by carrier.
Considerations
- Riders may have fees; understand how bonuses apply (cash vs. income value).
- Surrender schedules limit early access; use penalty-free withdrawal features wisely.
- Product availability and rates vary by state and carrier.
To see how a bonus annuity with lifetime income could fit your plan, review today’s rates and run a personalized illustration. You can also compare broader income-focused strategies here: Lifetime Income Annuities.
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FAQs: Bonus Annuity With Lifetime Income
What is a bonus annuity with lifetime income?
It’s typically a fixed indexed annuity (FIA) that provides an upfront contractual bonus and an optional rider that can pay guaranteed income for life. The bonus may apply to your accumulation value, your income base, or both—check the contract specifics.
Does the upfront bonus raise my cash value or just the income base?
It depends on the product. Some credit the bonus to the accumulation value you can later withdraw; others apply primarily to the income base used to calculate lifetime payouts. Your illustration should show both values side by side.
How does the income rider’s roll-up rate work?
Many income riders grow the income base at a stated roll-up rate (simple or compound) for a set number of years or until you start income. That roll-up doesn’t represent a cash yield—it’s a calculation value for future payout percentages.
When can I turn on lifetime income and how are payouts calculated?
You can generally elect income after the rider’s waiting period. Payments are determined by your income base multiplied by an age-based payout factor (single or joint life). Delaying the start usually increases the payout factor.
What fees should I expect on a lifetime income rider?
Income riders often charge an annual fee (commonly around 0.9%–1.3%) taken from the accumulation value. Ensure the net effect (bonus, roll-up, index terms, fees) still meets your goals.
Can I take withdrawals before starting income?
Usually yes, within free-withdrawal limits (often 5%–10% annually). Early withdrawals may reduce the accumulation value and can proportionally reduce the income base in some designs—review the rider rules carefully.
Can I complete a 1035 exchange into a bonus annuity with income?
Often yes—subject to suitability, current surrender charges, and product availability. A tax-free 1035 exchange can be an efficient way to reposition an older contract.
How are withdrawals and lifetime income payments taxed?
Annuity growth is tax-deferred and distributions are generally taxed as ordinary income. For annuitized payments and certain income streams, see our annuity exclusion ratio guide for how payments may be split between principal and earnings.
Are these annuities available in every state?
No. Features and availability vary by state and carrier filing. We’ll confirm your state’s options and show close alternates if a specific version isn’t approved.
How do these compare to traditional fixed annuities?
Traditional fixed annuities offer a declared interest rate without bonuses or index growth. If you’re comparing, check today’s current fixed annuity rates and consider whether a best fixed indexed annuity choice better fits your income goals.
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