When Does It Make Sense to Use a Bonus Annuity?
For anyone seeking guaranteed income and growth with some added upfront value, bonus annuities offer a compelling option. These fixed indexed annuities (FIAs) include a built-in premium bonus—typically ranging from 5% to over 20%—credited immediately to your contract. That bonus can be used to enhance lifetime income riders, death benefits, or account value. But like all insurance-based products, the key is understanding when they make the most sense.
If you’re approaching retirement and want to lock in income you can’t outlive, a bonus annuity with an income rider may be ideal. The bonus can immediately increase your income base, giving you a higher lifetime payout once you activate it. For those rolling over large IRAs or 401(k)s, this upfront growth can help offset recent market losses and regain financial footing faster.
But bonuses come with trade-offs. Some contracts have longer surrender periods, limited growth options, or reduced liquidity during early years. That’s why it’s crucial to compare not just the bonus percentage—but the full contract structure, income payout rates, and carrier strength.
At Diversified Insurance Brokers, we help clients evaluate bonus annuities based on their retirement income goals, risk tolerance, and liquidity needs. With access to over 75 top-rated carriers, we show you which plans offer real long-term value—not just headline bonuses.
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