Presenter : All Things Annuity
Category : General Annuity Info
Topic : Annuity Income Riders
Length : 6 Mins
Tags : annuities, annuity, fees
This video explains the pros and cons of annuity income riders and guaranteed roll up rates. Riders are add-ons to customize a plain old annuity into one that is designed for your particular set of goals or financial circumstances.
Income Riders guarantee will often use what is called a Roll-Up Rate. A Roll-Up Rate is simply a guaranteed rate of return, as long as you are deferring. So once an income rider is purchased, a "Phantom" account is created, this is often referred to as an income calculation base, or benefit base.
Think of it as there being two accounts being created for your one annuity. One contains your principle (account A) growing at a rate of say 3%, the other account is your principal PLUS the 8% Roll-Up earnings(account B. You are not ever going to be able to withdraw as a lump sum the funds in this Phantom Account B, the roll-up earnings in account B are not going to be paid out to beneficiaries if you die and maybe most importantly, understand that Riders are a type of annuity guarantee.