What Is an Income Rider?
An income rider guarantees you can withdraw a certain percentage of a 'benefit base' every year for life — regardless of what happens to your actual account value. Even if your account runs out, the insurance company keeps paying.
Two Separate Values
Account Value: Your actual money — what you'd get if you surrendered or what passes to beneficiaries. Benefit Base: A hypothetical number used only to calculate guaranteed income. NOT money you can access as a lump sum.
Example
$200K into FIA with 7% simple rollup. Wait 10 years. Benefit base: $340K. At 70, withdrawal rate is 5.5%. Guaranteed annual income: $18,700/year for life — even if account value drops to zero.
What They Cost
Income riders cost 0.75%-1.50%/year, usually charged against benefit base but deducted from account value. If benefit base is $400K and fee is 1%, you pay $4K/year. If account value is only $250K, that's a 1.6% effective drag.
When Worth It / When Not
Worth it: You're certain you'll use income guarantee, worried about outliving money, want flexibility SPIA doesn't offer.
Not worth it:You never activate the rider, you die early, SPIA would provide more income, the math doesn't work.