An income rider (often called a guaranteed lifetime withdrawal benefit, or GLWB) is an optional feature you can add to many deferred annuities, usually for an additional annual fee, that guarantees a lifetime income stream without requiring you to fully annuitize the contract.

How it’s different from annuitizing

Traditional annuitization converts your account value into a stream of payments and typically gives up direct access to the underlying account. An income rider, by contrast, tracks a separate “income base” used only to calculate your guaranteed withdrawal amount, while you generally retain access to the actual account value (minus withdrawals) and any remaining death benefit for heirs.

The income base vs. the account value

The income base often grows at a contractually guaranteed rate (or through a roll-up percentage) during years before you start withdrawals, but it’s important to understand that the income base is generally not money you can withdraw as a lump sum — it exists solely to calculate your guaranteed lifetime withdrawal percentage.

What to weigh

• The rider fee reduces your account value each year, whether or not you ever use the guaranteed income.
• Guaranteed withdrawal percentages typically increase with the age you begin taking income.
• Withdrawing more than the guaranteed amount in a given year can reduce or void the guarantee, so it’s important to understand the withdrawal rules before relying on the rider.

Income riders can be a useful way to build guaranteed income into a plan while retaining more flexibility than a full annuitization — but the fee and the specific guarantee terms vary significantly by product, so comparing the actual numbers matters.

This article is educational and general in nature. It isn’t personalized financial advice. All guarantees are subject to the claims-paying ability of the issuing insurance company.