Annuities

Annuity Income Riders: The Guarantee That You Will Never Run Out of Money

An income rider on a fixed indexed annuity guarantees you a lifetime income stream regardless of market performance. Here is exactly how it works and what it costs.

🇺🇸 Patriot Plans Editorial Team·8 min read·July 10, 2026

The income rider is the most powerful feature of a fixed indexed annuity. It guarantees you a lifetime income stream regardless of how the market performs or how long you live. Here is exactly how it works.

How the Income Rider Works

An income rider creates a separate 'income account' that grows at a guaranteed rate (typically 5-7%/year) regardless of market performance. This income account is not the same as your cash value — it is only used to calculate your income payments. When you turn on income, you receive a guaranteed percentage of the income account value each year for life.

The Income Account vs Cash Value

The income account grows at the guaranteed rate. The cash value grows based on index performance. The income account is typically larger than the cash value after 10-15 years of deferral. When you turn on income, you receive payments based on the income account, not the cash value.

Payout Percentages

The payout percentage (the percentage of the income account you receive each year) depends on your age when you turn on income. A 65-year-old might receive 5% of the income account per year. A 70-year-old might receive 5.5%. A 75-year-old might receive 6%. The older you are when you start income, the higher the payout percentage.

The Rider Cost

Income riders typically cost 0.5-1.5% of the income account value per year. This fee is deducted from the cash value. The rider cost reduces the cash value growth but provides the guaranteed income benefit.

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Frequently Asked Questions

What happens to the income rider if I die?

Most income riders include a death benefit that pays the remaining income account value (or a portion of it) to your beneficiaries. Some riders continue income payments to a surviving spouse. Ask about death benefit options when comparing income riders.

Can I turn off the income rider after I start taking income?

Generally, no. Once you turn on income, you cannot turn it off. The income payments continue for life.

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