A rider is an optional benefit you attach to an annuity contract, usually for an extra fee, that adds a feature the base contract does not include, such as guaranteed lifetime income or long-term care access.
What is an annuity rider?
A rider is an optional feature you can attach to an annuity contract on top of the base policy. Carriers use riders to let you customize a contract instead of building every possible feature into every product they sell. Adding a rider almost always comes with its own annual cost, usually charged as a percentage of your account value or your income base, so you are trading a fee for a specific guarantee you want.
Common types of annuity riders
Fixed index annuities and variable annuities carry the widest menu of riders. A few show up most often:
- Guaranteed lifetime withdrawal benefit (GLWB). Locks in a minimum annual withdrawal for as long as you live, even if your account value eventually reaches zero.
- Enhanced death benefit. Raises what your beneficiary receives above the plain account value, often tied to a roll-up rate or the highest value the contract reached on an anniversary.
- Long-term care rider. Increases your available withdrawals, or adds a separate benefit, if you need qualifying long-term care.
- Return of premium rider. Guarantees your beneficiary receives at least what you originally paid in, regardless of how the contract performed.
Do MYGAs include riders?
Rarely. A multi-year guaranteed annuity is built to be simple: one guaranteed rate, no ongoing rider fees, and a standard death benefit equal to the account value. If you want the income guarantees or long-term care features a rider provides, look at a fixed index annuity or a variable annuity instead, where riders are a normal part of the product.
Before adding any rider, compare its annual cost against what it protects, and confirm exactly what has to happen for the benefit to pay out. A rider fee typically runs somewhere between 0.5% and 1.5% of your account value or income base each year, charged whether or not you ever use the benefit, so it only pays off if you actually need what it guarantees. Ask your licensed strategist to walk through the trigger conditions line by line before you sign.
Frequently asked questions
What is an annuity rider?
It is an extra feature you can attach to an annuity, typically for an annual charge, to gain a benefit the base contract skips, such as guaranteed lifetime withdrawals or access to long-term care funds.
Do MYGAs have riders?
Most multi-year guaranteed annuities skip riders entirely. They are built as simple, no-fee accumulation contracts with one guaranteed rate and a standard death benefit, so there is little need to add optional features.
How does a GLWB rider work?
A GLWB rider guarantees a minimum annual withdrawal amount for the rest of your life, even in the rare case where your account value drops to zero before you pass away.
Written and reviewed by
James Forren Warren
Licensed Retirement Income Strategist · License #20551202
James Forren Warren is a licensed Retirement Income Strategist with Tax Free Wealth Plan. For the past five years he has helped individuals and families turn their savings into retirement income they can count on. He writes and reviews the annuity research on this site and keeps it plain: what a product does, what it costs you, and who it actually fits.
Educational only, not investment, tax or legal advice. Tax Free Wealth Plan LLC is a licensed insurance agency, not a registered investment adviser or broker-dealer. Annuities are not bank deposits, are not FDIC insured and are not guaranteed by any government agency. Guarantees are backed solely by the claims-paying ability of the issuing insurance company. Features, rates and availability vary by state and change over time; the contract and disclosure documents govern.