How can an annuity create income for life?
Lifetime income is a feature, not an automatic property of every contract.
Annuitization
Annuitization converts contract value into a stream of payments under contract terms. Choosing a "life" payout means payments continue for as long as you live, but the election is typically irrevocable and the underlying contract value is no longer accessible as a lump sum.
Lifetime-income riders
Many modern FIAs offer an optional lifetime-income rider. These often establish a "benefit base" used to calculate a guaranteed lifetime withdrawal amount — even if contract value is later drawn down. The rider may carry an annual charge, and its terms (roll-up rates, withdrawal percentages, age factors) vary widely by product.
Who Might Consider This
Those for whom predictable, lifetime income on a portion of savings is a priority may find these features valuable — provided the contract and rider terms fit their needs.
Common Misunderstandings
- "Every FIA pays you for life automatically." No — lifetime income requires either annuitization or a rider, and not all contracts include one.
- "The benefit base is money I can withdraw." It is typically a calculation basis for income, not a withdrawable balance.
Questions to Ask Before Deciding
- Does this contract include a lifetime-income rider, and is there a charge?
- How is the income amount calculated?
- What happens to income if markets decline?
- What survivor options exist?
Frequently Asked Questions
Is lifetime income guaranteed no matter what the market does?
Related Questions
Sources & References
Define the Job Before You Choose a Product.
See whether a modern annuity belongs in your retirement strategy — and where it may not.
Disclosures
The content on TheAnnuityTruth.com is educational and general in nature. It is not individualized investment, legal, or tax advice. Annuities are insurance products; product availability and features vary by carrier and jurisdiction, and guarantees are subject to the terms of the issuing insurance contract and the claims-paying ability of the issuing insurer. Annuity contracts are not FDIC insured, are not bank guaranteed, and are not a deposit or obligation of, or guaranteed by, any bank.