Enhanced Income Benefit RiderThis is an additional benefit, which is only available to you while you are living. If you have the opportunity to increase the payout rate due to your inability to complete 2 of 6 activities of daily living, the additional benefit would be classified as a living benefit since it increases the monthly income payout rates. Activities of daily living (ADLs) are defined as the ability to perform daily activities on your own accord to maintain or enhance one’s quality of life. This includes such activities as eating, bathing, dressing, transferring, toileting, and continence, which requires you to accomplish these tasks on your own and unassisted.
If you were in a situation needing to stay in a long-term care facility, many policies will provide full access, increase access, and may increase the income stream significantly based upon your life expectancy. Depending upon your age, these living benefits may not be important to you. However, if you are older or looking toward the future, you may want to consider what options and alternatives are available to you, using annuities for additional living benefits.
There are more policies being designed, which provide living benefits within annuities. This is just in case you need access due to unforeseen medical conditions in the future. Many times, you will find the living benefits may far outweigh the full account value accrued over time. The living benefits are normally linked directly to activities of daily living (ADLs) and can increase your monthly payout to provide an additional monetary benefit for you and for the care you need.
Let’s look at how the living benefit to enhance the income payout based upon the inability to perform 2 or more activities of daily living (ADLs): In this example, we have a 65-year old female, who decides to use the guaranteed income benefit rider. Her original deposit was $100,000. She does not want to completely annuitize her annuity contract, but wants to supplement her retirement income since she has a good retirement income from her job and the additional income she receives from Social Security.
CURRENTLY HAS THE ABILITY TO PERFORM ALL 6 ADLs:
Female Retirement Age: 65
Current Annual Income: $7,012.00
At age 67, she can no longer perform 2 of the 6 activities of daily living (ADLs). She decides to execute the income benefit rider from her annuity contract to begin receiving an additional annual income.
After 2 years, she can no longer perform 2 or more of the 6 activities of daily living and the income benefit increases:
Current Retirement Age: 67
Total Annuity Account Value: $113,118.00
Enhanced Benefit: x 8.7%
Annual Income increased to: $9,698.00
All riders are separate from the annuity contract. There is normally a cost associated with them, which must be paid on an annual basis. It is automatically deducted from the cash value of the annuity policy. Under certain circumstances, the insurance company may add the riders automatically to new annuity policies. In some situations, they will make the rider retroactively available to any and all existing policyholders at no additional cost.
As you can see, there is a lot more to annuities than what you may have expected. An annuity specialist can help assist you in choosing the right annuity for you. One that can provide accessibility and living benefits that could be beneficial for your financial portfolio. Perhaps your objective is having an annuity to help assist you in recovering from previous market losses, or using the annuity to create a safe money solution. Maybe it’s to provide you with a guaranteed income stream without annuitizing the annuity contract through the use of the income benefit rider. There are over 2,500 insurance companies and over 1,000 annuities being offered…which one is the right annuity for you?