| Annuity Basics | Living Benefit Riders
Many variable annuities also have guaranteed living benefits, which are designed for investors who desire current protection of principal, income, or the ability to take withdrawals, while they are still alive. In some cases, obtaining the protection features may require them to "annuitize" their investment. In other cases, principal may be recovered through guaranteed withdrawals over a specified period, and annuitization is not required. Other forms of living benefits guarantee a floor of principal that will be restored if the annuity has experienced losses over a set time period. With a guaranteed living benefit, the owner or annuitant is purchasing protection against investment risk or the risk of not being able to generate an adequate amount of income, and the variable annuity contract will either guarantee the level of account values which may be accessed through current withdrawals or the amount of annuitized payments that can be received in the future. Typically, these guarantees come with some restrictions of one form or another depending on the guarantee and each benefit has an added expense in the form of fees. Here are some of the more popular types of living benefits riders that are available today: Lifetime Income Benefit (LIB) Guaranteed Minimum Income Benefit (GMIB) Guaranteed Minimum Accumulation Benefit (GMAB) Guaranteed Minimum Withdrawal Benefit (GMWB) Guaranteed Lifetime Withdrawal Benefit (GLWB) All guarantees of these riders are based on the claims-paying ability of the issuing company or companies, so it is important to choose a financially strong insurance company. |