So much talk about fixed annuities in the industry -- has led to discussions about income riders. Rich Lane, second vice president of individual annuity sales and marketing for Standard Insurance Company, says in a ThinkAdvisor article, that clients may think riders are a good idea since they can receive money from the income rider plus get accumulation at the same time. According to Lane, riders can drag down clients’ potential for asset accumulation.
He says what clients often actually receive, “is an additional income option, with mediocre accumulation. The rider fee may eat up a significant portion of the interest crediting.”
Lane’s advice to avoid this conflict is to consider accumulation and distribution and your client’s financial goals. He says for example, a client who wants a safe option to accumulate money over time could benefit from a deferred annuity without an income rider, or a client who wants immediate income distributions should go with an immediate annuity.