Many times I see investors being offered annuities with an income rider. My advice to investors is to do their homework. There are many varieties being offered, and I find only a few that are good for my clients.
Let’s consider an annuity with an income rider and how much you should put into one policy. I often see large amounts being considered for an investment. I advise clients to split up their investment into more than one policy. The reason for this is the compounding of an income rider.
For example, if you invest $200,000 into one policy and you need income from this annuity, your income rider will probably stop compounding. However, if you invested your $200,000 into more than one policy, let’s say two at $100,000 each and you require more income, you can start the income from one policy and let the other policy continue compounding. If you need more income than received from the first $100,000 policy, you can also start the other at any time. The value in this is it provides you more income later by allowing the income rider to compound as long as allowed on as much of your investment as possible. Also, in most policies, letting the income rider compound longer until you are older to begin your income stream, the higher the payout you will receive. So investing in more than one policy can be advantageous to you.
You lose nothing by investing in two, three, or four policies and you will have better control of your future income stream.
To learn more about Gerald Summers, view his Paladin Registry profile on the Watchdog website.