A lifetime income benefit is the guarantee that an annuity will continue paying you for as long as you live, regardless of how long that is or how the underlying account performs. There are two paths to a lifetime benefit: full annuitization of the contract, or activation of a lifetime withdrawal rider that keeps the principal liquid.
Annuitization Path
When you annuitize, you give up access to the principal in exchange for a contractually guaranteed payment. A SPIA is the simplest example: you hand the carrier a lump sum and receive monthly checks for life. Payment amounts depend on age, gender (in most states), interest rates, and whether you elect a single life or joint and survivor payout.
Income Rider Path
An income rider provides lifetime withdrawals while preserving access to the remaining account value. You activate the rider, the carrier pays a guaranteed percentage of the income base for life, and your beneficiaries can still inherit any remaining account value. The rider costs an annual fee (typically 1%+), but the flexibility appeals to clients who want both guaranteed income and the option to walk away.
