What is Roll-Up Rate?
A roll-up rate is the guaranteed annual growth rate applied to the income base of an annuity income rider during the deferral period. Roll-up rates typically range from 4% to 8% and accrue simple or compound, depending on the contract. The roll-up does NOT apply to the actual account value – it only grows the separate income base used to calculate future lifetime withdrawals.
Simple vs Compound Roll-Up
A simple roll-up applies the rate to the original premium each year. A 7% simple roll-up on a $100,000 premium adds $7,000 per year to the income base, reaching $170,000 after 10 years. A compound roll-up applies the rate to the prior year’s income base, reaching $196,715 after 10 years at the same 7%. Compound roll-ups always produce a larger number, but most carriers reserve compound for shorter deferral periods.
How Roll-Up Rates End
Roll-ups stop accruing when you take your first lifetime withdrawal, when you reach a maximum age (often 85), or after a maximum deferral period (often 10-20 years). Once income starts, the roll-up no longer applies – the withdrawal percentage at activation locks in the income amount for life. Always confirm the roll-up term and stop trigger before buying. See our income rider calculator to model the difference.
