Analysts say this feature appeals to baby boomers, who are willing to take on some risk but still want security. T. Rowe Price has a living income benefit feature that will cost you 0.85 percent of whatever you make from your investment. Keven Maloney, vice president at Moody's Investors Service, warns that a company's financial strength is important when you buy a feature like this. If insurance companies knew that, they wouldn't be in the business of selling insurance. These are bonuses that give you extra cash in your initial annuity investment, and generally fall between 1 and 5 percent.
Consumers find value in that.
In most cases, the insurance company will make back what they give you. Maloney says that the annuity surrender period usually stretches from seven years to nine years when you receive an extra credit sign-up bonus, thus locking you into the annuity and assuring the insurer the chance to make its money back through investments. Some companies will also charge 0.25 percent more in fees for this feature, which could really add up if your investment does well. How quickly they recapture it will depend on market performance. This feature offers a guaranteed amount of money for your beneficiaries when you die, regardless of how well the underlying investments in your annuity perform.