What is a living benefit rider in an annuity?

A living benefit rider is a feature in an annuity that allows the annuity owner to access certain benefits during their lifetime. This is significant because it provides flexibility and financial security by enabling the owner to withdraw funds or receive guaranteed income under specific conditions, regardless of the performance of the underlying investment. Such riders often include provisions like income guarantees or enhanced withdrawal benefits, which can be critical for individuals who want to ensure they have access to funds for living expenses or emergencies.

The primary focus of a living benefit rider is on lifetime access to benefits, contrasting with other features like a death benefit that only pays out upon the owner's passing, or features related to premium payments and taxes, which do not pertain to the immediacy of benefit access during one's lifetime. Thus, the core value of a living benefit rider is its provision for financial support while the annuity holder is still alive.