Are Bonuses and Roll-Ups in Annuities Worth It?

Let’s Cut Through the Noise About Annuity Bonuses and Roll-Ups

If you’ve been shopping around for a fixed indexed annuity (FIA), chances are you’ve seen a wide range of enticing offers: 20% or even 30% upfront bonuses, 8% or 10% roll-up rates, and many promises that sound almost too good to be true.
If you’re confused, you’re not alone. Many of our clients come to us feeling overwhelmed by conflicting pitches, unsure of which annuity option offers the best value. That’s precisely why we’re writing this—to give you a clear, honest framework for making the right decision.

Let’s Start with the Bottom Line: Ignore the Bonus and Roll-Up

We know that may sound strange. After all, those bonuses and roll-up rates are usually front and center in most sales presentations. But here’s the truth: those numbers are often just marketing tactics, not a reliable way to compare annuities. Here’s why:

1. Annuity Bonuses and Roll-Ups Don’t Affect Your Cash Value
   The bonus and roll-up apply only to the income benefit base, not to the money you can actually access or walk away with. The cash value of your contract grows based on the performance of the stock market index (and is subject to caps, spreads, and participation rates), not the roll-up or bonus. There is no such thing as a guaranteed 30% growth in your actual account value. If there were, everyone would be buying these products. That should tell us something.
2. Annuity Bonuses and Roll-Ups are Used to Calculate Income—Not Grow Your Wealth
   The roll-up rate and bonus only help grow what’s called the living benefit value—a phantom number used solely to calculate future income, like a pension or Social Security estimate. It’s not a real bucket of money you can withdraw or leave to your heirs. Think of it like a formula, not a balance sheet.
3. It All Comes Down to the Final Income Payout
   We use a simple formula with our clients to cut through the clutter:
   Living Benefit Value × Payout Factor = Final Annual Income
   So if your income base grows to $200,000 and your payout factor is 5%, your guaranteed lifetime income is $10,000 per year. Now here’s the catch: you could get to the same $10,000 income through very different paths—either by having a high bonus and a low payout factor, or no bonus and a high payout factor. The final income number is the only thing that truly matters.

The Simple Way We Compare Annuities

When we help you evaluate annuity options, we cut through the fluff and look at one thing:

“What is the final annual income payout on a $100,000 deposit?”

By standardizing the comparison to $100,000, we can easily spot which annuity gives the most value, regardless of how flashy the bonus or roll-up sounds. If one annuity promises $10,000 per year and another offers $8,000, we’ll know immediately which one better meets your income needs. It’s simple math—and it works.

Income Isn’t the Only Thing That Matters

While the income payout is critical, we also look at:

• Inflation protection – Will your income keep pace with the rising cost of living?
• Nursing home doublers – Will your income increase if your health needs change?
  • A nursing home “doubler” is a contract feature that allows the insurance company to increase (often double) the regular income payout from an annuity (or sometimes a life insurance policy) if the contract owner becomes confined to a qualified nursing home or long-term care facility.
• Cash value growth – How will your actual account value perform?
• Fees and spreads – Are you paying too much for the benefits you’re getting?

That’s why we don’t just stop at one number—we look at the whole picture together.

Our Promise to You

At KCIIS, we work for you, not the insurance companies. That means:

• No consultation fees
• No pressure sales
• No cost to you—the insurers compensate us
• Straightforward comparisons so you can make informed decisions

We’re here to help you understand what you’re buying and why it fits your plan, not to confuse you with technical jargon or sales hype.

Final Thoughts

If you’ve been shown an annuity with a big bonus or a high roll-up, don’t rush in. Let’s take a step back, run the numbers together, and ask: “What’s my guaranteed income going to be?” That’s the only number that matters.

And suppose you’d like to dive deeper. In that case, we have a full library of videos and educational resources that break down annuities of all types. Just let us know—this is what we do every day.

Let’s build your retirement with clarity, not confusion. If you’re ready to get started or want a second opinion on an annuity offer, we’re here to help.

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