522 / What is a lifetime income benefit rider (LIBR)?

A lifetime income benefit rider (LIBR), while similar to a guaranteed lifetime withdrawal benefit rider (GLWB, see Q 521), is a rider pursuant to which the annuity carrier agrees to pay income over the taxpayer’s lifetime in the form of an annuity. The income stream that results once the taxpayer annuitizes the contract is also drawn from the annuity’s benefit base, but the carrier uses the taxpayer’s life expectancy to determine the value of the guaranteed income payments. Taxpayers seeking out steady, level annuity payouts that are guaranteed regardless of how long they live are often attracted to this type of feature.

One common ground between a LIBR and GLWB is the fact that the benefit base itself is not available for cash withdrawals. The benefit base is an “account” that has no real current cash value to the taxpayer—meaning that, unlike the accumulation value of the account, the taxpayer cannot access this value through surrendering the contract prior to the end of the deferral period.