Which Indexed Annuity Product Does Not Require Annuitization to Begin an Income Stream?

When planning retirement income, indexed annuities are often discussed as a way to create predictable cash flow with some protection from market volatility. What’s less clear, however, is how income actually begins and whether annuitization is required. A common and important question is:

Which indexed annuity product does not require annuitization in order to begin an income stream?

The answer is straightforward: an indexed annuity with an income rider, often referred to as a Guaranteed Lifetime Withdrawal Benefit (GLWB).

Income Riders and Indexed Annuities Explained

Annuitization is the traditional method of turning an annuity into income. It converts the contract value into a stream of payments, often for life. While effective, annuitization is permanent and removes flexibility. An indexed annuity with an income rider works differently.

With an income rider:

• You can begin income without annuitizing the contract

• Income is calculated using a guaranteed benefit base

• The annuity remains an asset rather than being surrendered

• Contract value remains accessible

This structure allows income to begin while preserving control over the underlying asset.

A Practical Comparison: Annuitization vs. GLWB Income

Understanding the distinction becomes easier when viewed through real-world examples.

Example 1: Annuitizing an Indexed Annuity

Assume $750,000 is placed into an indexed annuity and later annuitized to create income.

Once annuitization occurs:

• The annuity is no longer considered an asset

• Ownership of the principal effectively transfers to the insurance company

• Income payments begin and cannot be stopped or adjusted

• Access to the original value is gone

• Remaining value typically does not pass to heirs unless special payout options were selected

The result is reliable income, but at the cost of flexibility and liquidity. This approach resembles a personal pension and can be appropriate in certain cases, but it is irreversible.

Example 2: Indexed Annuity With a GLWB Income Rider

Now consider the same $750,000 invested in an indexed annuity with a GLWB income rider.

In this scenario:

• The annuity remains an asset on your balance sheet

• Income can be turned on, delayed, or paused depending on contract rules

• Guaranteed income is based on the rider’s benefit base

• Remaining contract value may pass to beneficiaries

• Income and asset value are treated separately

• Income rider can also pay out for life

This is the key reason indexed annuities with income riders are the product that allows income without annuitization. The income behaves like a pension, but the asset does not disappear.

Why This Flexibility Matters in Retirement

Retirement income planning is rarely static. Tax considerations, spending needs, healthcare costs, and market conditions all change over time.

Having the ability to:

• Delay income to increase future guarantees

• Pause withdrawals in lower spending years

• Coordinate income with tax planning

• Preserve remaining assets for heirs

adds a layer of control that traditional annuitization does not provide.

For many investors, this balance between guaranteed income and retained ownership is a central reason income riders are evaluated as part of a broader retirement income strategy.

The Key Takeaway

If you are evaluating which indexed annuity product does not require annuitization to begin an income stream, the answer is clear:

Annuities with income riders.

They offer guaranteed income while keeping the annuity intact as an asset, providing flexibility that can be valuable throughout retirement.

Explore Your Options

Understanding how income riders work in practice is easier when you can model different scenarios. Our annuity income calculator can help illustrate how guaranteed income may fit alongside your other retirement assets.

You may also want to explore our sequence of return risk calculator and how structured income can help manage that risk during the early years of retirement.

If you’re ready to discuss how indexed annuities and income riders might align with your overall plan, you can also schedule a conversation to review your options in more detail.