Which statement describes a Guaranteed Minimum Withdrawal Benefit (GMWB)?

Which statement describes a Guaranteed Minimum Withdrawal Benefit (GMWB)?

• A. It guarantees a minimum amount annually to be withdrawn without a surrender charge
• B. It guarantees the contract cannot be surrendered
• C. It guarantees a minimum income for life
• D. It guarantees the death benefit

Answer: (A)

GMWB is a rider that guarantees you can withdraw a set minimum amount each year from a variable annuity, and you can receive those withdrawals even if the underlying investments perform poorly. The guaranteed withdrawal is defined in advance (as a fixed amount or a percentage of the initial investment) and is available for either a term or for life. The key idea is that the withdrawal is protected from market performance: you’re entitled to that minimum amount regardless of how the account value fluctuates. Those withdrawals up to the guaranteed amount are typically available without incurring surrender charges during the surrender-charge period, though other fees or rules can apply and the withdrawals reduce the benefit base over time. So, the statement that describes a GMWB best is that it guarantees a minimum amount annually to be withdrawn, without a surrender charge, matching what this rider is designed to provide. The other concepts—no ability to surrender, a guaranteed income for life (which aligns more with a lifetime income rider), or a guaranteed death benefit—are not the defining feature of a GMWB.

GMWB is a rider that guarantees you can withdraw a set minimum amount each year from a variable annuity, and you can receive those withdrawals even if the underlying investments perform poorly. The guaranteed withdrawal is defined in advance (as a fixed amount or a percentage of the initial investment) and is available for either a term or for life. The key idea is that the withdrawal is protected from market performance: you’re entitled to that minimum amount regardless of how the account value fluctuates. Those withdrawals up to the guaranteed amount are typically available without incurring surrender charges during the surrender-charge period, though other fees or rules can apply and the withdrawals reduce the benefit base over time.

So, the statement that describes a GMWB best is that it guarantees a minimum amount annually to be withdrawn, without a surrender charge, matching what this rider is designed to provide. The other concepts—no ability to surrender, a guaranteed income for life (which aligns more with a lifetime income rider), or a guaranteed death benefit—are not the defining feature of a GMWB.