A policyowner adds a guaranteed minimum withdrawal benefit (GMWB) rider to a contract. What does this rider guarantee?

Why A is correct

A guaranteed minimum withdrawal benefit rider guarantees that the policyowner can withdraw a specified annual amount, often a percentage of an income base such as 5% or 7% for life, even if the account value is exhausted by poor investment performance. The income base is typically the greater of premiums paid or the contract value at the election date, and the withdrawals continue for life or a set period. The rider protects the owner from outliving the account, converting a market-dependent contract into income security.

Why the other options are wrong

• B) The rider guarantees withdrawals, not that the cash value will never decline; the account value can still fall, which is precisely why the income guarantee matters. The account can fall to zero, and the guarantee then funds the promised withdrawals from the insurer's general account instead.
• C) Withdrawals are not automatically tax-free; taxation follows normal contract rules, and amounts over the basis are taxable. Taxation of withdrawals follows the contract's cost basis rules and is never blanket-tax-free.
• D) Death benefit doubling is a separate feature or rider; the GMWB concerns lifetime withdrawals, not the death benefit. Doubling provisions are unrelated riders; the GMWB guarantees income, not a larger death benefit.

Memory hook

GMWB = the contract keeps paying your withdrawal even after the account hits zero.