Life Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
A guaranteed minimum withdrawal benefit (GMWB) rider guarantees that the policyowner:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A GMWB rider guarantees that a stated amount — often a percentage of the benefit base — may be withdrawn annually, even if poor investment performance reduces the account value to zero. The withdrawal benefit typically continues for life or until the benefit base is exhausted, addressing market risk for income-oriented owners while preserving upside potential.
Why the other options are wrong
- B) Withdrawals remain subject to ordinary income taxation and, in many contracts, surrender charges; the rider does not make them tax-free.
- C) The rider guarantees a withdrawal amount, not a fixed interest rate on deposits.
- D) The insurer charges a fee for the rider's guarantee; it is not provided free.
Memory hook
GMWB = the market can crash but your withdrawal check does not. Guaranteed cash flows out of a falling account.