Life Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 3/5
A client purchases a deferred annuity with a guaranteed minimum withdrawal benefit (GMWB) rider. The primary benefit of this rider is that it:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A guaranteed minimum withdrawal benefit rider (GMWB) guarantees that the annuitant may withdraw a minimum dollar amount (usually a percentage of the benefit base) each year for life, regardless of how the underlying investments perform. If investment losses reduce the account value, the guaranteed withdrawals still continue, protecting the owner's income stream against market risk. This is one of the guaranteed living benefit riders commonly offered with variable annuities.
Why the other options are wrong
- B) The GMWB guarantees lifetime withdrawals to the owner, not a death benefit to the beneficiary; death benefits are a separate feature.
- C) The rider does not eliminate surrender charges; it guarantees a withdrawal amount subject to the contract's terms.
- D) Withdrawals from a nonqualified annuity are taxable as gain-first (LIFO); the rider does not make gains tax free.
Memory hook
GMWB = a lifetime minimum paycheck from the annuity, no matter how badly the market behaves.