GMWB is an acronym that stands for guaranteed minimum withdrawal
benefit. A GMWB is an optional “living benefit” guarantee that
can be embedded into a variable annuity product. The GMWB allows
the contract holder to, at a minimum, withdraw a fixed
percentage of the total annuity premiums each year regardless of
market performance. The income payments are guaranteed until the
total premium is recovered. The GMWB does not require
annuitization. For example, Catherine invests $150,000 into a
variable annuity and selects a GMWB that provides 4% annually.
The capital markets have performed terribly and as a result the
variable annuity contract value is only $75,000 at the end of 10
years. Catherine is in a good position though because she will
receive $6,000 ($150,000 x 4%) per year until the $150,000 is
recovered.  Annuity Fees and Expenses  META Tag Title:  Annuity
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