Guaranteed Minimum Withdrawal Benefit (GMWB)
Candlefocus EditorGMWB works by giving policyholders guaranteed income throughout all types of market activity. It allows investors to withdraw a predetermined percentage of their total sum invested, typically ranging between 5-10%. This percentage holds steady regardless of how the markets go, and provides the security of knowing that your investments will always bring a certain level of return.
This type of rider is especially important in times of volatile market conditions, where the security of not only your principal but also your income can be affected. By giving policyholders peace of mind and steady incomes regardless of market activity, GMWB is a powerful tool to protect their assets.
Furthermore, GMWBs often come with additional features that offer protection for the policyholder, such as the ability to increase withdrawals or add portfolio diversity. This gives investors the added confidence to be able to remain in their investments for the long run, knowing that there are certain measures in place to guarantee their income regardless of what the markets do.
Finally, GMWB riders can provide great peace of mind for policyholders. By allowing them to lock in a steady income stream, regardless of market fluctuation, investors have the security of knowing that their investments will be there when they need them without the stress of predicting or monitoring market trends.
Overall, GMWB is a key component of financial security and serves to protect policyholders during times of volatile markets. By providing peace of mind and protection of capital and income, as well as additional features such as the ability to add portfolio diversity, policyholders can be sure that their investments remain secure despite market fluctuation.