There are a growing number of strategies an adviser can suggest: guaranteed minimum withdrawal benefits (GMWBs
), various annuity products, managed payout services--even an institutional platform offering competing providers’ annuities in the form of IRAs--among others.
Another type of GMWB
rider that promises withdrawals for life was introduced in 2004.
Adding a GMWB
rider on a fixed indexed annuity might sound great to a client looking for income down the road.
* A GMWB
is similar to a GLWB, but a stream of income is guaranteed for a specified period rather than for the lifetime of the contract owner or annuitant.
In the case of a GMWB
, annuitants can receive income based on the benefit balance, and the amount will be solely dependent on their actual age at the time they initiate payments under the contract.
proponents maintain that people want continued access to their account balance.
"The effect of modelling parameters on the value of GMWB
guaranteed", Insurance: Mathematics and Economics 43 , pp .
guarantees the contract owner can withdraw each year a fixed percentage of the premiums, until all premiums have been completely recovered, regardless of the actual account value.
introduced the first GMWB
in 2002, and other writers quickly joined the fray.
These benefits may be such things as lifetime income payments, protections provided by death benefits, guaranteed minimum withdrawal benefits (GMWB
), guaranteed minimum withdrawal benefit for life (GWBL), guaranteed minimum income benefits (GMIB), and guaranteed minimum accumulation benefits (GMAB).
One of the most common is the guaranteed mini-mum withdrawal benefit (GMWB
) option, which gives the policyholder the option to withdraw a prespecified anmial amount even if the account value has fallen below this amount.
Melia knows of a product solution he thinks will emerge as a better option to systematic payments, because it offers payments guaranteed for the participant's life-a guaranteed minimum withdrawal benefit (GMWB