What does GMWB stand for in the context of variable annuities?

In the context of variable annuities, GMWB stands for Guaranteed Minimum Withdrawal Benefit. This benefit is designed to provide policyholders with a safety net by guaranteeing a minimum amount that can be withdrawn from a variable annuity over the life of the contract, regardless of the investment performance of the underlying assets.

This withdrawal benefit is particularly appealing to investors who want to secure a steady income stream during retirement while still benefiting from the growth potential of the managed investments within the variable annuity. It allows the investor to withdraw a specified percentage of their initial investment or a higher guaranteed amount, which offers peace of mind that they won't outlive their assets.

By offering a combination of withdrawal guarantees and investment flexibility, GMWB products cater to individuals looking for a balance between growth potential and income security. This makes it a popular feature in variable annuities, promoting its value to clients who may be cautious about market volatility affecting their retirement funds.