What is Guaranteed payout withdrawal of life – GLWB’
The guaranteed income withdrawal life (GLWB) rider to a variable annuity contract that allows for withdrawals or regular or casual, must be made from the annuity during the accumulation phase without penalty. The dependent pays for GLWB with an additional percentage of the cost of the total cost of the annuity contract. The amount of money allowed to be withdrawn in the percent of the total value of the annuity.
Breaking down the ‘Guaranteed payment withdrawal of life – GLWB’
The guaranteed income withdrawal life (GLWB) allows the owner of this rider on the annuity or to take regular or occasional withdrawals from the annuity during the accumulation period before it is taxed.
Generally, annuity is a contract between the buyer, is called the dependent, and the Issuer, in which the dependent makes a one-time payment or regular payments to the Issuer, and in return the Issuer makes monthly payments to the dependent after the balance of funds in the annuity or any other contract threshold. It is a way to save for retirement by making regular payments over a certain period of time and then receive regular payouts after retirement.
In most cases, the dependent is not allowed to withdraw or receive any payments from the account to the account of the switches of the accrual period in which the dependent pays to the Fund an annuity, the annuity period. This process is called annuitizing the account and this is a relatively simple mechanism to fill the account to pay it, and then payment of the distributions subject to the dependent monthly, quarterly or annually. If the dependant draws the money from the account in the accrual period, they face severe charges. The GLWB rider allows the dependant to take distributions from the annuity during the charging period, regardless of how the Fund makes and the Fund continues to grow and remains close to the target funding date and the annuity. It is possible that the distributions GLWB will drain Fund enough money, so the date of the annuity Fund will have to be postponed. The amount that can be withdrawn is determined by using GLWB contract rider.
The pros and cons of the guaranteed income withdrawal life (GLWB)
Unlike the traditional annuity, which connects the money to the dependent invests in a Fund until retirement, and GLWB rider on an annuity allows the dependent to access the money that they paid into the annuity by withdrawing some of them, before the annuity is made with an accrual period. This flexibility means that the dependent could exchange part of the stability of annuity to increase the impact of money if they invest money, they are withdrawn from the annuity in more risky investments higher returns. The only real cons of the GLWB rider is the cost of its purchase and the probability is that during the period of rent-sharing can be delayed if a significant amount is withdrawn from the annuity.