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GLWB Rider

Do I Really Get A 7.2% Return Forever From That Guaranteed Lifetime Withdrawal Benefit (GLWB)?

John L. Olsen

“Lifetime withdrawal benefits” are very popular these days; most of the indexed or variable deferred annuities sold today are bought by consumers who paid extra for this “rider”. Regrettably, all too many of those buyers believe that, for that extra cost, they will earn a guaranteed “investment return equal to the “rollup rate” of the annuity. They won’t. They will get a guaranteed amount of income, but that’s not the same thing. Let’s define our terms. A “Guaranteed Lifetime Withdrawal Rider” (usually abbreviated as GLWB)...

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Facts About Annuities That Your Agent Should Share With You

John L. Olsen

FACT #1: The economic benefit of payments under a Guaranteed Lifetime Withdrawal Benefit rider (GLWB) doesn’t materialize until after you’ve received your principal and all of your earned interest.           Here’s an example: At your age 55, you deposit $100,000 into a deferred annuity with a GLWB rider that guarantees a “roll up” interest rate (on the “benefit base”, on which the withdrawal payments are calculated) of 7.2%, compounded for ten years (which is the same as 10% simple interest). That produces a benefit base of...

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