Abstract：In this study, we propose an approach to fairly price the guarantee rider embedded in variable annuities based on the recent fair dynamic valuation approach. Fair dynamic valuation of insurance liabilities, adopted by some recent industry regulations such as Solvency II, combines the information about prices of traded assets in the financial market and actuarial valuation. In particular, we investigate the popular Guaranteed Minimum Lifetime Withdrawal Benefit (GLWB) variable annuities, which provides policyholders lifetime income benefits to insure against longevity and market risks. As it is vital for the insurers to assess the longevity risk when pricing, we show that fair dynamic valuation with hedging the tradeable longevity-linked securities, e.g. the longevity forward, significantly lowers fair valuation of GLWB guarantee and thus saves fair management fee.