What describes a step-up feature in GMDB or GMIB riders?

What describes a step-up feature in GMDB or GMIB riders?

• A. A feature that increases the guaranteed amount over time, often with additional premium payments or minimum growth.
• B. A feature that decreases the guaranteed amount over time.
• C. A feature that freezes the guaranteed amount.
• D. A feature that converts the rider to a fixed annuity.

Answer: (B)

A step-up feature means the guaranteed amount (or the income base) increases over time. In GMDB riders, the death benefit guarantee can be raised at set anniversaries to reflect growth in the rider’s value, often supported by credited growth or additional premium payments. In GMIB riders, the guaranteed lifetime income is recalculated upward at reset dates, so you can receive a higher income later even if market values have fallen since. This provides protection against market downturns by locking in higher guarantees as the contract accumulates value. It is not a decrease, a freeze, or a conversion to a fixed annuity.

A step-up feature means the guaranteed amount (or the income base) increases over time. In GMDB riders, the death benefit guarantee can be raised at set anniversaries to reflect growth in the rider’s value, often supported by credited growth or additional premium payments. In GMIB riders, the guaranteed lifetime income is recalculated upward at reset dates, so you can receive a higher income later even if market values have fallen since. This provides protection against market downturns by locking in higher guarantees as the contract accumulates value. It is not a decrease, a freeze, or a conversion to a fixed annuity.