What is a GMIB?

What is a GMIB?

• A. A rider that guarantees a minimum death benefit amount.
• B. A rider that guarantees a fixed rate of return on premiums.
• C. A rider that guarantees withdrawals regardless of account value.
• D. A rider that guarantees a minimum income stream in retirement, often based on the account value or premiums, with specific payout rules and fees.

Answer: (D)

GMIB stands for Guaranteed Minimum Income Benefit. It’s a rider on a variable annuity that promises a minimum income stream in retirement, even if the investment performance of the account is poor. The guaranteed income is typically based on a calculated base—the benefit base—often linked to the premiums paid or the value of the account, and the contract specifies how that income is paid (for life) and under what rules and fees it adjusts over time. This is different from a death-benefit guarantee, which protects beneficiaries if the account value falls to a low level after death, and from a fixed-rate return on premiums, which would be an accumulation feature rather than a retirement income guarantee. It’s also not simply guaranteeing withdrawals regardless of account value; the GMIB guarantees a minimum income for life, but the actual payout depends on the rider’s rules and may be subject to fees.

GMIB stands for Guaranteed Minimum Income Benefit. It’s a rider on a variable annuity that promises a minimum income stream in retirement, even if the investment performance of the account is poor. The guaranteed income is typically based on a calculated base—the benefit base—often linked to the premiums paid or the value of the account, and the contract specifies how that income is paid (for life) and under what rules and fees it adjusts over time.

This is different from a death-benefit guarantee, which protects beneficiaries if the account value falls to a low level after death, and from a fixed-rate return on premiums, which would be an accumulation feature rather than a retirement income guarantee. It’s also not simply guaranteeing withdrawals regardless of account value; the GMIB guarantees a minimum income for life, but the actual payout depends on the rider’s rules and may be subject to fees.