What is a Guaranteed Minimum Death Benefit (GMDB)?

What is a Guaranteed Minimum Death Benefit (GMDB)?

• A. A rider that guarantees a withdrawal of principal at no fee.
• B. A rider that guarantees a minimum income stream in retirement.
• C. A rider that guarantees a minimum death benefit amount, subject to contract terms and fees.
• D. A rider that guarantees returns based on market performance.

Answer: (C)

GMDB is a rider attached to a life policy or variable annuity that guarantees a minimum death benefit will be paid to beneficiaries if the insured dies, regardless of how the investments performed. The guaranteed amount is defined in the contract (often tied to premiums paid or a roll-up feature) and can increase over time under certain conditions. Because it’s a rider, it comes with fees and specific terms that can affect the guarantee and when it pays. It isn’t a guarantee of lifetime income or of investment returns; its purpose is to ensure heirs receive a floor on the death benefit, subject to contract terms and fees.

GMDB is a rider attached to a life policy or variable annuity that guarantees a minimum death benefit will be paid to beneficiaries if the insured dies, regardless of how the investments performed. The guaranteed amount is defined in the contract (often tied to premiums paid or a roll-up feature) and can increase over time under certain conditions. Because it’s a rider, it comes with fees and specific terms that can affect the guarantee and when it pays. It isn’t a guarantee of lifetime income or of investment returns; its purpose is to ensure heirs receive a floor on the death benefit, subject to contract terms and fees.