The guaranteed minimum income benefit (GMIB) guarantees what?

The guaranteed minimum income benefit (GMIB) guarantees what?

• A. A minimum amount will be available to convert to annuitized income at a rate specified in the contract
• B. A guaranteed death benefit
• C. A guaranteed withdrawal amount
• D. A guaranteed fixed income for life

Answer: (A)

GMIB centers on guaranteeing a floor for future income. It ensures that a minimum amount will be available to convert into annuity payments at a rate specified in the contract. This minimum comes from the benefit base, which can grow with premiums and credited interest, and at the annuitization date you can convert that guaranteed amount into a lifetime income using the guaranteed rate. The key idea is that, even if the account value is low, you still have a guaranteed minimum sum to turn into an annuity. It isn’t a death benefit, it isn’t a guaranteed withdrawal amount, and while the conversion can provide a lifelong payout, the guarantee itself is about the minimum amount you can convert at the contracted rate.

GMIB centers on guaranteeing a floor for future income. It ensures that a minimum amount will be available to convert into annuity payments at a rate specified in the contract. This minimum comes from the benefit base, which can grow with premiums and credited interest, and at the annuitization date you can convert that guaranteed amount into a lifetime income using the guaranteed rate. The key idea is that, even if the account value is low, you still have a guaranteed minimum sum to turn into an annuity. It isn’t a death benefit, it isn’t a guaranteed withdrawal amount, and while the conversion can provide a lifelong payout, the guarantee itself is about the minimum amount you can convert at the contracted rate.