Which statement accurately describes GMAV (guaranteed minimum account value) in a variable annuity?

Which statement accurately describes GMAV (guaranteed minimum account value) in a variable annuity?

• A. It guarantees a fixed rate of return on the premium
• B. It guarantees the withdrawal amount will never decrease
• C. It guarantees the death benefit at maturity
• D. The contract's account value will be the greater of the premiums paid or the actual account value after a specified period

Answer: (D)

GMAV sets a floor for the contract value: after a defined period, the value you receive won’t be less than the higher of what you’ve paid in premiums or the actual account value. If the account has grown, GMAV tracks the actual value; if it has fallen below the premiums, the guarantee tops it up to the premium amount. This describes the guarantee precisely as “the greater of the premiums paid or the actual account value after a specified period.” The other options refer to different guarantees (a fixed rate of return, a guaranteed withdrawal amount, or a death benefit) and do not define GMAV.

GMAV sets a floor for the contract value: after a defined period, the value you receive won’t be less than the higher of what you’ve paid in premiums or the actual account value. If the account has grown, GMAV tracks the actual value; if it has fallen below the premiums, the guarantee tops it up to the premium amount. This describes the guarantee precisely as “the greater of the premiums paid or the actual account value after a specified period.” The other options refer to different guarantees (a fixed rate of return, a guaranteed withdrawal amount, or a death benefit) and do not define GMAV.