Annuities: What is a Guaranteed Minimum Income Benefit?

Shawn Plummer

CEO, The Annuity Expert

You may be offered a Guaranteed Minimum Income Benefit (GMIB) when you buy an annuity. This type of rider guarantees a certain level of income for life, no matter how long you live. It can be a great way to ensure a steady income in retirement. In this guide, we will discuss what GMIBs are and how they can help you secure your financial future.

What is a guaranteed minimum income benefit?

A guaranteed minimum income benefit is a type of rider often added to an annuity contract. This rider guarantees that the annuitant will receive a certain level of income for life, no matter how long they live. The amount of guaranteed income will be based on the size of the annuity contract and the annuitant’s age at the purchase time.

GMIBs can be a great way to ensure that you have a steady income in retirement, especially if you are worried about outliving your savings. This rider can also give you peace of mind knowing that you will not have to worry about financial insecurity in retirement.

How does a guaranteed minimum withdrawal benefit work?

The guaranteed minimum income benefit (GMWB) works by guaranteeing a certain level of income for life. The amount of guaranteed income will be based on the size of the annuity contract and the annuitant’s age at the purchase time.

For example, let’s say you have a $100,000 annuity contract, and you are age 65 when you purchase the annuity. If your annuity has a GMIB rider with a guaranteed income of $500 per month, you will receive $500 per month for life, no matter how long you live.

If you live for 20 years after retirement, you will receive $120,000 in income from the GMIB rider. But if you live for 30 years after retirement, you will receive a total of $180,000 in income from the GMIB rider.

As you can see, the longer you live, the more valuable the GMWB annuity becomes. This is because the guaranteed income stream continues for as long as you live, even if you live for many years after retirement.

What are the benefits of a guaranteed minimum income benefit?

There are several benefits of having a GMIB rider on your annuity contract. First, it can give you peace of mind knowing that you will have a steady income in retirement, no matter how long you live.

Second, the GMIB rider can help you keep up with inflation. This is because the payments from the GMIB rider are often adjustable, which means they can increase over time to keep up with the cost of living.

Third, the GMIB rider can provide financial security for your loved ones in the event of your death. This is because the payments from the GMIB rider will continue to be paid to your beneficiaries after you die.

Fourth, and lastly, the GMIB rider can help you avoid probate. This is because the payments from the GMIB rider are paid directly to your spousal beneficiaries, which means they will not have to go through probate.

What is the difference between GMIB and GMWB?

There is no difference between a Guaranteed Minimum Income Benefit (GMIB) and a Guaranteed Minimum withdrawal Benefit (GMWB). Both types of riders can be added to an annuity contract.

Next Steps

If you are looking for a way to ensure a steady income stream in retirement, consider purchasing a GMIB rider. This rider can give you peace of mind knowing that you will not have to worry about financial insecurity in retirement. So contact us today for a quote and start planning for your future today!

Guaranteed Minimum Income Benefit (Gmib) And Guaranteed Minimum Withdrawl Benefit (Gmwb) Annuity

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Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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