Some people who engage in this benefit, think that there is a guaranteed interest rate on their money. It is not. In most cases you have to annuitize the contract to access the benefit. It works if you think the market is going up and you keep locking in higher values. You have to be careful and entertain the thought of getting out of the contract before you annuitize and when the contract is above the GMIB value. You come out ahead if you do it that way. Here is a definition of the GMIB from Invetopedia.
Investopedia explains Guaranteed Minimum Income Benefit - GMIB
Receiving a guaranteed minimum income benefit ensures that an annuitant will receive a payment regardless of market conditions. This minimum payment amount is predetermined by assessing the future value of the initial investment. This option is only beneficial to annuitants who plan to annuitize their annuity.
Saturday, June 13, 2009
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You are wrong, you do not have to annuitize to use the benefit. If you had this product you would know how it works!
ReplyDeleteSorry the true benifit of most GMIB is not realized unless certain circumstances are present for that particular person.
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