- A guaranteed minimum income benefit (GMIB) is the minimum dollar amount that your annuity pays when you retire. You don't have to convert your entire savings to monthly payments. Instead, you can make withdrawals from your annuity on a systematic basis every month. The insurer guarantees these withdrawal benefit regardless of your actual account balance. This feature is great if you don't want to convert your entire savings to monthly payments at retirement.
- The guaranteed minimum accumulation benefit (GMAB) is a valuable benefit which shifts the risk inherent in a variable annuity to the insurance company. The insurer guarantees you will earn a set interest rate, or at least a minimum account value, after a specified period of time. During the accumulation period, you cannot withdrawal any money or make any changes to the contract, but the insurer must direct the investment allocation. This benefit is designed for investors who want to remove the risk of loss in their annuity.
- Some variable annuities offer a high water mark death benefit option, which guarantees that your death benefit will equal the highest account value of your annuity since the contract's start date, regardless of the current account value. This benefit is ideal when you want an inflated death benefit similar to a life insurance policy, but you don't qualify for life insurance.
- A fee is normally charged on a variable annuity. These fees may be part of the mutual fund itself -- such as a management fee -- or part of the policy in the form of administrative fees. Fees reduce the amount of money you get from your policy, so you should look for the lowest fees possible.
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