Guaranteed Minimum Accumulation Benefit (GMAB)

What it is

A Guaranteed Minimum Accumulation Benefit (GMAB) is an optional rider on a variable annuity that guarantees the annuitant a minimum contract value after a specified holding period—commonly the accumulation period, often around 10 years. It protects the annuity’s value from adverse market performance during that period.

How it works

• You purchase a GMAB rider for an additional fee charged by the insurer.
• If, at the end of the holding/accumulation period, the annuity’s market value is below the guaranteed minimum, the rider makes up the difference so the annuitant receives the guaranteed amount.
• If the annuity’s market value exceeds the guaranteed minimum, the annuitant simply receives the higher account value.
• Some contracts include features that credit back unused rider costs or provide “step-ups” when the account reaches new highs during the holding period.

Key features and limitations

• Holding period: GMABs typically require the annuity to be held for a defined period before the guarantee applies.
• Fees: Riders carry extra costs that vary by provider and contract.
• Restrictions: Contracts may impose surrender charges, age limits, or requirements to annuitize to access certain guarantees.
• Trigger condition: The guarantee is only used if the contract’s market value is below the guaranteed amount at the measurement date.

How GMAB compares to other guaranteed riders

• Guaranteed Minimum Income Benefit (GMIB): Guarantees a minimum lifetime income stream if you annuitize the contract, usually subject to age and holding-period requirements.
• Guaranteed Minimum Withdrawal Benefit (GMWB): Guarantees the ability to withdraw a set percentage of the initial investment annually (commonly 5–10%) until the initial investment is recovered, with possible step-ups.
• Guaranteed Lifetime Withdrawal Benefit (GLWB): A GMWB variant that guarantees withdrawals for the annuitant’s lifetime.
• Standalone Lifetime Benefit (SALB): Provides lifetime access to guaranteed withdrawals without necessarily being tied to annuitization; may involve different fees and restrictions.

Who might consider a GMAB

• Investors seeking downside protection for a portion of a variable annuity’s accumulation value over a defined period.
• Those willing to pay extra fees and accept holding‑period restrictions in exchange for a floor beneath market returns.
• Investors who want protection but also the potential upside of investment gains (since the higher market value is paid if markets perform well).

Costs and considerations

• Additional rider fees reduce net investment returns and vary by insurer.
• Holding periods, surrender charges, annuitization rules, and age limits can limit liquidity and flexibility.
• Evaluate whether the cost of the rider is justified by the level of protection it provides given your investment horizon, risk tolerance, and alternatives (e.g., broad diversification, fixed products).

Key takeaways

• GMAB is an optional variable annuity rider that guarantees a minimum value after a set period, protecting against market declines.
• If the annuity’s market value exceeds the guaranteed minimum, the higher value is paid instead.
• Riders involve extra fees, holding-period rules, and other contract limitations—compare costs and features across providers before purchasing.