The guaranteed minimum interest rate (GMIR) is the lowest rate an insurance company is contractually required to credit to your annuity, regardless of market conditions. It is a floor written into the contract that protects your money from earning less than a stated minimum.
How the GMIR Works
For MYGAs, the GMIR is less relevant during the initial guarantee period because the credited rate is already locked in at a higher level. The GMIR becomes important after the guarantee period ends, if you choose to leave money in the contract rather than withdrawing or doing a 1035 exchange.
For traditional fixed annuities with annually declared rates, the GMIR ensures the insurer cannot drop your rate below a certain level, typically 1-3% depending on the contract and state regulations.