What is Guaranteed Minimum Interest Rate?
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.
