Definition of "Guaranteed Minimum Income Benefit"

A type of "living benefit" in a variable annuity that can provide a guaranteed minimum future income level regardless of how the stock and bond markets perform. This benefit is usually available for an additional annual fee and must meet certain requirements. For example, the owner may be required to own the contract for a specified time period before exercising the benefit. This benefit guarantees a fixed income stream by calculating the value of purchase payments compounded annually at a specified rate. This benefit grows independently of investment performance.