Which statement describes the minimum guaranteed death benefit (MGDB) again?

Which statement describes the minimum guaranteed death benefit (MGDB) again?

• A. The initial face amount of a variable life policy guaranteed to be paid to a named beneficiary as long as premiums are paid
• B. The account's investment value at death
• C. A life income guarantee
• D. Surrender value protection

Answer: (A)

The important idea here is a floor on the death benefit in a variable life policy. The minimum guaranteed death benefit sets a floor equal to the policy’s original face amount that will be paid to the beneficiary on the insured’s death, as long as premiums are paid and the policy stays in force. This means the beneficiary is protected from the risk of market downturn—the death benefit won’t drop below that initial amount even if the policy’s cash value falls due to investment results. If the policy has an option for an increasing death benefit, the total payout can be higher than the initial face amount, but it can’t fall below that guaranteed minimum. Other features like the current investment value at death, a separate life income guarantee, or surrender-value protections describe different aspects and don’t define the MGDB.

The important idea here is a floor on the death benefit in a variable life policy. The minimum guaranteed death benefit sets a floor equal to the policy’s original face amount that will be paid to the beneficiary on the insured’s death, as long as premiums are paid and the policy stays in force. This means the beneficiary is protected from the risk of market downturn—the death benefit won’t drop below that initial amount even if the policy’s cash value falls due to investment results. If the policy has an option for an increasing death benefit, the total payout can be higher than the initial face amount, but it can’t fall below that guaranteed minimum. Other features like the current investment value at death, a separate life income guarantee, or surrender-value protections describe different aspects and don’t define the MGDB.