The guaranteed minimum interest rate is the lowest rate a fixed deferred annuity will earn. It is stated in the contract and, as long as you own the annuity, it cannot change.
In a fixed deferred annuity, money earns interest at a rate the insurance company sets. That rate is fixed for a period of time, usually a year, and after that rate period ends, the insurance company sets another fixed interest rate for the next period. The new rate could be higher or lower than the earlier rate.
Even though the company may change the current or renewal rate, the annuity still has a guaranteed minimum interest rate. That minimum is the floor below which the annuity cannot earn. In the 2007 guide, this is described as the lowest rate your annuity will earn. In the 2022 guide, it is described as the lowest rate the annuity can earn and says it is stated in your contract and disclosure.
This guarantee is one of the features that makes fixed annuities different from variable annuities. Fixed annuities guarantee your money will earn at least a minimum interest rate, while rates above that minimum may change based on what the insurance company sets.
Before you buy, the NAIC guide says to ask about the initial interest rate, how long it will last, and the renewal interest rate, including when it will be announced and how the insurance company will tell you what the new rate will be. You should also review your contract carefully to confirm the guaranteed minimum interest rate and understand how other rates may change over time.
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Educational content provided by Jeffrey Scott McLeod, LUTC, National Insurance Producer License #558629. This is for informational purposes only and is not a recommendation to buy or sell any annuity. Guarantees are subject to the claims-paying ability of the issuing insurance company. Always consult your own advisor and read the full NAIC Buyer’s Guide. For residents of your state.
Source: © 2025 National Association of Insurance Commissioners (NAIC). Reprinted with permission. Further reprint or distribution strictly prohibited without written permission of NAIC.
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