A market value adjustment can raise or lower the amount available when a contract owner withdraws, surrenders, or annuitizes during a period covered by the contract's MVA provision. The surrender charge is separate and may apply to the same transaction.
Move the rate. Watch the adjustment change direction.
Uses the two sample formula shapes in the Insurance Compact standard, a fixed 0.25% spread, and $100,000 subject to the MVA.
The comparison rate plus spread is above the initial rate: both sample formulas produce a negative adjustment.
Illustration only. It excludes surrender charges, taxes, contract floors, caps, and exemptions. Your contract controls.
The math
Two standard formula shapes
The Insurance Compact lists both as sample acceptable formulas; it also permits other approved formulas. A filed contract tells you which formula, inputs, limits, and order of operations apply.
Compounds the rate difference over the time remaining. With I = 4%, J = 6%, K = 0.25%, and N = 3, the result is −6.22%.
Multiplies the rate difference by the remaining duration. With the same inputs, the result is −6.75%.
- I · Initial rate
- The initial guaranteed rate or the contract's starting reference-index value.
- J · Current rate
- The current guaranteed rate or current value of the disclosed reference index.
- K · Spread
- A formula spread. In the Compact's guaranteed-rate example, it cannot exceed 0.25%.
- N · Time remaining
- Days or months remaining in the MVA period, divided by 365 or 12.
Read the contract
Five ingredients determine the real result
Formula
The contract or endorsement defines the calculation and where it is applied relative to charges and credits.
Reference index or rate
The input may be a public interest-rate index or the insurer's current guaranteed rate for new money or renewal periods.
Spread
A stated spread shifts both the sign threshold and the size of the adjustment.
Caps and floors
Contractual limits can restrict an upward or downward adjustment; nonforfeiture rules can also impose a minimum value.
Exemptions
The contract identifies transactions and windows where no MVA applies, and whether a waiver affects the MVA, surrender charge, or both.
What this means when you shop
Compare the liquidity rule, not just the headline rate
There is no universal exemption list. State-approved forms can differ, and a national brochure cannot replace the contract and endorsement. Start with products whose feed explicitly records no MVA, then confirm the actual state form.
A contract-verified no-MVA example
Compare guaranteed terms, surrender schedules, free withdrawals, premium bands, and carrier strength.
Open F&G Secure MYGA Non-MVAA contract-verified no-MVA example
Keep index-crediting terms separate from liquidity terms and rider fees.
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Frequently asked questions
What happens to an annuity MVA when interest rates rise?
Under the two regulator-accepted formula shapes illustrated here, a higher comparison rate produces a negative adjustment. The exact result depends on the contract formula, reference rate, spread, time remaining, and contractual limits.
Is an MVA the same as a surrender charge?
No. A surrender charge follows a contract schedule. An MVA is a separate positive or negative adjustment tied to the contract formula and its rate or index inputs. Both may apply to the same transaction.
When does an MVA not apply?
The answer is contract-specific. Common examples include a guaranteed benefit window, some death benefits, annuitization, required distributions, permitted free withdrawals, and contractual waivers, but a contract may include, exclude, or limit any of these.
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