What Is MVA (Market Value Adjustment)? Definition

Why it matters

An MVA applies when the owner withdraws more than the free amount, or surrenders the contract, during the guarantee period. If rates have risen, the adjustment usually reduces the payout. If rates have fallen, it may increase it. The formula varies by carrier, and some states do not allow MVAs. Buyers should ask for examples of how the adjustment works and how it interacts with surrender charges.

Source: investor.gov

Where we use this term

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Related terms

Surrender Charge: A surrender charge is a fee an insurer charges if you withdraw more than the allowed amount from an annuity, or cancel the contract, during the surrender period. It is usually a percentage that declines each year.
Surrender Period: A surrender period is the length of time, often several years, during which withdrawals above the allowed amount from an annuity trigger a surrender charge. After it ends, the owner can withdraw funds without that fee.
Multi-Year Guaranteed Annuity (MYGA): A multi-year guaranteed annuity (MYGA) is a fixed deferred annuity that guarantees one interest rate for a set number of years, usually from two to ten. It works like a certificate of deposit issued by an insurer.
Free Withdrawal: A free withdrawal is a portion of an annuity that the owner can take out each year without paying a surrender charge. The allowed amount is stated in the contract, often a percentage of the account value.
Annuity: An annuity is a contract with an insurance company in which you pay a lump sum or a series of payments. In return, the insurer agrees to make payments to you, either right away or at a future date.

All 241 terms

Market Value Adjustment (MVA)

Why it matters

Where we use this term

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