Market Value Adjustment
An adjustment applied to withdrawals from market-value-adjusted annuities, increasing or reducing the surrender value according to interest rate movements.
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What happens under a market value adjustment (MVA) annuity when the owner withdraws funds early and interest rates have risen since issue?
The withdrawal value is adjusted downward to reflect the rise in interest rates — A market value adjustment annuity permits the insurer to adjust the cash value at withdrawal to reflect changes in interest rates since purchase. If rates have risen, the insurer would have to reinvest withdrawn money at the new higher rates, so the value is adjusted downward; if rates have fallen, the adjustment is favorable. MVA products still typically carry a guaranteed minimum and are designed to discourage market-timing withdrawals.
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