Market Value Adjustment (MVA)
What fixed-annuity buyers should know when a disclosure mentions an MVA — separate from surrender charges, unique to your contract.
A market value adjustment is an extra credit or charge some fixed annuities apply when you take money out early — tied to how interest rates have moved since you bought your contract. It is not the same thing as the surrender-charge schedule, though both can hit the same withdrawal.
Why insurers use MVAs
When an insurer sells you a fixed rate locked in for several years, it has to invest your money to make good on that promise. If you walk away early — especially when rates have moved a lot since you signed up — what your contract is actually worth to the insurer that day may be higher or lower than the account value on your statement. The MVA closes that gap on its end, using a formula written into the contract.
How the math layers
People treat the MVA and the surrender charge as the same number. They're not. An early withdrawal goes through both, in this order:
A concrete example
Same fixed annuity, same withdrawal point, two different rate scenarios. The surrender charge stays the same either way — but the MVA can go from a deduction to a credit depending on where rates went.
End of year 3, after rates rose
Illustrative only. The real MVA in your contract is calculated from a specific rate index — usually a Treasury yield or swap rate — not from a rule of thumb.
What happens if rates dropped instead
When rates fall, some MVA formulas pay you a positive adjustment on an early exit — but only if your contract's formula works both ways and your withdrawal qualifies.
When MVAs don't apply
The MVA is built for early withdrawals. Four common situations fall outside it:
- You're past the surrender-charge window. Once the rate-guarantee period has ended, the contract almost always waives the MVA along with the surrender charge.
- You're taking the contract's penalty-free withdrawal amount. Many fixed annuities allow up to 10% per year penalty-free, and the MVA usually doesn't apply to that portion. The disclosure will spell it out.
- You died. Death benefits are typically paid at account value, with no MVA reduction.
- Your contract simply doesn't have one. Not every fixed annuity has an MVA at all. Some newer insurers skip it.
Reading your disclosure
To verify how the MVA works on your specific contract, look for three things in the brochure or sample contract:
- The "Market value adjustment" section (or sometimes "Interest adjustment") — confirms whether one applies at all.
- Example tables showing your account value next to what you'd actually receive on an early exit, for rates that rose and rates that fell. These are usually the clearest way to see the formula in action.
- The rate index the formula tracks — usually a Treasury yield or swap rate. The MVA size depends on changes in that specific index since you bought, not on the general direction of the market.