Interest-rate-based surrender value adjustment
Quick Definition: A Market Value Adjustment (MVA) is a feature in some MYGAs that adjusts your surrender value based on changes in interest rates. If rates rise after purchase, your surrender value decreases. If rates fall, your surrender value increases. It can work for or against you.
Interest rates RISE after you buy:
→ Your locked-in rate is now less attractive
→ MVA reduces your surrender value
→ You lose money if surrendering early
Interest rates FALL after you buy:
→ Your locked-in rate is now more attractive
→ MVA increases your surrender value
→ You gain money if surrendering early
MVA only applies if you surrender before term ends. If you hold to maturity, MVA doesn't affect you.
Insurance companies invest your premium in bonds matching the MYGA term. If you surrender early and rates have risen, they must sell bonds at a loss to pay you. MVA passes that loss to you.
In exchange for MVA risk, carriers often offer slightly higher rates on MVA MYGAs compared to non-MVA versions.
Purchase: $100,000 MYGA at 5% for 7 years
Year 3: Need to surrender (personal emergency)
Scenario 1: Interest rates now 7% (up 2%)
Account value: $115,762
Surrender charge: 6% = $6,945
MVA penalty: ~5% = $5,788
Net received: $103,029
Scenario 2: Interest rates now 3% (down 2%)
Account value: $115,762
Surrender charge: 6% = $6,945
MVA bonus: ~5% = $5,788
Net received: $114,605
⚠️ Important: MVA can significantly reduce your surrender value beyond stated surrender charges. In high-rate environments, early surrender can result in losing even your principal.
MVA MYGAs:
→ Slightly higher rates (0.1-0.3%)
→ Surrender value fluctuates with rates
→ More risk if rates rise
Non-MVA MYGAs:
→ Slightly lower rates
→ Predictable surrender value
→ Only surrender charge applies
Accept MVA if:
Avoid MVA if:
MVA adjusts surrender value based on interest rate changes—penalizes early exit in rising rate environments, rewards in falling rate environments. Only choose MVA MYGAs if certain you won't need early access. The slightly higher rate isn't worth the additional risk for most people.