Market Value Adjustments
The Market Value Adjustment (MVA) is an adjustment we will make to the accumulated value during the surrender charge period upon:
- The full surrender of the annuity contract or
- Any portion of any partial withdrawal that is subject to a surrender charge. (Not including annual 10% free out),
The MVA may increase or decrease the accumulated value, depending on whether general interest rates have fallen or risen from the time the annuity was purchased. If interest rates have risen, the accumulated value can be lower. Conversely, if interest rates have fallen, the accumulated value can be higher.
To determine an increase or decrease of interest rates, the company uses the Index rates based on the ICE BofAML US Corporate 7-10 Year Effective Yield, published by the Federal Reserve Bank of St. Louis.
As an example of how the MVA might affect the accumulated value, assume that when a contract with a 5-year surrender charge is issued, the Index is 2.50%. At the end of the third year, if the Index is 25 basis points higher, the accumulated value could be reduced 0.486%. Conversely, if the Index has fallen by 25 basis points, the accumulated value could be increased by 0.490%.
