- An MVA adjusts an early surrender payout up or down based on how interest rates have moved since issue — up rates mean a negative adjustment, down rates a positive one.
- The MVA applies on top of the surrender charge, typically to amounts beyond the free-withdrawal corridor during the surrender period.
- MVAs are commonly waived at death, at annuitization, at the end of the term, and on the free-withdrawal amount — the waivers are as important as the formula.
- MVA products generally pay higher rates than book-value products because the buyer shares the carrier's interest-rate risk.
- The adjustment usually cannot cut into a contractual minimum guaranteed value — but that floor can sit below your credited account value.
Our surrender charge guide covers the declining percentage schedule everyone reads. This page covers the term printed a few pages later that far fewer people read: the market value adjustment, a formula that changes what an early exit pays based on where interest rates sit on the day you leave versus the day you bought. Unlike the surrender charge, the MVA has no fixed schedule and no ceiling you can read off a table — and unlike the surrender charge, it can work in your favor.
Why the MVA exists
When you buy a five-year MYGA, the carrier invests your premium in bonds matched to that term. If you surrender early, the carrier must sell those bonds at market. If rates rose after issue, the bonds are worth less than planned, and the MVA passes that loss to you — the buyer who broke the term. If rates fell, the bonds are worth more, and the MVA passes some of that gain to you. The mechanism converts you from a depositor (who bears no rate risk) into something closer to a bondholder (who bears it fully, but only on early exit). That risk transfer is precisely why MVA products pay higher rates than book-value products, where the carrier absorbs rate risk alone and charges for it in yield.
The direction, stated plainly
Rates up since issue → negative adjustment. Surrendering a 4% contract in a 6% world means the carrier liquidates underwater bonds; the MVA subtracts from your proceeds, on top of the surrender charge. Rates down since issue → positive adjustment. Surrendering a 6% contract in a 4% world means selling appreciated bonds; the MVA adds to your proceeds and can meaningfully offset — occasionally exceed — the surrender charge. The formula typically keys off a specified index (a Treasury constant maturity or a corporate index) comparing issue-date and surrender-date levels, scaled by remaining term: the more years left, the bigger the swing, exactly like bond duration.
A concrete sketch
Take a $200,000 MYGA in year two of five with a 7% surrender charge, and suppose the reference rate has moved by one point. Rough magnitudes: the surrender charge takes about $14,000 either way. With rates up 1% and roughly three years remaining, an MVA in the neighborhood of −3% takes another ~$6,000 — total haircut ~$20,000. With rates down 1%, a +3% MVA hands back ~$6,000, cutting the net cost to ~$8,000. Same contract, same schedule, wildly different exit price — driven by a number nobody controls. (Every contract's formula differs; run yours, not this sketch.)
The waivers matter as much as the formula
MVAs are routinely waived where the carrier isn't forced into unplanned bond sales: at the death of the owner or annuitant (heirs get the account value, adjustment-free, on nearly all contracts); at annuitization, since the money stays with the carrier as a payout stream; at term maturity and during any renewal window, because the deal was kept; and on the free-withdrawal corridor, typically 10% per year on the same terms as the surrender charge waiver. Many contracts also waive both charges under nursing-home and terminal-illness riders. Practical consequence: an MVA is a live risk only for a voluntary, above-corridor exit during the surrender period — which is exactly the move a well-planned ladder never needs to make.
The floor under the damage
State standard nonforfeiture law requires a minimum guaranteed surrender value — commonly 87.5% of premium accumulated at a low statutory rate — that the MVA cannot breach. That floor caps catastrophe, but note what it protects: a statutory minimum, not your credited account value. In a sharp rate spike, a mid-term surrender can legally return less than your current statement balance and even less than a flat account of your premiums plus interest. The floor is a seawall, not a guarantee of high ground.
MVA vs book value: choosing on purpose
A book-value contract pays account value minus the surrender schedule, full stop — simpler, rate-risk-free for you, and priced accordingly with a lower crediting rate. An MVA contract pays more yield for your acceptance of exit-price uncertainty. The choice is a bet on your own behavior: money you are certain will finish the term earns more in the MVA version, because you are being paid for a risk you never intend to trigger. Money that might need to leave early belongs in the book-value version, the free corridor, or a shorter term — see our CD comparison for how bank early-withdrawal penalties differ structurally from both.
Reading your own contract in five minutes
Find four things: the reference index the formula uses; the formula's scale (what a 1% move does per remaining year); the waiver list, checked against death, annuitization, maturity, corridor, and health riders; and the minimum guaranteed value in dollars today. Then file the contract and stop watching rates — you bought the term, and the entire analysis above only ever applies to the version of you that breaks it.
Frequently asked
Facing a surrender quote with an MVA attached?
Carriers must show the math on request. Send the surrender quote, the contract's MVA formula page, and the issue date — we will decompose the quote into surrender charge and MVA, and check it against the waivers before you sign anything.
Book a Free Review →