Glossary

Market value adjustment (MVA)

A change to an annuity's surrender value on early withdrawal, up if interest rates have fallen since purchase and down if they have risen.

Also called: MVA, interest rate adjustment

A market value adjustment (MVA) is a feature in many fixed, multi-year guaranteed and indexed annuities that changes the amount you receive if you surrender, or withdraw more than the free amount, during the surrender period. It applies in addition to any surrender charge, and it moves with interest rates.

The logic is that the insurer bought bonds to back your guaranteed rate. If rates have risen since you bought, those bonds are worth less, so the MVA reduces your payout. If rates have fallen, the bonds are worth more, and the MVA increases it. Say, hypothetically, you have $100,000 in a five-year annuity, rates have risen two percentage points, and you surrender in year two. A 6% surrender charge plus a negative MVA of a few thousand dollars could leave you with well under $94,000. Had rates fallen instead, a positive MVA could offset part of the charge.

MVAs typically stop applying once the surrender period ends, and contracts generally limit them so the value can't fall below a guaranteed minimum. Contracts with an MVA sometimes offer a slightly higher rate in exchange. Read the formula before buying. See multi-year guaranteed annuities and annuity surrender charges and free withdrawals.

Last reviewed October 4, 2026

In the index now

Related terms

Multi-year guaranteed annuity (MYGA) A fixed deferred annuity that locks in one interest rate for a set term, often three to 10 years, much like a bank CD but issued by an insurer. Surrender charge A fee deducted from a policy's or annuity's value if you cancel or withdraw too much in its early years, usually shrinking each year. Surrender period The years after purchase during which cancelling or over-withdrawing from an annuity or permanent policy triggers a surrender charge. Free withdrawal provision An annuity clause that lets you take out a set share of the contract value each year, often 10%, without paying a surrender charge. Fixed annuity An annuity that credits a rate set by the insurer, with principal protected from market losses, either deferring growth or paying fixed income.

Related guides

Annuity surrender charges and free withdrawals How annuity surrender charges work, the free-withdrawal allowance, market value adjustments, waivers, and what it costs to leave a contract early. Fixed annuities: how they work, what they cost, who they suit A fixed annuity pays a declared interest rate set by the insurer. How rates, surrender charges and guarantees work, and when a CD or Treasury may do the job. Life insurers and the economy: rates, recessions and markets How interest rates, inflation, recessions and market crashes affect life insurers and policyholders, and how insurers in turn fund the economy. Multi-year guaranteed annuities (MYGAs): how they work A MYGA locks one interest rate for a set number of years. How the rate, surrender charges and end-of-term choices work, and how it compares with CDs.

Related insurers

Prosperity Life Group Life and annuity group owned by JAB Insurance since 2025, combining S.USA, SBLI USA, Shenandoah Life and National Western Life, acquired in 2024.

Related annuity companies

American Equity and American National Brookfield Wealth Solutions' annuity group: American Equity and Eagle Life fixed index annuities and American National MYGAs, sold through agents and online. F&G Annuities & Life Des Moines annuity specialist about 70% owned by Fidelity National Financial, selling fixed indexed annuities, MYGAs and a RILA through agents. Nationwide The annuity arm of mutual insurer Nationwide, selling variable, RILA, fixed indexed, fixed and immediate annuities through advisors, banks and RIAs. Pacific Life Newport Beach insurer under a mutual holding company, selling variable, fixed indexed, RILA, fixed and income annuities through financial professionals. Protective Life Birmingham insurer owned by Japan's Daiichi Life, selling MYGAs, indexed, variable and immediate annuities, many with lifetime income, via advisors and banks. Prudential Newark-based public insurer selling FlexGuard RILAs, variable, fixed indexed, MYGA and income annuities through financial professionals.