Market Value Adjusted Fixed Annuities
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Market Value Adjusted Fixed Annuities

A fixed annuity with a market value adjustment feature, also referred to as a modified guaranteed annuity, offers the flexibility of various guarantee terms combined with the potential for higher interest rates than traditional fixed investments. The guarantee terms range from shorter term to longer term and typically credit higher interest rates for longer-term commitments. A guaranteed fixed rate is declared for the length of each guarantee term.

The guaranteed rate is valid only if the investment is held until maturity. Investments may be split amongst several guarantee terms to match various time horizons when funds may need to be accessed. Withdrawals made before maturity of the guarantee term may be subject to a contingent deferred sales charge (CDSC) and/or a market value adjustment (MVA). Typically, the length of the CDSC schedule matches the duration of the guarantee term.

Designed for retirement saving

Like other types of deferred annuities – fixed or variable – market value adjusted annuities are long-term contracts purchased from a life insurance company designed to help you save for retirement.

Keep in mind that withdrawals may be subject to contingent deferred surrender charges (CDSC) and a market value adjustment (MVA). Early withdrawals, those taken prior to age 59½, may be subject to a 10% early withdrawal federal tax penalty in addition to ordinary income taxes. All withdrawals will reduce the death benefit and contract value.

Features of a Fixed Annuity with an MVA

Market value adjusted annuities

How the Market Value Adjustment is Determined

A market value adjustment (MVA) may apply to any withdrawal made prior to the maturity of a guarantee term. The MVA reflects the impact of changes in Treasury rates between the time the guarantee term was elected and the time of the withdrawal.  Generally, if Treasury rates have gone up since the guarantee period was elected, the market value adjustment will be unfavorable, while a downward rate movement will typically result in a favorable adjustment to occur.  Therefore, an MVA could increase or decrease the amount of the withdrawal.

NFW-3311AO.1, NFW-3525AO

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