Market Value Adjusted Annuity
Market value adjusted annuities are a type of fixed annuity that delivers a guaranteed interest rate for a fixed period (also called guarantee period). A market value adjusted annuity has a greater potential to provide higher interest rates than a non-market value adjusted annuity and is appropriate for individuals who are willing to tolerate a small amount of risk for a potentially higher guaranteed interest rate.
Offering a variety of interest rates and guarantee periods, market value adjusted annuities allow you to divide your funds over several different contract periods, giving you more control over your money. During each annuity's contract period, you may choose to take cash from your policy when prevailing interest rates are favorable for a withdrawal. If you surrender the annuity before the guarantee period expires, the cash value of the annuity may be adjusted to reflect the changes in prevailing interest rates.
With a market value adjusted annuity the issuing insurance company pays a fixed rate of interest for a specified time period, known as the "guarantee period". If you withdraw your money before the end of the guarantee period, you may get more or less than the existing annuity accumulation value. If current interest rates are higher than when the contract was initially issued, you get less; if current rates are lower, you get more. The increase or decrease is called "market value adjustment."
When surrendering your contract early, you may also be subject to an early withdrawal charge. To invest safely in a market value adjusted annuity, you should fully evaluate the financial strength of the issuing insurance company and carefully read the annuity product disclosure. You should also discuss your retirement investment goals with a FixedAnnuityDirect.com Annuity Specialist.