By adjusting for interest rate changes, market-value-adjusted annuities grant you the flexibility to 1) leave your money in place after the initial term of your annuity has completed, or 2) withdraw it prior to the initial term of your annuity. If you surrender the annuity during the MVA period, we will adjust the surrender value to reflect changes in interest rates between the time the annuity was elected and the time of the withdrawal.
Navy Mutual will apply the MVA, based on the difference between the average rate of return for the plan and the current rate guaranteed on new contributions. Thus, the fair market value of the annuity is determined by market interest rates at the time of surrender and may result in either a higher or lower surrender value than what was projected, but never a surrender value that is less than the sum of your contributions.
MVA Example: Assume a deferred annuity plan terminates at the end of five years with cumulative contributions of $100,000, an account balance of $127,628, and an average rate of return of 5.0%.
…Rising interest rates – With the rate guaranteed on new contributions of 8.0%, the MVA would equal -$7,658 and the amount paid upon termination would be $119,970.
…Declining interest rates – With the rate guaranteed on new contributions of 3%, the MVA would equal +$5,105 and the amount paid upon termination would be $132,733.
To learn more about market value adjustments, please call us at 800-628-6011.