Annuity market value adjustment (MVA) is a feature in some fixed and indexed annuities that adjusts the contractTMs surrender value up or down when withdrawals or surrenders exceed free amounts during the surrender period. The adjustment reflects the impact of interest-rate changes on the insurerTMs underlying investment portfolio since the contract was issued. If interest rates have fallen, the MVA may increase surrender values; if rates have risen, it may reduce them. MVAs allow insurers to offer more competitive base interest rates by aligning early surrender values with market conditions, but they add complexity to understanding potential outcomes.

Advisors explain annuity market value adjustments when comparing MVA and non-MVA annuities and when clients contemplate large withdrawals during the surrender period. They show how MVAs can be positive or negative, illustrating scenarios where surrender values might be higher or lower than the basic schedule. Advisors also coordinate with carriers to obtain projected surrender quotes that include MVAs before clients make major decisions. Compliance expects that clients understand MVA risk before purchase. Understanding annuity MVAs enables advisors to position them as a tradeoff for higher credited rates and to help clients avoid surprises if they need to exit early.