Market Value Adjustment (MVA)

Market Value Adjustment (MVA) in an Indexed Universal Life (IUL) insurance policy is a financial mechanism that comes into play under certain circumstances. It involves:

• Activation Conditions: Triggered by withdrawals or surrenders beyond the policy's standard terms.
• Adjustment Purpose: Reflects the variance between current interest rates and the rates when the policy was credited.

Effects on Policy Value:

• Potential Increase or Decrease: The policy's cash surrender value may rise or fall, contingent on existing market conditions.

In an IUL Policy Context:

• Surrender Charges Consideration: MVA is applied in conjunction with any applicable surrender charges.
• Insurance Company Protection: Aims to shield the insurer from losses due to early withdrawals, especially when interest rates have escalated since the policy's inception.

The MVA ensures that the financial impact of policyholder actions aligns with the prevailing economic environment, safeguarding both the policyholder and the insurance company.