Annuity maven

[Allen Trent]

I'm thinking that's a "walk away" value, with a possible MVA IF the contract was surrendered at this point.

It does say contract value, rather than income base?

Just my thoughts that would fit the numbers.

That could make more sense.

Never seen a carrier show lowest possible value on a statement unless it showed full account value that was earning interest.

IE. If I gave a carrier $100k a year ago & it earned 6% but had surrender schedule starting at 10% & MVA, I can't fathom the statement showing beginning value of 90,000, interest earned $6000, ending value of 93,000.

If statements showed that, I think there would be alot of surrenders, insurance bureau complaints, etc.

Also, would MVA have a hit of 5% in the past 12 months? I don't think interest rates have up the last 12 months to where a carrier would be hitting the contract surrender listing with an MVA penalty. But if purchased 3+ years ago interest rates have definitely went up that could cause an added MVA penalty to a contract owner.

Last question as I am not familiar with MVA statements, do the statements post an actual MVA adjustment on every anniversary statement when there is no way to calculate it as it is unknown how much the client might take out that is in addition to any free withdrawal. MVA would also have to adjust up if better bond market for carrier since time of purchase

 

[scagnt83]

That could make more sense.

Never seen a carrier show lowest possible value on a statement unless it showed full account value that was earning interest.

IE. If I gave a carrier $100k a year ago & it earned 6% but had surrender schedule starting at 10% & MVA, I can't fathom the statement showing beginning value of 90,000, interest earned $6000, ending value of 93,000.

If statements showed that, I think there would be alot of surrenders, insurance bureau complaints, etc.

Also, would MVA have a hit of 5% in the past 12 months? I don't think bond rates have went down the last 12 months to where a carrier would be hitting the contract surrender listing with an MVA penalty.

Last question as I am not familiar with MVA statements, do the statements post an actual MVA adjustment on every anniversary statement when there is no way to calculate it as it is unknown how much the client might take out that is in addition to any free withdrawal. MVA would also have to adjust up if better bond market for carrier since time of purchase

Most statements Ive seen list both an Account Value and Surrender Value.

Surrender Value includes the MVA.

However, I dont think he mentioned the age of this annuity. If its over 15 years old, the statement could look a bit different than most modern statements. But on the other hand, if its 15+ years old, it is likely past Surrender and no longer has MVAs.

 

[Allen Trent]

Most statements Ive seen list both an Account Value and Surrender Value.

Surrender Value includes the MVA.

However, I dont think he mentioned the age of this annuity. If its over 15 years old, the statement could look a bit different than most modern statements. But on the other hand, if its 15+ years old, it is likely past Surrender and no longer has MVAs.

Thanks

on the MVA aspect of surrender, would the statement show if MVA was positive to the owner? IE, would a contract with a 6 % current surrender charge possibly show the surrender value at only 4-5% less than contract value if interest rates had dropped since time of purchase?

 

[scagnt83]

Thanks

on the MVA aspect of surrender, would the statement show if MVA was positive to the owner? IE, would a contract with a 6 % current surrender charge possibly show the surrender value at only 4-5% less than contract value if interest rates had dropped since time of purchase?

Yes. It shows the Surrender Value including any positive or negative MVA adjustments. At least modern statements do, I cant speak for all legacy contracts over 20 years old.

Im fairly certain it is a regulatory requirement in all 50 states based on NAIC model regs.

 

[LostDollar]

I'm thinking that's a "walk away" value, with a possible MVA IF the contract was surrendered at this point.

It does say contract value, rather than income base?

Just my thoughts that would fit the numbers.

Note op's comment about requesting an income rider to be removed two years ago.

Note op's comment about contract fees remaining relatively stable.

Note your thought that contract fee could be a rider fee.

So if the carrier was just now catching up with OP's request x years back to cancel a rider and refunding some past fees, could that create some type of financial events that would cause the statement OP presented in the thread?

 

[DHK]

Note the math:

$79,819.16 (February 1, 2024)
+ $8,697.75 (credits/earnings)
$88,516.91
- $1,633.99 (Contract charges)
$86,882.92

Why does the statement show a contract value for $82,812.71 - a difference of $4,070.21?

That's not the contract fees or rider fees which are usually disclosed as M&E (mortality & expense - usually in variable contracts) or other living benefit rider fees.

A market value adjustment can occur if the contract is fully surrendered before the end of the surrender charge schedule. It does guarantee that you will receive no less than 87.5% of the amount contributed, minus withdrawals already received. This is in addition to existing surrender charges that may apply in the given year of surrender.

So why does the Contract Value show lower than the total?

That's why I believe (but cannot verify) that this could be the "walk away" value.

 

[Allen Trent]

A market value adjustment can occur if the contract is fully surrendered before the end of the surrender charge schedule.

MVA adjustments can happen also on any distributions that incur a surrender charge, not just full surrenders. So, if a contract allows 10% & you take 15% out, the extra 5% could incur surrender charge & also MVA adjustment. Plus, alot more MYGA these days dont permit 10% free WD, some allow only interest only or no free withdrawals at all.--basically, the only time MVA is not applied on a contract with MVA is if the distribution didnt also incur a surrender charge (IE: annual free WD, nursing home waiver if any, after surrender charge duration expired, death)

 

[Allen Trent]

Note op's comment about requesting an income rider to be removed two years ago.

Note op's comment about contract fees remaining relatively stable.

Note your thought that contract fee could be a rider fee.

So if the carrier was just now catching up with OP's request x years back to cancel a rider and refunding some past fees, could that create some type of financial events that would cause the statement OP presented in the thread?

if that was the case, I think the annual statement would show the opposite. it would show the account value growing more than interest credited, not showing a net of negative $5,700 compared to the starting value + interest =ending value

I think DHK is correct, it is showing the "surrender" values as the beginning & ending values.

Might have a 10% cap on interest. IE: starting real value around $86,500 & ending real value of $88,882. But statement shows contract "surrender" value starting of $79,819 (probably a 8% surrender charge/MVA change in that contract year) & ending surrender value of $82,812 (probably a 7% surrender charge/MVA change)

 

[LostDollar]

if that was the case, I think the annual statement would show the opposite. it would show the account value growing more than interest credited, not showing a net of negative $5,700 compared to the starting value + interest =ending value

I think DHK is correct, it is showing the "surrender" values as the beginning & ending values.

Might have a 10% cap on interest. IE: starting real value around $86,500 & ending real value of $88,882. But statement shows contract "surrender" value starting of $79,819 (probably a 8% surrender charge/MVA change in that contract year) & ending surrender value of $82,812 (probably a 7% surrender charge/MVA change)

But OP says math was fine in prior year statements.

So what happens this past year with surrender value/charges and MVA adjustments to make the math not be fine for this one year?

 

[Lloyds of Lubbock]

Annuity is 4 years old
"Why does the statement show a contract value for $82,812.71 - a difference of $4,070.21?"
That's the point.
Calling customer service and getting somebody in India is not helping.
I will give the agent another week and hopefully get an answer.