What are all these "Rate" in Annuity?
Author: Andrew Lee About 3 minutes read. DISCLAIMER There are different type of rates that are mentioned and used in an Annuity Contract, and we would like to understand what does it mean. In addition to the meaning itself and how it works, note that, how the rate works sometime is tied to conditions (e.g. no withdraw, longer holding period, first-year premium, etc.) in the contract. When you look at a rate, make sure you understand what triggers that rate and how the rate is being applied. Consult with a qualified life agent or financial advisor if you have questions on how the rate works before signing any Annuity contract! Do not sign things you do not understand. Here are some terminologies explanation to get started. Market Value Adjustment - the increase or reduction of value due to interest rate fluctuation overtime. Simply put, the concept applies the present value (PV) and the anticipated rate of return to reflect the purchase price of an investment. Here is a simplified exa...