Fied Annuity Buyers Split On Durations

An MVA fixed annuity pays a declared rate of interest for a specified period. When a holder takes some or all of the assets out of an MVA annuity during the annuity contract term, the issuer exposes the holder to some interest rate risk by adjusting the market value of the annuity to reflect changes in a specified interest rate benchmark, according to Beacon.

Book value fixed annuities also pay a declared rate of interest for a specified period, but the issuer does not impose a market value adjustment if the holder takes some or all of the assets out of the annuity before the end of the contract term, Beacon says.

When FA buyers favor 1-year rates, that's a sign that 1-year rates seem especially high or that buyers expect interest rates to rise in the near future, experts say.

When FA buyers shift toward multi-year contracts, that may be a sign that the multi-year rates seem high or that buyers expect interest rates to fall or hold steady.