Product Specification#

Status: Draft, 2026-08-04 (all cited sources accessed 2026-08-04).

Scope note. This is a standardized composite specification assembled for reference liability cash-flow modeling of a U.S. individual multi-year guaranteed annuity (MYGA) — a single-premium, book-value fixed deferred annuity with a market value adjustment. It does not describe any single insurer’s product. Facts carrying a source tag — [S#] (primary product documents) and [R#] (regulatory/actuarial references), both numbered per _research/fixed-deferred-annuity.md, and [REG-R#] (the cross-product reference library references/regulatory-and-actuarial-references.md, whose shared R-numbering now runs R1–R157 with most of the R73–R149 block unused; provenance in _research/regulatory-actuarial.md for R1–R34, _research/regulatory-actuarial-annuities.md for R35–R72, and the AP&P Manual appendix extractions _research/appp-ag33.md, appp-ag35.md, appp-a820-a821-a822.md and appp-a585-a250-a255-a270.md for R151–R157, all accessed 2026-08-06) — were extracted from the cited document. Values marked std are standardizations introduced for the reference implementation; each std table row carries a footnote giving the rationale and the observed range across insurers. Facts the research file could not verify are flagged unverified.

Role in this library. This is the deferred annuity base chassis. The fixed-indexed annuity documents reference the structure specified here — the surrender-benefit composition order (account value, less surrender charge, plus or minus MVA, floored at the nonforfeiture value) and the Model #805 floor construction — rather than restating it. They do not inherit this contract’s parameters or its two most distinctive mechanics: an FIA’s account-value roll-forward is index-credit driven, and its lapse architecture is not this chassis’s renewal/shock-lapse architecture (an FIA’s shock lapse is suppressed by an in-force GLWB rider, roughly 10%/33% with and without a rider, against the 52%–56% reported for fixed-rate deferred annuities — see products/fixed_indexed_annuity/technical-notes.md). That file also restates, rather than inherits, the MVA family and the death benefit; both differences are itemized there. The variable annuity documents deliberately do not: a VA is a separate-account contract that Model #805 expressly excludes, and the nonforfeiture floor reaches it only through Model #250 §7.B on any fixed account REG-R42 REG-R43 — do not import the recursions below into a VA model.

Composite anchors. Charges and nonforfeiture follow MassMutual Ascend SecureGain 5 S10 S11 S12; the MVA algebra follows the Midland National / Sammons linear family S5 S8 S9; the Nationwide BOA Platinum Edge registered contract S4 is the arithmetic unit-test anchor for the geometric MVA branch, being the only retrieved source with fully worked MVA numbers. This pairing is the research file’s own recommended composite.

Product overview and market role#

A MYGA is a single-premium deferred annuity whose entire purchase payment is credited to an account value growing at an insurer-declared effective annual rate, guaranteed for a stated multi-year guarantee period (typically 3–10 years), after which a new rate is declared S1 S2 S5 S16. There is no index feature and no separate account: the account is a book-value account. Interest is credited daily and quoted as an annual effective rate S4 S5 S16. Typical designs carry no front-end load and no annual administration fee — 100% of premium is credited S5 S10 S13 S16.

Liquidity is bounded by three contractual devices that between them define the product’s economics: a declining surrender charge over the guarantee period, an annual free-withdrawal allowance exempt from that charge, and a two-sided market value adjustment (MVA) transferring interest-rate risk on early exit back to the contract holder S2 S8 S9 S10 S13. Underneath all three sits a statutory floor: the minimum nonforfeiture amount of NAIC Model #805, an accumulation of 87.5% of gross considerations at an indexed rate R1 REG-R42.

The product competes on declared rate against bank CDs and other MYGAs, and its single most important behavioral feature is the shock lapse at the end of the guarantee period / surrender charge period. Industry experience shows surrender rates peaking in the year the surrender charge expires and remaining elevated afterward, decreasing as the guaranteed minimum interest rate rises, decreasing as the credited rate rises, and increasing with the excess of market rate over credited rate — with the shock-year rate high regardless of the interest-rate environment R8 REG-R63. The NAIC’s prescribed standard-projection assumption puts base lapse at 75% in the year of a guarantee-period expiry against 1% inside a multi-year guarantee period R2 REG-R36.

MYGAs are not SEC-registered. Two retrieved contracts are registered (Voya Multi-Rate Annuity S3, Nationwide BOA Platinum Edge S4); the research file’s reading is that this follows from their MVAs carrying no cap or collar at all S3 S4, where the retail MYGAs cap or floor the adjustment S2 S8 S9 S12 S13. Treat that as the research file’s observation, not a stated legal test unverified.

Representative specification#

Contract identity, issue rules and premium#

Parameter	Representative value	Basis
Legal form	Individual single-premium deferred annuity (SPDA), non-participating, non-registered, with a market value adjustment	S10 S11 S13 S16
Premium pattern	Single premium; no additional purchase payments	S5 S10 S13
Minimum initial premium	$10,000	S10 S16; pick std (1)
Maximum without company approval	$1,000,000	S1 S2; pick std (1)
Issue ages (age last birthday)	0–85, qualified and non-qualified	std (2)
Initial guarantee period	5 years	S10 S11
Front-end load	None; 100% of premium credited	S5 S10 S13 S16
Annual contract / maintenance fee	$0	S5 S10 S13 S16
Premium tax deducted from the contract	0%	S3 S16; pick std (3)
Free look	10 days; refund = purchase payment (no MVA)	S3; pick std (4)
Anchor model cell	Male 60, non-qualified, $100,000 single premium, 5-year period	std (5)

Observed minima: $5,000 S1 S13; $10,000 S2 S3 S10 S16; $50,000 S5 S6 S7. Observed maxima: $1,000,000 with more on approval S1 S2; >$1,000,000 with consent S3; >$2,000,000 needs approval S13. $10,000 / $1,000,000 is the modal retail pair. The $100,000 anchor premium is chosen so the source’s own $100,000-and-over rate band applies S11.
Observed: 0–80 S1 S2; 0–89, inherited 0–75 S10; 0–85 non-qualified and 18–85 tax-qualified S13; up to 90 S5; specimen maximum annuitant age [85] S14. 0–85 is the modal upper bound; the composite drops the qualified-money lower-age distinction. Only S1 S2 state an age basis (“actual age”), so ALB is the std reading of the eligibility rule. The technical notes run mortality on age nearest birthday, the basis VM-22 prescribes R2 §6.B.8; the anchor cell is taken as age 60 on both bases at issue std, so no conversion is applied in the reference run.
Observed premium tax deducted by the insurer: 0%–4% by jurisdiction S3; 0%–3.5% S16; deductible from accumulation value or death benefit where the state requires S5 S9. Set to 0% so premium tax is a switch, not a baked-in level; Model #805 permits premium tax actually paid to be deducted from the nonforfeiture floor R1 REG-R42.
Observed: 10 days, refund of purchase payment S3; 10 days, refund of contract value including any applicable MVA S4; 30 days, refund of premium less withdrawals S9. Model #245 §5.A requires a free look of not less than 15 days where the disclosure document and Buyer’s Guide are not delivered at or before application R4 REG-R45.
Issue age 60 puts surrender-charge expiry after the IRC §72(q) age-59½ boundary and before the RMD applicable age, so neither tax cliff dominates the behavior module R6.

Interest crediting and renewal#

Parameter	Representative value	Basis
Initial declared rate, guaranteed for the 5-year initial term	4.45% effective annual	S11 (eff. 09/22/25, purchase payments $100,000+; 4.10% under $100,000)
Declared rate shape within the initial term	Level for the whole term	S11; choice std (6)
Crediting frequency (contract)	Daily compounding to the declared annual effective rate	S4 S5 S16
Guaranteed minimum interest rate (GMIR)	0.25%	S11
Renewal architecture	Roll into a new 5-year guarantee period at a redeclared rate, with a fresh (shorter) surrender charge and MVA schedule	S1 S2 S5 S11; choice std (7)
Renewal surrender charge (renewal years 1→5)	5%, 4%, 3%, 2%, 1%	S2; adoption std (8)
Attained-age cap on the renewal charge	4% at 94, 3% at 95, 2% at 96, 1% at 97, 0% at 98–100	S1 S2
Renewal declared rate	Company discretion, never below the GMIR	S1 S2 S11 S16; projection rule std (technical notes)
Guarantee-period-end window	30 days: withdraw, surrender, renew or annuitize at full account value, no charge and no MVA	S1 S2 S5 S6; adoption std (9)
Default at window expiry	Automatic renewal into a period of the same duration	S1 S5
Bailout rate provision	None	(10)

Observed: level rate guaranteed to the fifth anniversary S11; an escalating design on the same product’s earlier brochure — base +0.25% bonus in term year 1, then base +0.10% cumulatively per year (illustrated 3.25%, 3.10%, 3.20%, 3.30%, 3.40% on a 3.00% base) S10; multiple rates within one term, not permitted in New York S3. Level is modal and single-parameter; the escalating variant is a guaranteed element and must be disclosed as such rather than illustrated R4 §6.F(8) REG-R45.
Two camps. Camp A rolls into a new multi-year guarantee period with a fresh, usually lower, surrender charge — Athene S1 S2, Midland S5 S6, MassMutual Ascend (charges and MVA apply “during each initial term or any renewal terms”) S11. Camp B drops to annually redetermined rates with no new surrender charge — New York Life, where the renewal rate is set each anniversary and, for New York issues, the GMIR itself is redetermined annually at not less than 1.00% S13. Camp A matches the charge and nonforfeiture anchor S11; the two produce entirely different lapse patterns and the technical notes carry both as a model-point switch.
Observed: Athene CA 9/8/7/6/5/4/3 initial vs 5/5/5/5/5/4/3 renewal S1; Athene NY 7/6/5/4/3 initial vs 5/4/3/2/1 renewal S2. Voya and Nationwide instead measure the charge from the original purchase payment date, so reinvestment never restarts the clock S3 S4. The composite adopts Athene NY’s renewal schedule and age cap.
Not described in the MassMutual Ascend documents; taken from Athene S1 S2 and Midland S5 S6, where it is the retail norm. Nationwide’s analogue is 90 days’ notice with unelected money defaulting into a liquid Transition Account free of MVA and CDSC S4; Voya’s is 18 days’ notice with a 5-day election deadline and auto-reinvestment S3.
No bailout-rate provision appears in any retrieved document. The bailout feature (a stated renewal rate below which the owner may surrender charge-free) is a real MYGA/FIA feature unverified but is not evidenced here; the 30-day free-out window is the mechanism actually documented S1 S2 S5 S6.

Surrender charges and liquidity#

Parameter	Representative value	Basis
Surrender charge, initial term (years 1→5)	9%, 8%, 7%, 6%, 5%; 0% from year 6	S10
Surrender charge base	The portion of the withdrawal/surrender in excess of the free allowance	S8 S9
Free allowance, contract year 1	10% of purchase payments	S10
Free allowance, contract years 2+	10% of the account value at the most recent anniversary	S10
Carry-forward	None; non-cumulative within a contract year, multiple withdrawals permitted up to the allowance	S4 S16; adoption std (11)
Free amount exempt from charge and MVA, including at full surrender	Yes	S8 S11; convention std (12)
Minimum partial withdrawal	$500	S2; pick std (13)
RMD treatment	Exempt from charge and MVA even above the free allowance	S15; adoption std (14)
Nursing-home / extended-care waiver	After year 1; confinement ≥90 consecutive days; up to 100% of account value free of charge; no rider cost	S10 (trigger and charge waiver); MVA also waived per S2 S5 S13
Terminal-illness waiver	After year 1; prognosis of survival 12 months or less; up to 100% of account value free of charge; no rider cost	S10; MVA also waived per S2 S13

Observed: explicitly non-cumulative S4; multiple partial withdrawals permitted up to the allowance S16; Voya restricts the exemption to the first withdrawal of each calendar year and charges the rest even if the 10% was unused S3.
Confirmed in the Midland worked example: on a full surrender at accumulation value $115,927 with an $11,593 free amount and a 3% charge, the charge is $3,130 = 3% × ($115,927 − $11,593) and the MVA runs on the same $104,334 base “before the reduction for any surrender charge” S8; MassMutual Ascend states charges and MVA “do not apply to amounts covered by the 10% free withdrawal allowance” S11. The opposite convention is real and material: Voya S3 and Nationwide S4 both apply the MVA to free-amount withdrawals taken before maturity.
Observed: $500 partial / $100 systematic S2; $100 with a $2,000 account-value floor after the withdrawal S13; $50 minimum systematic interest payment S5.
Observed: exempt even above the free amount S15; exempt by current company practice only, explicitly not a contractual guarantee S5 S6; exempt when the insurer calculates the RMD S13; exempt on the enhanced-liquidity version only S2. Worst treatment observed: RMDs treated as any other withdrawal and fully charged unless taken in the 30-day window S1 S2. Nationwide sets the free amount at the greater of 10% of contract value or the RMD, but the MVA still applies S4.

Market value adjustment#

Parameter	Representative value	Basis
Formula family	Linear duration × rate change: `μ = (i0 − it) × T`	S8 S9
`i0`, `it`	MVA reference yield at issue (locked for the guarantee period) and at surrender	S8 S9
`T`	(days from the surrender date to the end of the current contract year ÷ 365) + whole years remaining in the MVA period	S8
Reference index	A published corporate credit index yield (source design: Barclay’s US Credit Index)	S8 S9; model treatment std (15)
Application base	The portion of the surrender exceeding the free amount, before the surrender charge deduction	S8
Cap	Symmetric: the adjustment, positive or negative, may not exceed the surrender charge amount	S2; pick std (16)
MVA period	Equal to the surrender charge period; resets at each renewal	S8 S11
Not applied to	Death benefit S2 S4 S8 S13 S16; the 30-day window S2; annuitization S16std (17); RMDs and waiver withdrawals S2 S5 S13; after the MVA period S8 S13 S16	as cited
Floor on the adjusted value	Surrender value after MVA and charge may not fall below the state minimum nonforfeiture value	S8 S9 S12

The index is Barclay’s US Credit Index for the Midland/Sammons family, and the formula “varies by state” S8. Observed references market-wide: Treasury notes maturing in the last quarter of the term S3; interest rate swaps + 25 bp S4; Barclay’s US Credit Index S8 S9; 5-Year Treasury CMT and/or the BofA Merrill Lynch 5-10 Year US Corporate Bond Index S12; the company’s own new-money declared rate S14; an unnamed reference-index YTM, with Treasury CMT plus corporate bond indexes in New York S13. std: the model takes a single scalar reference-yield series as input rather than hard-coding an index, because the index is a state-filed variable.
Observed cap/collar designs — the largest single cross-carrier divergence: symmetric cap at the withdrawal charge S2; cap at min(surrender charge, interest credited) both ways S8 S9; asymmetric, positive capped at the early withdrawal charge and negative limited only by the standard nonforfeiture law minimum S12; floored at premiums accumulated at the GMIR, with the surrender charge still able to breach that level S13; no cap at all S3 S4. The symmetric cap is the cleanest to specify and is the design that, on the research file’s reading, keeps the contract non-registered S3 S4 unverified. All five are first-class model parameters in the technical notes.
Observed: not applied on annuitization S16, “may not apply” S8; applied on annuitization before maturity S4; applied but only when positive for amounts used to start a lifetime payout option S3. The composite takes the retail form.

Minimum guaranteed surrender value (Model #805 nonforfeiture floor)#

Parameter	Representative value	Basis
Statutory basis	NAIC Standard Nonforfeiture Law for Individual Deferred Annuities, Model #805	R1 REG-R42
Net consideration ratio	87.5% of gross considerations credited in the contract year	R1 §4.A(2) REG-R42
Contract GMSV accumulation rate	2.80%	S11
Statutory corridor, indexed nonforfeiture rate	`min(3.00%, round(5-yr CMT, nearest 1/20 of 1%) − 1.25%)`, floored at 0.15% (15 bp)	R1 §4.B REG-R42
CMT observation date	A date or averaging period stated in the contract, no longer than 15 months before issue or redetermination	R1 §4.B REG-R42
Annual contract charge deducted from the floor	$0 (statutory maximum $50, accumulated at the same rate)	S11; R1 §4.A REG-R42; pick std (18)
Withdrawal deduction convention	Gross — not reduced by early withdrawal charges or negative MVAs — accumulated at the GMSV rate	S11; convention std (19)
Redetermination	Permitted if the contract says so; none during the initial term	R1 §4.B; std
Death benefit floor	At least the cash surrender benefit	R1 §6 REG-R42
Equity-index carve-out (§4.C, up to a further 100 bp)	Not applicable — no index benefit on this chassis	R1 §4.C REG-R42

Correction, stated explicitly. The commonly repeated description of Model #805 puts a 1% floor under the indexed nonforfeiture rate. The retrieved Fall 2020 print sets the floor at 15 basis points (0.15%), giving a corridor of 0.15% ≤ i ≤ 3.00% with i = round(5-yr CMT, 1/20 of 1%) − 1.25% R1 §4.B REG-R42. The 1% figure reflects the 2003 amendment as originally adopted and is unverified against any retrieved document; do not implement it. The representative 2.80% GMSV rate S11 sits inside the corrected corridor.

The statute permits a $50 annual contract charge, accumulated at the same rates, to be deducted R1 §4.A REG-R42. The one retrieved product-level GMSV definition does not take it: “87.5% of purchase payments minus all prior withdrawals … plus interest credited daily at the GMSV rate of 2.80%” S11. The composite follows the product and exposes the charge as a parameter set to $0.
Two conventions are in the market and differ materially. S11 deducts withdrawals excluding early withdrawal charges and negative MVAs — the floor falls by the gross amount taken. S9 deducts surrenders “after MVA or reduction for surrender charges” — by the net proceeds, keeping the floor higher. The composite takes S11 and exposes the other as a switch.

Death benefit and annuitization#

Parameter	Representative value	Basis
Death benefit before annuitization	Full account value at the date of death; no surrender charge, no MVA	S1 S2 S13
Statutory floor	Not less than the cash surrender benefit, hence not less than the minimum nonforfeiture amount	R1 §6 REG-R42
Alternative design (not adopted)	Greater of accumulation value and the minimum surrender value	S5 S6
Annuitization availability	After the first contract year	S1 S2 (S10 lists the income options but is silent on timing)
Annuitization proceeds basis	Surrender value during the surrender charge period; full account value in the 30-day window and after that period	S1 S2 S5; composition std (20)
Income options	Fixed period; life; life with 10- or 20-year certain; joint and one-half survivor	S1 S2 S10
Deemed maturity date (statutory)	Later of the anniversary next following the annuitant’s 70th birthday and the 10th contract anniversary	R1 §8 REG-R42
Annuitization bonus	None	(21)

Observed: cash surrender value except in the 30-day window, where full accumulation value applies S1; full accumulation value at all times after year 1 S2; surrender value, with accumulation value granted by current company practice for life options after year 1 or after five years in force with payments over ≥5 years, and accumulation value in Florida S5; contract value with an MVA but no charge if in force ≥2 years S4. The composite is the modal retail rule.
No annuitization bonus appears in any retrieved document. The nearest analogues are the current-company-practice accumulation-value concession S5 and the 30-day-window full-account-value treatment S1 S2.

Contractual mechanics#

Notation, reused verbatim in technical-notes.md: P single purchase payment; AV(t) account value; i_cr declared credited rate; sc(y) surrender charge rate in contract year y; FW(t) available free-withdrawal allowance; E(t) amount exposed to charge and adjustment; μ(t) MVA rate; M(t) MVA amount (signed); C(t) surrender charge amount; MGSV(t) minimum guaranteed surrender value; SB(t) surrender benefit paid. Note on labels: MGSV is this library’s term across the annuity family for the Model #805 nonforfeiture floor; the specimen contract S11 calls the same quantity the “GMSV” and its accumulation rate the “GMSV rate”, and that wording is preserved wherever S11 is quoted below. products/fixed_indexed_annuity/ calls the same floor the guaranteed minimum value (MGV), following its own source S10 — one concept, three labels.

Account value. 100% of premium at issue, accreting at the declared effective annual rate compounded daily S4 S5 S16, reduced by the gross amount of any withdrawal. No charges are deducted from the account value — no front-end load, no annual fee, no rider charges on the base contract S5 S10 S13 S16. Over a period of length dt years with no withdrawal, AV(t) = AV(t − dt) × (1 + i_cr)^dt, with i_cr the initial declared rate for the whole initial guarantee period S11 and the renewal declared rate — never below the 0.25% GMIR S11 — thereafter.

Free withdrawal. Each contract year the owner may withdraw, free of surrender charge and MVA, up to 10% of purchase payments in year 1 and 10% of the account value at the most recent anniversary thereafter S10. The allowance is non-cumulative and may be taken in one or several withdrawals S4 S16 std. A free withdrawal reduces the account value by the amount paid and reduces the Model #805 floor by the same gross amount S11.

Partial withdrawal above the free amount. For a requested gross withdrawal W (the amount removed from the account value) with FW of allowance remaining, E = max(0, W − FW), C = sc(y) × E S8 S9 S10, M = clamp(μ × E, −C, +C) S8 S2, and the cash paid is W + M − C. Charge and adjustment are both computed on E before either is deducted S8. Contracts promising a stated net check gross up instead — the Voya prospectus works the case, requiring a $2,099.08 withdrawal to deliver a $2,000 check at an MVA factor of 0.9528 S3.

Full surrender — composition order: account value → MVA → surrender charge → nonforfeiture floor. With FW(t) the unused allowance and E(t) = AV(t) − FW(t):

C(t)  = sc(y) × E(t)
M(t)  = clamp( μ(t) × E(t),  −C(t),  +C(t) )
SV(t) = AV(t) + M(t) − C(t)
SB(t) = max( SV(t), MGSV(t) )                                    [S8] [S9] [S12]

When the allowance is zero — or when the alternative convention applying the MVA to the whole account value is selected, as Voya and Nationwide do S3 S4 — this collapses to the multiplicative form SB(t) = max( AV(t) × (1 + μ(t) − sc(y)), MGSV(t) ), the identity to use when checking dimensional consistency: μ and sc are both pure rates on the same currency base. Whether the MVA reaches inside the free amount differs by insurer: it does not for the retail MYGAs S2 S9 S10 S15 S16, it does for the two registered contracts S3 S4. Representative convention: MVA-free inside the free amount std, with a switch for the alternative.

Market value adjustment. μ(t) = (i0 − it) × T(t) with T(t) = (days from the surrender date to the end of the current contract year ÷ 365) + whole years remaining in the MVA period S8 S9. i0 is locked at the start of the guarantee period; rising reference yields give a negative adjustment and falling yields a positive one S5 S9 S13. Worked reference (Midland, on the fixed index annuity carrying this MVA text — do not read the numbers as a MYGA illustration S8): 7-year MVA period, $100,000 premium, accumulation value $115,927 at the end of contract year 5, free amount $11,593, 3% charge = $3,130, reference rate 3.00% at issue, T = 2. Rate falls to 2.00% → μ = +2.00%, MVA = +$2,086.69, surrender value $114,884; rate rises to 4.00% → μ = −2.00%, MVA = −$2,086.69, surrender value $110,711 S8.

Minimum guaranteed surrender value. MGSV(0) = 0.875 × P R1 §4.A(2) S11 and MGSV(t) = [MGSV(t − dt) − withdrawals(t) − charge(t)] × (1 + i_nf)^dt, with i_nf the contract GMSV rate (2.80% S11) constrained to the statutory corridor R1 §4.B REG-R42, charge(t) the annual contract charge ($0 representative, $50 statutory maximum R1 S11) and withdrawals deducted gross S11 std. Premium tax actually paid and indebtedness are further permitted deductions, accumulated at i_nf, and are zero here R1 §4.A. Model #805 §6 separately requires the cash surrender value to be at least the present value of the accrued paid-up annuity benefit discounted at a rate not more than 1% above the contract accumulation rate R1 §6; on a book-value MYGA with no richer purchase-rate guarantee the minimum nonforfeiture amount is the binding leg, and the paid-up-annuity leg is noted but not implemented std.

Guarantee-period end, renewal and shock. In the 30 days before each guarantee period ends the owner may withdraw any amount, surrender, renew or elect an income option, in every case at the full account value with no charge and no MVA S1 S2 S5 S6. Absent instruction the contract automatically begins a new period of the same duration at a newly declared rate S1 S5; under Camp A a fresh 5/4/3/2/1 surrender charge and MVA period begins S2 S11, while under Camp B the contract receives a new rate each anniversary with no further surrender charge S13.

Annuitization. Available after the first contract year S1 S2, at the surrender value during the surrender charge period and the full account value in the window or after that period S1 S2 S5 std. Payout factors are not specified here: no retrieved product document contains an annuity rate table S4, so factor construction must come from the 2012 IAM Basic / Projection Scale G2 machinery R9 REG-R59 REG-R60 plus a chosen valuation rate, with VM-V §1 governing the statutory maximum valuation rate for the income stream REG-R37.

Riders and options#

In scope (modeled as features of the base contract, no explicit charge):

Extended-care / nursing-home waiver. After contract year 1, confinement to a nursing home or LTC facility for ≥90 consecutive days permits withdrawal of up to 100% of the account value with no early withdrawal charge; no rider cost S10. Trigger variation observed: 90 days S2 S10; 45 days with a 3-year request window S3; 180 continuous days S4; 60 days S13 S15; qualified nursing care center after year 1 S5 S6.
Terminal-illness waiver. After contract year 1, prognosis of survival of 12 months or less permits withdrawal of up to 100% of the account value with no charge; no cost S10 S2 S13 S15.
RMD exemption. RMD amounts free of charge and MVA even above the free allowance S15 std (footnote 14).

Where several waivers apply, the highest single free-withdrawal amount applies, not the sum S2.

Out of scope (described, not modeled): enhanced beneficiary benefit rider paying 40% of policy earnings at death for issue ages ≤70, capped at 100% of adjusted premiums, charged 0.30% annually as 0.075% of accumulation value each policy quarter and ending after the 25th anniversary S13; enhanced spousal continuance rider S13; chronic and critical illness waiver requiring age ≤65 at issue S15; disability and unemployment waivers S13; SEPP waiver S2; small-balance and involuntary termination provisions below $2,500 S3; advisory-fee withdrawals of up to 1.50% of contract value annually on RIA-distributed variants, treated as partial surrenders subject to charge and MVA above the free amount S5 S6; enhanced-liquidity product variants S2; care-benefit variants S7. No guaranteed living benefit rider appears on any retrieved MYGA — which is why the shock lapse here is unsuppressed; the contrast with FIA and VA blocks is the presence or absence of exactly such a rider REG-R62 REG-R64.

Variations across insurers#

MVA formula family. (i) Geometric discount factor, [(1+a)/(1+b)]^t, on the SEC-registered modified guaranteed annuities — Voya on Treasury note yields with no spread S3, Nationwide on swaps with a 25 bp expense adder S4. (ii) Linear duration × rate change, (i0 − it) × T, on the retail MYGAs S8 S9. (iii) Linear declared-rate differential, W × (Ic − In) × Fs, on the insurer’s own new-money rate against a contractual duration-factor table S14. Model #245 §4.I recognizes both the external-index and company-declared-rate branches R4 REG-R45. Chosen: family (ii) — the most common retail form and the one the charge/nonforfeiture anchor pairs with; all three are implemented in the technical notes.
MVA caps. The biggest divergence: symmetric at the withdrawal charge S2; min(charge, interest credited) both ways S8 S9; asymmetric, positive capped and negative floored only by the nonforfeiture law S12; floored at premium accumulated at the GMIR S13; uncapped S3 S4. Chosen: symmetric at the surrender charge, with the cap a first-class model parameter rather than a hard-coded rule.
Free-withdrawal design. 10% of account value is the convention S2 S4 S9 S10 S15 S16, but Midland Oak ADVantage uses an interest-only allowance equal to the prior year’s credited interest S5 S6 and New York Life a greatest-of rule reaching 100% of policy gain for premiums ≥$100,000 S13. Chosen: 10% of account value — it is the modal design, it is the design the charge and nonforfeiture anchor actually carries S10 S11, and it is the only one of the three that makes the free amount a fixed known base at each anniversary, which is what the free-amount/MVA interaction and the E(t) = AV − FW composition below both need. The interest-only design is channel-specific (RIA/fee-based) and the greatest-of design is premium-band conditional, so neither generalizes. Whether the MVA reaches inside the free amount also differs (see mechanics).
Renewal architecture. Camp A — new multi-year period with a fresh, lower charge S1 S2 S5 S11; Camp B — annually redeclared rates, no new charge S13. Chosen: Camp A, with Camp B as a switch: the two produce entirely different lapse patterns and VM-22’s own worked examples are built around the distinction R2 REG-R36.
Surrender charge shape. Declining 7%–9% schedules dominate the commission-paid retail market (9/8/7/6/5/4/3 S1; 9/8/7/6/5 S10; 7/6/5/4/3/2/1 in New York S13); New York Life’s non-New York schedule holds 7% flat for three years first S13; Nationwide’s registered contract caps the charge at 5% and steps down in pairs S4; Midland’s RIA-distributed Oak ADVantage uses a level 3% every year paired with the interest-only free withdrawal S5 S6. Chosen: 9/8/7/6/5 S10 — it is the schedule of the charge/nonforfeiture anchor itself, it is exactly five rates for a five-year guarantee period (one per guarantee year, expiring with the term, so the surrender-charge clock and the guarantee-period clock coincide and the shock lapse has a single unambiguous date), and its 9% first-year level is the steepest in the retail set, which makes the Model #805 floor bind in the worked example rather than sit inert.
Guaranteed minimum interest rate. From an explicit 1% renewal floor S1 S2, to a contract GMIR of 0.25% S9 S11 or 1.50% S14, to none at all on Nationwide’s registered contract: “there is no minimum Specified Interest Rate for any of the Guaranteed Period Options” S4. Not cosmetic — VM-22’s GMIR Factor steps prescribed base lapse by 1.25 / 1.00 / 0.70 across the ≤1.0% / 1.0–2.5% / >2.5% bands R2 REG-R36. Chosen: 0.25% S11 → GMIR Factor 1.25 — it is the GMIR on the anchor’s current ICC24 form (the 2023 brochure’s “1% or higher” S10 is the superseded print), and it falls in VM-22’s lowest band, which carries the highest base-lapse multiplier. Taking the contemporaneous value therefore also takes the conservative end of the prescribed lapse scale rather than an assumption-flattering one.
Death benefit. Full accumulation value, no charge, no MVA S1 S2 S13; greater of accumulation value and minimum surrender value S5 S6; account value only if paid within six months of the annuitant’s death, MVA-adjusted afterwards or if owner ≠ annuitant S3. Chosen: full account value — modal, and it keeps the death benefit outside the MVA module entirely.
Guarantee-period-end handling and the surrender-charge clock. 30-day free-out window S1 S2 S5 S6; 90 days’ notice defaulting into a liquid Transition Account S4; 18 days’ notice with a 5-day election deadline and auto-reinvestment S3. The clock runs from the start of the current guarantee period S1 S2 S5 S11 or from the original purchase payment date, never restarting S3 S4. Chosen: the 30-day window with a per-period clock — that is what creates the repeating shock lapse under Camp A.

Regulatory context#

NAIC Standard Nonforfeiture Law for Individual Deferred Annuities (Model #805) R1 REG-R42. The load-bearing regulation. The minimum nonforfeiture amount is an accumulation of net considerations (87.5% of gross) at the indexed nonforfeiture rate, decreased by prior withdrawals, an annual contract charge of up to $50, premium tax actually paid and indebtedness, all accumulated at the same rate R1 §4.A. The indexed rate is min(3%, round(5-yr CMT to the nearest 1/20 of 1%) − 1.25%) floored at 15 basis points R1 §4.B — not 1%. The cash surrender benefit may never be less than the minimum nonforfeiture amount, and the death benefit never less than the cash surrender benefit R1 §6. Scope exclusions set the library’s boundaries: Model #805 does not reach variable annuities, immediate annuities, or a deferred annuity after annuity payments have commenced R1 §2, nor a compliant index-linked variable annuity, which runs through Model #250 §7 and AG 54 REG-R43 REG-R44. Model #808, the life nonforfeiture law, has no application here REG-R2.

NAIC Annuity Disclosure Model Regulation (Model #245) R4 REG-R45. The correct model number is #245, not #250; #250 is the Variable Annuity Model Regulation R4 REG-R43 REG-R45. It sets minimum disclosure standards and, in §6, standards for annuity illustrations. Its §4.I definition of an MVA — “a positive or negative adjustment … based on either the movement of an external index or on the company’s current guaranteed interest rate being offered on new premiums or new rates for renewal periods” — is the regulatory recognition of both MVA branches the model implements R4. Delivery: disclosure document and Buyer’s Guide at or before application face-to-face, else within five business days, failing which a free look of not less than 15 days applies R4 §5.A. Illustrated non-guaranteed elements may be no more favourable than current elements, may assume no future improvement and must reflect planned changes after an initial guaranteed period R4 §6.F(8) — which is why an escalating declared-rate design must be sold as a guaranteed element rather than a projection S10.

NAIC Suitability in Annuity Transactions Model Regulation (Model #275) R5 REG-R46. The 2020 best-interest revision requires producers to act in the consumer’s best interest and insurers to supervise recommendations R5 §1.A. §6.A(1)(j) requires the producer, on any exchange or replacement, to consider whether the consumer will incur a surrender charge or start a new surrender period, and whether the consumer has had another exchange or replacement within the preceding 60 months R5. That look-back is a genuine behavioral brake on MYGA-to-MYGA churn at surrender-charge expiry and belongs in the qualitative justification of any shock-lapse calibration.

VM-22, Principle-Based Reserves for Non-Variable Annuities R2 REG-R36. For in-scope contracts VM-22 constitutes CARVM R2 §1.A and applies for valuation dates on or after January 1, 2026 R2 §2.B. A company may keep business issued in the first three years after the effective date on VM-A/VM-C/VM-M/VM-V; once elected for a block VM-22 PBR must continue; and all applicable blocks must be on VM-22 PBR prospectively starting three years after the effective date R2 §2.B (2029 is arithmetic — the text prints the rule, not the date unverified). A MYGA sits in the Accumulation Reserving Category R2. Aggregate reserve = stochastic reserve + deterministic reserve for contracts passing the Single Scenario Test + reserves for excluded contracts valued formulaically; the additional standard projection amount is disclosure-only under VM-31 R2 §3.

Formulaic CARVM — A-820, AG 33 and the VM-C guideline family REG-R153 REG-R151 R7 REG-R41. Where VM-22 PBR does not apply (transition election, exclusion test), the reserve remains formulaic CARVM — the greatest-of-excesses construction printed at AP&P Appendix A-820 ¶15, whose ¶14 scope gate admits this contract (¶15 reaches all annuity contracts other than qualified-plan group annuity business, which ¶13.b routes to a CRVM-consistent method) REG-R153 ¶¶13.b, 14, 15 — read through Actuarial Guideline XXXIII, whose text has now been read in full as printed in the AP&P Manual Appendix C REG-R151 (superseding the title-only record at REG-R39). Its applicability sentence reaches “all annuity contracts subject to CARVM, where any elective benefits … are available to the contract owner”, so this chassis — full surrender, partial withdrawal, annuitization by option — is squarely inside REG-R151 Purpose. Two records this file previously carried are corrected. The printed title is “Determining CARVM Reserves for Annuity Contracts With Elective Benefits”, not the Rev. Rul. 2002-6 wording; and the printed Effective Date block reads “This guideline shall be effective on December 31, 1998, affecting all contracts issued on or after January 1, 1981” REG-R151 Effective Date, against the December 31, 1995 date carried here from Rev. Rul. 2002-6 for a differently-titled instrument R7. Both dates are recorded and the reconciliation is unresolved: the extracted pages carry no amendment history, so the natural reading — that the guideline was later revised — is an inference, not a fact from either source. The 1 January 1981 issue-date reach is common to both, and the guideline’s 33⅓ / 66⅔ / 100% grade-in ran off by December 31, 2000, so it has no live effect on any current valuation REG-R151 Effective Date. AG 33 contains no formulas, tables or factors beyond the 7% expense-allowance cap and those phase-in percentages, and it never cites SVL §5a by number — the §5a mapping used throughout this library is the library’s own, made on content REG-R151 REG-R1 §5a.B. Mechanics are in the primary-text extractions _research/appp-a820-a821-a822.md and _research/appp-ag33.md. VM-C is the authoritative index of which guidelines the Valuation Manual incorporates, including AG VIII, AG XIII, AG XXXIII and AG XLI REG-R41. For the payout phase VM-V §1 carries the statutory maximum valuation interest rate and supersedes the interest guidance in AG IX-B and IX-C REG-R37.

SEC registration S3 S4 REG-R49. A fixed deferred annuity whose MVA is not adequately limited is sold as a registered modified guaranteed annuity: both uncapped-MVA contracts in the source set are SEC-registered with statutory prospectuses S3 S4, while the capped retail MYGAs are not S2 S8 S9 S12 [unverified as a legal test]. The SEC’s 2024 rulemaking moved registered index-linked and registered market value adjustment annuities onto Form N-4 with tailored disclosure of contract adjustments and surrender charges and a prescribed Key Information Table; effective September 23, 2024, compliance date May 1, 2026 [REG-R49; that entry flags the compliance date unverified](#uslib-reg-r49). The representative contract has a capped MVA and is outside that regime. That SEC category is not the statutory instrument of the same name. AP&P Appendix A-255, “Modified Guaranteed Annuities”, defines the term by asset location — “a deferred annuity contract … the underlying assets of which are held in a separate account”, with “nonforfeiture values that are based upon a market-value adjustment formula if held for shorter periods”, the assets having to be in that separate account “during the period or periods when the contract holder can surrender the contract” REG-R157 ¶1. This chassis is a general account obligation with no separate account, so A-255 does not reach it; where it does reach a contract it delegates the reserve method itself to A-820 and adds one floor — the separate account liability at least equal to the surrender value produced by the contract’s own market-value-adjustment formula, with a transfer of assets to make good any shortfall REG-R157 ¶5. A-255 prints no MVA formula, no parameters for one, and does not mention CARVM REG-R157.

Federal tax — IRC §72 and §1035 R6 REG-R55 REG-R56. Pre-annuitization withdrawals are taxed income-first (LIFO): the taxable portion is the excess of “the cash value of the contract (determined without regard to any surrender charge) immediately before the amount is received” over the investment in the contract R6 §72(e)(3)(A) — the tax base is the account value, not the surrender value. Annuity payments use the exclusion ratio of investment in the contract to expected return at the annuity starting date, capped at unrecovered investment R6 §72(b). A 10% penalty applies to the includible portion of premature distributions under §72(q), with exceptions for age 59½, death, disability, SEPP and immediate annuities R6; all annuity contracts issued by the same company to the same policyholder in one calendar year are treated as one contract REG-R55. §1035 permits tax-free annuity-to-annuity exchange but not annuity-to-life REG-R56 — the mechanism behind most shock-lapse outflow. Under IRC §807 the tax reserve is the greater of the net surrender value and, post-TCJA, 92.81% of the NAIC-prescribed method reserve (CARVM), capped at the statutory reserve R7 REG-R16, so one projection feeds both engines.

Actuarial standards. ASOP No. 2 governs redetermination of the declared renewal rate as a non-guaranteed element, its scope expressly covering fixed deferred annuities REG-R26; ASOP No. 7 is the general standard for the asset/liability cash-flow analysis this model performs — the disintermediation, reinvestment and MVA exposure that defines a MYGA block REG-R27; ASOP No. 22 governs asset-adequacy opinions, the classic MYGA exposure REG-R29; ASOP No. 56 is the model-governance frame REG-R32, ASOP No. 54 the pricing standard REG-R70, and ASOP No. 10 with FASB ASU 2018-12 the U.S. GAAP (LDTI) measurement frame REG-R71 REG-R34.