principles has been
recognized by A.M. Best, a nationally recognized
industry rating authority.
A.M. Best’s rating of “A-” (Excellent) for American
Equity is a measure of performance in the areas of:
Investment Quality Capital Adequacy
Policy Reserves Cost Control
A.M. Best uses 15 rating categories ranging from
A++ to F An A- rating from AM Best is its fourth
Neither American Equity Investment Life Insurance
Company nor any of its agents give legal, tax or
investment advice. The information here is a
summary of our understanding of current tax laws
as they relate to this insurance product. Consult
your own personal advisor for these matters.
P Box 71216
Des Moines, IA 50325
Form 1003 (08/08/06) Annuity Contract
Market Effect of Future Interest Rate Changes on
ValueAdjusted Annuity Cash Surrender Values
Annuity Contract 1 $107,000 $97,055 $88,580 $88,580 $88,580
The Market Value Adjusted (MVA) annuity
contract has earned a special appeal in today's 2 110,743 100,449 91,237 91,237 91,237
marketplace because it offers the consumer an 3 114,824 105,171 96,412 95,067 95,067
acceptable option to the traditional fixed annuity, 4 119,039 110,101 101,911 99,045 99,045
the common certificate of deposit and the
5 123,392 115,247 107,710 103,175 103,175
broader equity market, including stocks, bonds
6 127,889 120,618 113,824 107,473 107,465
and variable insurance products. This appeal is
enhanced by the inherent security provided by 7 132,534 126,224 120,271 114,652 111,919
deferred annuity contracts in general versus most 8 137,330 132,074 127,067 122,295 117,745
other financial strategies. 9 142,283 138,179 134,232 130,433 126,776
10 147,398 144,550 141,784 139,096 136,484
In a declining rate environment, the Owner is
11 154,287 152,789 151,320 149,879 148,465
guaranteed a minimum interest rate, common to
12 161,427 161,427 161,427 161,427 161,427
other fixed annuities. In addition, due to the
mechanics of the MVA feature, the Cash * Values assume $100,000 single premium, 5% first year
Surrender Value actually increases as interest interest rate and 3% subsequent rate.
rates fall, much like a bond. In this situation, increased, however, the Cash Surrender Value
current credited rates for the annuity contract are would go down, as illustrated.
typically higher than other new money strategies
which might then be available. During the Surrender Charge period of your
contract, American Equity permits a penalty-free
Likewise, when interest rates have increased over Withdrawal once each year after the first Contract
a period of time, Cash Surrender Values, like Year, which is not subject to any Market Value
bonds, may decline. However, unlike a bond, the Adjustment, of up to 10% of the Contract Value.
Owner has the guarantee that the Cash Surrender The Market Value Adjustment would apply only to
Value is never less than the total premiums paid, a total Surrender or a Withdrawal in excess of this
minus Withdrawals, accumulated at the minimum 10% penalty-free partial withdrawal made during
guaranteed interest rate of the specific contract the Surrender Charge period.
form, less any applicable Surrender Charges.
Also, in the event of death, the benefits paid would
The following table illustrates the effect of the not be subject to a Market Value Adjustment.
Market Value Adjustment on the Cash Surrender
Value of a typical Market Value Adjusted annuity, American Equity's Market Value Adjusted annuities
assuming future interest rates increase or provide many advantages, plus the benefits of
decrease by 1% or 2%. being associated with a financially secure life
In the example, the 7th year Cash Surrender
Value would be $120,271, assuming there was American Equity's Market Value Adjusted annuity
no change in interest rates during that time is an excellent product for financial diversification.
period. If new money rates decreased by 2% over
that same seven year time, the Cash Surrender The Market Value Adjusted annuity is an insurance product
Value would increase to $132,534; if rates and is not guaranteed by any bank or insured by the FDIC.