What occurs to the cash value of a market value adjusted annuity if it's surrendered prior to the end of the stated guarantee period?

When a market value adjusted annuity is surrendered before the end of the stated guarantee period, it is subject to a market value adjustment. This adjustment reflects the current interest rates compared to the rates that were in effect when the annuity was issued. If interest rates have risen since the date of the purchase, the market value adjustment would typically result in a reduction in the cash value being received upon surrender. Conversely, if interest rates have fallen, the cash value could be increased.

This mechanism protects the insurance company from losses that could occur if a large number of policyholders surrendered their contracts when interest rates were unfavorable for them. As a result, the cash value is not simply liquidated at full value but adjusted according to market conditions, reflecting the financial realities of interest rates at the time of surrender. The other options do not correctly describe the effects of an early surrender in this context.