Why it earned this rating
Our assessment
LunarGuard MVA 7-Year offers a clean locked-rate structure, competitive guaranteed yields (especially above $100,000), and straightforward terms for a MYGA of this duration. The full-account-value death benefit, nursing home waiver, and RMD accommodation are all meaningful additions. What holds the rating at 4.0 rather than higher is the MVA — a real and variable cost that makes early surrender unpredictable, not just expensive.
The short version
This is a 7-year guaranteed-rate annuity from a smaller carrier backed by Constellation Insurance. The core appeal is straightforward: you lock in a rate for seven years, earn interest tax-deferred, and at maturity you get your full accumulated value. The rates available as of the brochure date — 4.85% below $100,000, 5.05% at $100,000 or more — are the kind of figures that make MYGAs attractive when bank CDs and money markets lag. What makes this product more complex than a CD alternative is the MVA, which causes any surrender during the charge period to carry an additional gain or loss depending on where interest rates have moved since issue.
Key facts
The full review
Is AuguStar LunarGuard MVA 7-Year a Good Annuity?
Yes, for the right buyer. If you have a genuine 7-year time horizon, want a guaranteed fixed return, and are not planning to touch the principal during the surrender period, this product does exactly what a MYGA is supposed to do. It is less suitable for someone who is uncertain about their liquidity needs, because the combination of surrender charges plus an MVA creates an exit cost that is difficult to predict in advance.
Why Someone Would Buy This Annuity
The primary reason is tax-deferred accumulation at a locked, guaranteed rate. Unlike a CD, interest grows without an annual tax bill if the annuity is held in a non-qualified account — which matters meaningfully for higher earners. The rate tier above $100,000 is an additional incentive for buyers who can meet that threshold. The nursing home waiver and RMD accommodation make it practical for buyers in or near retirement who want certainty without sacrificing basic flexibility for genuine hardship situations.
Who This Annuity Is Best For
I think LunarGuard MVA 7-Year is best for someone in their late 50s through 70s who has a chunk of non-qualified savings or IRA money they do not plan to touch for seven years — retirement savings they want to park safely with a predictable return. It is particularly well-suited for the $100,000-or-more buyer who qualifies for the higher rate. It is less attractive for someone with unclear liquidity needs, for someone who wants more upside potential than a fixed rate provides, or for any buyer who might need to exit early and cannot absorb an unpredictable MVA penalty.
What You're Really Buying Here
You are buying a fixed-rate insurance contract, not a market investment. The insurance company takes your premium, credits a guaranteed interest rate each year for seven years, and guarantees your principal will not go down from market movements. In exchange, you accept that surrendering early carries both a surrender charge and an MVA — meaning the insurer reserves the right to reduce your surrender value further if prevailing interest rates have risen since you bought the contract (and conversely, the MVA can be favorable if rates have fallen). The trade is certainty of outcome at maturity versus uncertainty of cost if you leave early.
How the Core Feature Works
LunarGuard MVA 7-Year credits a single fixed interest rate for the full seven-year contract term. There are no allocation decisions, no annual crediting elections, and no strategies to manage. The rate is determined at issue and locked in: the brochure shows 4.85% annually for premiums below $100,000, and 5.05% for $100,000 or more. The minimum guaranteed rate is 0.25% annually, which is a contractual floor but well below any realistic current rate.
Interest compounds tax-deferred inside the contract. At contract maturity, the accumulated value is available without surrender charges. During the surrender period, you can take up to 5% of account value each year free of charges — 5% of premiums paid in year one, then 5% of the prior anniversary account value in subsequent years. Withdrawals beyond the free amount are subject to the surrender charge schedule and the MVA.
Why the Secondary Feature Matters
The MVA is the feature most buyers in this product need to understand before signing. A Market Value Adjustment is an interest-rate-sensitive calculation applied to surrenders above the free-withdrawal amount during the surrender period. If rates have risen since you bought the contract, the MVA typically reduces your surrender value beyond what the stated surrender charge alone would suggest. If rates have fallen, it can work in your favor.
The practical implication is that a 7% stated surrender charge in year three is not the actual worst-case exit cost if rates have moved significantly. In a rising-rate environment, the total reduction to account value on an early full surrender can be materially larger than the schedule implies. This product is appropriate when you treat the 7-year term as a genuine commitment, not a rough guide.
Liquidity and Surrender Schedule
LunarGuard MVA 7-Year allows 5% free withdrawals annually — 5% of premiums paid in year one, then 5% of the prior contract anniversary account value in years two through seven. That is a modest free-withdrawal provision relative to some competitors that offer 10%. Withdrawals can be taken up to twelve times per year, with a $100 minimum per withdrawal (no minimum for EFT distributions).
RMDs attributable to this contract generally do not trigger surrender charges, which is an important accommodation for IRA owners who have to take distributions regardless of preference. The nursing home rider provides additional relief if you are confined to a qualified care facility.
Beyond those provisions, any excess withdrawal is subject to both a surrender charge and the MVA. The surrender charge schedule is:
| Contract Year | Surrender Charge |
|---|---|
| 1 | 9% |
| 2 | 8% |
| 3 | 7% |
| 4 | 6% |
| 5 | 5% |
| 6 | 4% |
| 7 | 3% |
| 8 | 0% |
The 9% opening charge is on the higher end for a 7-year MYGA. Combined with the MVA, early surrender in the first several years can be genuinely expensive. This contract is not appropriate for money with any realistic near-term liquidity need.
Fees and Tradeoffs
There are no stated base contract fees or rider fees — MYGAs earn their margin through the spread between what the carrier earns on the invested assets and what it credits to policyholders. The nursing home rider and death benefit are included without disclosed additional cost, which is standard for a MYGA of this type.
The real cost structure lives in the surrender terms. The 9%-to-3% schedule plus an MVA means the economic cost of early exit is both high and variable. The 5% free-withdrawal provision is somewhat lower than the 10% that some competing MYGAs offer, which further limits liquidity flexibility. Buyers should run the numbers on both the surrender charge and a potential MVA impact before committing, particularly if there is any chance they will need to surrender before year seven.
Product snapshot
| Feature | Details |
|---|---|
| Product Type | Fixed Annuity |
| Surrender Period | 7 years |
| Issue Ages | 18-88 |
| Minimum Premium | $10,000 |
| Crediting Methods | Fixed Rate |
| Free Withdrawal | 5% of account value annually (5% of premiums paid in year 1; 5% of prior account anniversary value years 2+) |
| MGSV | 87.5% of account value for surrenders during year 1-3 |
| Death Benefit | Full Account Value payable to beneficiary if death occurs during accumulation or payout phase |
| Income Rider | Not available |
| Premium Bonus | None |
| Availability | Approved in CA. Not approved in NY. |
Carrier snapshot
Legal Entity: AuguStar Life Insurance Company
Parent: Constellation Insurance
A.M. Best Rating: A
AuguStar Life Insurance Company is a mid-sized carrier operating under Constellation Insurance. The A.M. Best "A" (Excellent) rating reflects a carrier that meets the standard threshold most advisors require, though AuguStar does not have the same national profile as the largest annuity issuers. For a product held to maturity, carrier credit quality matters — a 7-year commitment means this rating deserves attention.
Final take
LunarGuard MVA 7-Year is a clean MYGA for buyers who know what they want: a guaranteed rate, tax-deferred growth, and no decision-making for seven years. The product does exactly that. The 5.05% rate at $100,000 or more is the kind of locked yield that justifies the illiquidity premium for the right buyer.
The constraint worth taking seriously is the MVA. This is not a product to buy if you have any doubt about holding the full term. The surrender schedule alone is steep in the early years, and the MVA compounds that cost in a rising-rate environment. If you have a genuine 7-year time horizon and the discipline to leave the money alone, this product performs well on its stated purpose. If there is any real chance you need that capital before maturity, look at a shorter-duration MYGA instead.