LunarLock MVA 5-Year review

Yes, for the right buyer. If you have five-year money, want a locked rate, and will not need to surrender early, this is a clean and competitive MYGA. If there is a meaningful chance you will need to exit before maturity, the MVA adds genuine risk that a non-MVA alternative would not carry. The product is not a bad one — it is a specific tool that requires the right circumstances to work as intended.

The main reason to consider LunarLock MVA 5-Year is a locked rate that is competitive in the 5-year fixed annuity market. The secondary reason is tax deferral — unlike a bank CD, gains compound without an annual 1099 until you withdraw. A third reason is simplicity: there are no crediting strategies to pick, no rider decisions to make, and no index performance to track. You put money in, it grows at a guaranteed rate, and at the end of five years you have full access. Buyers looking for a straightforward alternative to CDs or short-term bond ladders are the most natural fit.

I think this annuity is best for someone in or near retirement who has a defined block of money they do not expect to need for five years, wants a guaranteed return without market risk, and values the tax-deferral benefit over a taxable CD. The $10,000 minimum makes it accessible to a wider range of buyers than some competitors. It is less appropriate for someone who is not certain about their five-year liquidity picture, since the MVA creates a real unknown on the downside of an early exit.

You are buying a fixed-rate insurance contract that grows at a predetermined rate for five years. There is no index, no market exposure, and no variability in the credited rate — it is set at issue and locked through maturity. The insurance wrapper provides tax deferral and a death benefit equal to full account value. What you give up in exchange is liquidity flexibility: amounts above the annual 10% free-withdrawal allowance are subject to surrender charges and an MVA that can move in either direction depending on the interest rate environment at the time of withdrawal.

LunarLock MVA 5-Year credits a fixed interest rate guaranteed for the full five-year term. Current rates are 5.05% annually for premiums under $100,000 and 5.25% for $100,000 and above. The guaranteed minimum interest rate is 0.25% annually — this is the contractual floor if AuguStar ever reduces rates on a renewal or subsequent contract, not an expectation for the current term.

Interest compounds tax-deferred until withdrawal. The rate you receive at issue does not reset annually — it is fixed for the entire five-year surrender period. That predictability is the product's core value proposition: you know exactly what you will earn if you hold to maturity.

The most important secondary element to understand is the market value adjustment — MVA. An MVA is a mechanism that adjusts the amount you receive if you surrender or take excess withdrawals during the surrender period. If interest rates have risen since your contract was issued, the MVA works against you, effectively increasing your exit cost beyond what the stated surrender charge alone would suggest. If rates have fallen, the MVA can actually work in your favor.

The practical implication: the surrender charges listed in the schedule (9% in year one, declining to 5% in year five) do not tell the whole story. Your actual cost to exit early depends partly on where interest rates are at that moment. This is meaningfully different from a non-MVA MYGA, where the surrender charge schedule is the complete picture. Buyers who shop MYGAs without distinguishing between MVA and non-MVA products may be surprised when they compare exit scenarios.

You can withdraw up to 10% of account value per year without penalty — 10% of premiums paid in year one, and 10% of the prior anniversary value in subsequent years. Up to 12 withdrawals per year are allowed, with a $100 minimum per withdrawal (waived for electronic transfers). Amounts above the free-withdrawal allowance during the surrender period are subject to both the stated surrender charge and the MVA.

Required minimum distributions attributable to this contract are generally not subject to surrender charges, which makes it workable inside an IRA without triggering penalties on mandatory distributions. A Nursing Home Rider is also available for issue ages 18–80 (not available in all states), which allows penalty-free access if the owner requires 30 or more consecutive days of hospitalization or nursing facility care after the first contract anniversary.

There are no base contract fees, no rider fees, and no spread charges on this product. The cost structure is entirely embedded in the rate AuguStar offers relative to what they could otherwise pay — which is typical for MYGAs. What you see in the credited rate is effectively net of their margin.

The structural tradeoffs are the surrender period and the MVA. A 9% first-year charge is on the higher end for a 5-year product — some non-MVA competitors use a 7-8% first-year charge with a shorter step-down schedule. The MVA amplifies early-exit risk in a rising-rate environment. And the guaranteed minimum rate of 0.25% is a contractual minimum, not a realistic scenario during a term where the opening rate is guaranteed — but it is worth noting as part of the contract architecture.

Legal Entity: AuguStar Life Insurance Company

Parent: Constellation Insurance

A.M. Best Rating: A