ProductsQuestion 17 of 110
Which statement correctly distinguishes accumulation units from annuity units in a variable annuity?
a.Both the number of units and their value are fixed once the contract is issued
b.Accumulation units vary in number as the contract owner invests, while at annuitization a fixed number of annuity units is established whose value fluctuates
c.Annuity units are purchased during the pay-in phase and accumulation units during the payout phase
d.Accumulation units have a fluctuating value but annuity units have a fixed value
Explanation
During the accumulation phase, each purchase payment buys a varying number of accumulation units, so the unit count grows. At annuitization the accumulated value is converted into a fixed number of annuity units, and the payment changes only because the unit value moves with separate account performance. The other choices reverse the phases or freeze the wrong variable.
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