What is the difference between Accumulation units and annuity units ?

Accumulation units and annuity units both  represent an investor’s ownership in the separate account. However, the units are owned during different phases of the annuity contract. An accumulation unit represents the investor’s proportionate ownership in the separate account’s portfolio during the accumulation or deferred stage of the contract. The value of the accumulation unit will fluctuate as the value of the securities in the separate account’s portfolio changes. As the investor makes contributions to the account or as distributions are reinvested, the number of accumulation units will vary. An investor will only own accumulation units during the accumulation stage, when money is being paid into the contract or when receipt of payments is being deferred by the investor, such as with a single-payment deferred annuity. When an investor changes from the pay-in or deferred stage of the contract to the payout phase, the investor is said to have annuitized the contract. At this point, the investor trades in the accumulation units for annuity units.

The number of annuity units is fixed and represents the investor’s proportional ownership of the separate accounts portfolio during the payout phase. The number of annuity units that the investor receives upon annuitizing a contract is based on the payout option selected, the annuitant’s age and sex, the value of the account, and the assumed interest rate.