Question of the Week
of the following are major differences between accumulation
units and annuity units in the separate account of
a variable annuity?
I. There are a variable number of accumulation units
II. Accumulation units grow tax-deferred
III. When the contract holder converts accumulation units to annuity units, he/she has lost control of the account
IV. The AIR only applies to annuity units
a) I, II
b) II, IV
c) I, III, IV
d) I, II, III, IV
The correct answer is d.
All of these are differences between accumulation and annuity units. In addition, there are a fixed number of annuity units to be cashed in each month.