Accumulation Unit


DEFINITION of 'Accumulation Unit'

1) In the case of a variable annuity, a measurement of the value invested in the account during the accumulation period of the contract. The more funds you contribute to your annuity account, the more accumulation units you will build.

2) In the case of a unit trust, a type of investment structure where the trust's income is directly reinvested into the trust, instead of being paid out as cash to the investor.

BREAKING DOWN 'Accumulation Unit'

1) Accumulation units are used to accurately measure the value of contributions by the annuitant. In times when the variable annuity's investments dip, a fixed amount of funds will buy more accumulation units than when the securities are more highly priced, just as investors are able to by more shares of cheaper stock than they can of higher priced stock with the same amount of currency.

2) Accumulation units within a unit trust can be reinvested back into the trust via boosting the unit price, or issuing additional units to investors. Either way, the investor is able to reinvest their share of profits back into the trust.

  1. Annuity

    A financial product that pays out a fixed stream of payments ...
  2. Reinvestment

    Using dividends, interest and capital gains earned in an investment ...
  3. Unit Trust - UT

    An unincorporated mutual fund structure that allows funds to ...
  4. Separate Account

    1. A privately managed investment account opened through a brokerage ...
  5. Variable Annuity

    An insurance contract in which, at the end of the accumulation ...
  6. Unit Investment Trust - UIT

    An investment company that offers a fixed, unmanaged portfolio, ...
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  1. What are the requirements that a trust needs to meet to be qualified?

    The requirements that a trust must meet to be qualified are as follows: The trust must be a valid trust under state law ... Read Full Answer >>
  2. How liquid are variable annuities?

    Variable deferred annuities and variable immediate annuities are not considered liquid. Variable deferred annuities carry ... Read Full Answer >>
  3. Do variable annuities have RMDs?

    Variable annuities are not subject to required minimum distributions (RMDs) unless they are held in qualified plans, such ... Read Full Answer >>
  4. Can variable annuities be rolled into an IRA?

    Variable annuities are often found in government or nonprofit employer retirement plans such as 403(b) or 457(b) plans. With ... Read Full Answer >>
  5. How do I calculate the future value of an annuity?

    When planning for retirement, it is important to have a good idea of how much income you can rely on each year. There are ... Read Full Answer >>
  6. Are variable annuities protected from creditors?

    Whether your variable annuity is protected from creditors depends on the state in which you live. About three-quarters of ... Read Full Answer >>

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