Accumulation Unit

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Annuity

    A financial product that pays out a fixed stream of payments ...
  2. Unit Trust - UT

    An unincorporated mutual fund structure that allows funds to ...
  3. Reinvestment

    Using dividends, interest and capital gains earned in an investment ...
  4. Variable Annuity

    An insurance contract in which, at the end of the accumulation ...
  5. Separate Account

    1. A privately managed investment account opened through a brokerage ...
  6. Unit Investment Trust - UIT

    An investment company that offers a fixed, unmanaged portfolio, ...
RELATED FAQS
  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. Is an annuity a perpetuity?

    An annuity can be a perpetuity, depending on how it is set up. An annuity is an investment that makes regular payments throughout ... Read Full Answer >>
  3. What are the most common deferred tax assets used by individuals?

    Deferred tax assets โ€“ those that are only taxed when funds are withdrawn or the asset is sold โ€“ are quite common in estate ... Read Full Answer >>
  4. Are annuities for seniors only?

    Though annuities tend to be advertised primarily to seniors, there is no reason why younger generations should not make the ... Read Full Answer >>
  5. What is a longevity annuity?

    A longevity annuity is an investment contract with an insurance company designed to address the potential financial problems ... Read Full Answer >>
  6. What is the difference between a fixed and variable annuity?

    For many people, saving for retirement means tucking money away in a diverse range of investments. Because traditional savings ... Read Full Answer >>
Related Articles
  1. Home & Auto

    An Overview Of Annuities

    These contracts provide a guaranteed income stream. Learn how they work and their benefits.
  2. Taxes

    Designating A Minor As An IRA Beneficiary

    Leaving liquid assets like cash or securities to minors can be a complicated procedure. Make sure you understand how your gift will be distributed, managed and taxed.
  3. Options & Futures

    20 Investments You Should Know

    To take advantage of all your investing options, you need to know what your choices are. Here we tell you about the diverse features and advantages of 20 different financial instruments.
  4. Economics

    Understanding Perpetuity

    Perpetuity means without end. In finance, a perpetuity is a flow of money that will be received on a regular basis without a specified ending date.
  5. Professionals

    Are Longevity Annuities in 401(k)s a Good Idea?

    An in depth look at the arrival of longevity annuities in 401(k)s and IRAs.
  6. Retirement

    How To Move From Nest Egg To Income?

    Income vs. a nest egg is closely tied to what most of us are ultimately interested in for retirement โ€“ maintaining our standard of living and to travel.
  7. Retirement

    Strategies To Build Your Retirement Portfolio

    Retirement indexes are designed to estimate how much an investor would need to have saved today to generate annual income in retirement, starting at 65.
  8. Investing

    What are Fixed-Income Securities?

    For a fixed-income security, the periodic return on the investment is the same throughout the life of the security. Principal is returned at the time of maturity. The payment can be in the form ...
  9. Professionals

    Monthly Pension Or Lump-Sum: Which Is Better?

    When a client is faced with the choice of a monthly pension or a lump-sum payment, which one is better? Here's a quick guide on how to decide.
  10. Professionals

    Immediate Annuities: What To Watch Out For

    Immediate annuities can provide substantially higher monthly payouts than other fixed-income instruments, but also have some key limitations.

You May Also Like

Hot Definitions
  1. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  2. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  3. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  4. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
  5. Adverse Selection

    1. The tendency of those in dangerous jobs or high risk lifestyles to get life insurance. 2. A situation where sellers have ...
Trading Center