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ACCUMULATION UNITS

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.

TAKENOTE!

Most annuities allow the investor to designate a beneficiary who will receive the greater of the value of the account or the total premiums paid if the investor dies during the accumulation stage.

ANNUITY UNITS

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 his or her 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 when the contract is annuitized is based on the payout option selected, the annuitant's age and sex, the value of the account, and the assumed interest rate.

An investor in an annuity has the choice of taking a lump sum distribution or receiving scheduled payments from the contract. If the investor decides to annuitize the contract and receive scheduled payments, once the payout option is selected it may not be changed. The following is a list of typical payout options in order from the largest monthly payment to the smallest:

• Life only/straight life

• Life with period certain

• Joint with last survivor

 
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