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167 Don’t Make Me Say I Told You So

Separate Account

A separate account provides variable investment options and,

along with the general account, sets the foundation of a variable
annuity. The returns of the subaccounts are variable rather than

fixed. The contract holder, not the issuing insurance company,
assumes market risk. The account is “separate” from the general

assets of the insurance company, so there is no credit risk in the
event that the insurer becomes insolvent.

Summary

► Variable annuities offer the opportunity to grow your assets

by investing in subaccounts.

► Most contracts offer investments from many well-known
fund managers, and many contracts offer anywhere between

50 and 100 subaccounts.

► Most contracts offer the ability to switch your money

between subaccounts cost-free and tax-free, usually up to
12 times per year.

► The subaccounts are held in a “separate” account.

► The value of these subaccounts rises and falls over time, and
there is market risk with these funds.

Chapter 4: Annuities

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