Series 26: Units And Assumed Interest Rate (AIR)

Units and Assumed Interest Rate (AIR)

Insurers measure the value of an annuity in units. When the investor decides to annuitize the contract, the insurance company converts accumulation units to annuity units. During the accumulation phase, the number of accumulation units will grow as the value of the account grows. After annuitization, the number of annuity units remains fixed. If the investor chooses fixed payments, the payments will remain fixed as long as payments are made. If the investor chooses variable payments, the value of the units will vary depending on the performance of the subaccounts. A fixed payout option is subject to inflation risk, but a variable payout option is subject to market risk.

For both fixed and variable payments, the size of the first monthly payment is based on the age of the annuitant