Variable product investments are held in which account?

Variable product investments are held in which account?

• A. General account
• B. Separate account
• C. Investment trust
• D. Mutual fund

Answer: (B)

Variable product investments are held in a separate account. This separate account is set up specifically to hold the assets backing variable life and variable annuity contracts, keeping them separate from the insurer’s general assets. Because of this separation, the contract’s values and benefits depend on the performance of the subaccounts chosen by the policyholder and are not guaranteed by the insurer. The general account, by contrast, supports fixed products with guaranteed returns. While subaccounts inside the separate account may resemble mutual funds in how they invest, the assets backing the variable products are what’s held in the separate account.

Variable product investments are held in a separate account. This separate account is set up specifically to hold the assets backing variable life and variable annuity contracts, keeping them separate from the insurer’s general assets. Because of this separation, the contract’s values and benefits depend on the performance of the subaccounts chosen by the policyholder and are not guaranteed by the insurer. The general account, by contrast, supports fixed products with guaranteed returns. While subaccounts inside the separate account may resemble mutual funds in how they invest, the assets backing the variable products are what’s held in the separate account.