What is a characteristic of accumulation units in a variable annuity?

Accumulation units in a variable annuity serve as the measure of the contract’s value during the accumulation phase and represent the owner's interest in the separate account of the annuity. This means that when a policyholder invests in a variable annuity, the money is allocated to various investment options, such as mutual funds, which are held in a separate account. The value of these accumulation units fluctuates based on the performance of the underlying investments. Therefore, by holding accumulation units, the annuity owner is essentially a part-owner of the investments in the separate account, which reflects their proportional interest in that investment pool.

This characteristic contrasts with other aspects of annuities, such as a fixed interest rate or guaranteed returns, which do not apply to the variable structure of these products. Additionally, accumulation units are not solely for the purpose of providing immediate annuitization, as they are primarily established for growth potential before the annuitization phase begins.