The insurance company uses an accounting method called 'Accumulation Units'. A mutual fund uses Net Asset Value per share to account for its investments. A variable annuity also uses Net Asset Value.

Each evening at 4 p.m. eastern time when the New York Stock Exchange closes, the separate account portfolio is valued and divided by the total number of accumulation units. This works very similar to a mutual fund valuation. Annuity purchases placed prior to 4 p.m. eastern time are credited to the individual as of that day. And annuity purchases placed after 4 p.m. eastern time are credited to the individual as of 4 p.m. eastern time the following day.

When you retire and begin your monthly payouts, the insurance company is going to go through a process called 'Annuitizing'. On that day, the insurance company will convert the account into a fixed number of annuity units.

With a variable annuity, what will change is the value of each annuity unit. The important piece at this point is not the amount of annuity units, but rather the value of each annuity unit. The value of each annuity unit will fluctuate. And it is the value of each annuity unit that determines how much you will receive each month in the monthly payout. To figure out exactly how much is in your annuity after payout begins, multiply the annuity units by the Net Asset Value. Also, some annuity contracts call for the annuity payout to be changed monthly, some call for quarterly changes, some call for semi-annual changes, some call for annual changes. Your payout will come in the form of annuity units.

B. R. Bowers & Company

122 East Maumee St.
Adrian, MI  49221
Phone: (517) 265-7683
Toll Free:  800-392-6230
Fax:  (517) 264-5095

3225 Walker Avenue NW
Suite 200
Grand Rapids, MI  49544
Phone:  (616) 784-0652
Fax:  (616) 784-0674

Email:  bryan@brbowerscompany.com

http://www.brbowerscompany.com