Separate Account
The separate account provides the variable investment options and along with the general account provides the foundation of a variable annuity. The investment fund options (often dozens of mutual funds) are referred to as subaccounts. In contrast to the general account, the separate account is not guaranteed by the insurance company. The returns of the subaccounts are variable rather than fixed, so the contract holder rather than the insurance company assumes market risk. The separate 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.
