Valuation of a Variable Annuity Contract

What this video covers

• How accumulation units work like mutual fund shares, and why both the number of units and the accumulation unit value (AUV) can change during the pay-in phase
• The formula for contract value (total accumulation units owned times current AUV) and how to apply it to a customer scenario
• Why surrender value is never the same as contract value, and which two deductions (contingent deferred sales charges and outstanding policy loans) always reduce it
• What happens at annuitization: accumulation units convert to annuity units, the contract becomes irrevocable, and the number of annuity units freezes forever
• How annuity unit value fluctuates against the assumed interest rate (AIR), and why this causes monthly payouts to vary rather than stay level
• The five-point head-to-head comparison of accumulation units versus annuity units that the exam tests repeatedly
• The irrevocability trap: why a contract owner cannot surrender, add money, or reverse the decision once annuitization occurs