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A measure used in valuing a variable annuity during the time it is being paid to the annuitant. Each unit’s value fluctuates with the performance of an investment portfolio. An annuity is a life insurance company contract that pays periodic income benefits for a specific period of time or over the course of the annuitants lifetime. These payments can be made annually, quarterly or monthly.
When the insured wants to start taking money out, they convert their total accumulated savings to start paying them their income. In order to accomplish this, the insured party purchases annuity units with the money that was formerly being saved as accumulation units.