Units and Assumed Interest Rate (AIR)
Insurers measure the value of an annuity in units. When the investor decides to annuitize the contract, the insurance company converts accumulation units to annuity units. During the accumulation phase, the number of accumulation units will grow as the value of the account grows. After annuitization, the number of annuity units remains fixed and the value of the units varies depending on the performance of the subaccounts.
The size of the first monthly payment in a variable annuity is based on the age of the annuitant, the account value, the gender of the annuitant, and the settlement option (described below). After the first month, the checks are based on an assumed interest