When periodic premiums are paid into a variable annuity, what is the purchaser credited with?

In a variable annuity, when periodic premiums are paid, the purchaser is credited with a number of accumulation units. This is a crucial concept in understanding how variable annuities operate. Each time a premium payment is made, it is converted into accumulation units based on the current value of the underlying investments, which typically include stocks and bonds.

The number of accumulation units credited is determined by the performance of the investments in the contract. As the value of these investments fluctuates, the value of each accumulation unit may change, thus impacting the total value of the annuity account over time. When the annuity is eventually paid out, the accumulation units will be converted into annuity units, which will then determine the periodic benefit payments to the annuitant.

This mechanism allows for the potential growth of the investment based on market performance, which is a key feature of variable annuities compared to fixed annuities. While the other choices mention benefits or attributes that are not applicable to how premiums are tracked in variable annuities, the correct focus on accumulation units highlights the investment component that distinguishes variable annuities in the broader landscape of annuity products.