Chapter 26

Question 1

Origin and Purpose

Answer 1

The key principle underlying these variable separate accounts was that all of the risks and rewards of the investment portfolio’s performance were held by the contractholder, not the insurer.

Question 2

General Characteristics

Answer 2

In the general account statement, the company’s separate account assets and liabilities are each aggregated and recorded in single lines for assets and liabilities “From Separate Accounts Statement.”

Because the assets in the separate accounts statement are segregated from the investments in the general accounts of the company, such assets generally are insulated from the general creditors of the company