The cash values for the separate accounts are calculated daily.

• A. True
• B. False
• C. Only when a loan is outstanding
• D. Not specified

Answer: (A)

In variable life insurance and variable annuity contracts, the cash value in a separate account is tied to the market value of the underlying subaccounts. Each subaccount has a per-unit value (its net asset value) that is calculated every business day. The contract’s cash value is determined by multiplying the number of units you hold in each subaccount by its daily per-unit value and then subtracting any applicable charges. Because market values change daily, the cash value must be updated daily to reflect current performance. This daily valuation is standard for separate accounts, and it applies regardless of whether a loan is outstanding. Therefore, the statement is true.