Insurance Products Vs Mutual Funds - Value to be used for Funding.

[flosfur]

Insurance products have surrender penalties and mutual funds have redemption charges.

Mutual funds' account statements don't show redemption charges, if any, (at least, I don't remember seeing them) but insurance products' statements generally do.

Generally (from what I have seen) , current market value of ins products = Cash surrender value. Yet, the value of mutual fund's units are not reduced by redemption charges (I have not, yet, seen it done).

Any thoughts on this.

Reason for the question:

I am looking at a statement of variable annuity which is invested in mutual funds. The statement shows a current surrender penality, which is about 5% of the mutual funds' value. The variable annuity is the plan's only asset.

What is plan's assets market value for funding - surrender value or the accumulated value?

[Belgarath]

I'm not sure there is a concrete answer. FWIW, I asked an actuary, who said that it depends upon the situation - can be done either way, but for FASB, it must be surrender value.

[flosfur]

Thanks.