What is indicated by the number of annuity units in a variable annuity?

In a variable annuity, the number of annuity units signifies the share of the investment funds that the annuitant has accumulated during the accumulation phase of the annuity contract. Specifically, when the annuity is converted into income, these units reflect how many shares the investor has in the investment portfolio. As the value of the underlying investments fluctuates, the value of each annuity unit will change, directly impacting the payment amounts the annuitant receives during the distribution phase.

This connection between annuity units and the share of funds accumulated illustrates how variable annuities allow the potential for growth aligned with market performance, while also providing a structured withdrawal of funds over time. The other choices do not accurately capture the essence of how annuity units function within the context of a variable annuity.