Separate account is an investment pool maintained by an insurer that is legally distinct from its general account and is used primarily to support variable life and variable annuity products. Assets in separate accounts are allocated to specific investment options and are generally insulated from the insurer's general creditors, subject to regulatory protections. Policyowner values fluctuate with the performance of chosen separate account options, while the insurer may also provide guaranteed minimum death or income benefits. Separate accounts allow insurers to offer market-based returns while maintaining a clear segregation of assets and liabilities associated with particular product lines.

Advisors explain separate account features when selling variable annuities and variable universal life policies, emphasizing that clients bear investment risk in these accounts while still benefiting from insurance guarantees. Prospectuses describe each separate account option, including objectives, risks, and fees. Compliance and regulatory frameworks treat separate accounts differently from general account products, requiring securities licensing and more detailed disclosure. When clients ask about insurer insolvency concerns, advisors may describe how separate accounts are structured and protected under state law. Understanding separate accounts helps advisors position variable products accurately along the risk-return spectrum and address questions about safety and guarantees.