# ASC 944-80-05: Financial Services—Insurance — Separate Accounts — 05 Overview and Background

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/944/80/#05-overview-and-background)

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## ASC 944-80-05: 05 Overview and Background

[Read section](https://asc.understandingaccounting.org/asc/944/80/#05-overview-and-background)

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##### [944-80-05-1](https://asc.understandingaccounting.org/asc/944/80/#944-80-05-1)

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This Subtopic provides insurance entities guidance on accounting for and financial reporting of [separate accounts](https://asc.understandingaccounting.org/glossary/s/#separate-account "A separate investment account established and maintained by an insurance entity under relevant state insurance law to which funds have been allocated for certain contracts of the insurance entity or similar accounts used for foreign originated products. The term separate accounts includes separate accounts and subaccounts or investment divisions of separate accounts."), including an insurance entity's accounting for separate account assets and liabilities related to contracts for which all or a portion of the investment risk is borne by the insurer.

##### [944-80-05-2](https://asc.understandingaccounting.org/asc/944/80/#944-80-05-2)

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Separate accounts represent assets and liabilities that are maintained by an insurance entity for purposes of funding fixed-benefit or variable annuity contracts, pension plans, and similar activities. The contract holder generally assumes the investment risk, and the insurance entity receives a fee for investment management, certain administrative expenses, and [mortality](https://asc.understandingaccounting.org/glossary/m/#mortality "The relative incidence of death in a given time or place.") and expense risks assumed.

##### [944-80-05-3](https://asc.understandingaccounting.org/asc/944/80/#944-80-05-3)

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Often for administrative purposes, separate account subaccounts with differing investment objectives are created within a single separate account. Examples include both of the following:

1.  a
    
    A variable life insurance contract offered through an insurance entity's high return separate account
    
2.  b
    
    A contract holder's allocation of a portion of the contract holder's deposit in a deferred variable annuity to a growth equity fund.