### Question
What is the definition of variable contract?


### Answer
The definition of **variable contract** is as follows in *26 U.S.C. § 817*:

> a contract—


(1) which provides for the allocation of all or part of the amounts received under the contract to an account which, pursuant to State law or regulation, is segregated from the general asset accounts of the company,


(2) which—


(A) provides for the payment of annuities, or


(B) is a life insurance contract, and


  

(3) under which—


(A) in the case of an annuity contract, the amounts paid in, or the amount paid out, reflect the investment return and the market value of the segregated asset account, or


(B) in the case of a life insurance contract, the amount of the death benefit (or the period of coverage) is adjusted on the basis of the investment return and the market value of the segregated asset account

#### Citation:
  - *26 U.S.C. § 817*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter L-Insurance Companies > PART I-LIFE INSURANCE COMPANIES > Subpart E-Definitions and Special Rules**

