For variable products, where must the underlying assets be kept?

For variable products, the underlying assets must be kept in a separate account. This is crucial because variable products, such as variable life insurance and variable annuities, are designed to allow policyholders to allocate their premiums among a variety of investment options, typically including stocks, bonds, and mutual funds.

The use of a separate account ensures that the investment performance of these assets is isolated from the insurer's general account, which contains more traditional fixed-income investments. By keeping the underlying assets in a separate account, the insurer can effectively manage the investment risks and returns that are directly linked to the policyholder's choices. This structure provides flexibility and potential for growth based on market performance, which is fundamental to the nature of variable products.

Other options, like a general account or pooled account, do not provide the necessary segregation and investment diversity that variable products offer. A reserve fund is also not appropriate, as it typically refers to funds set aside to cover future claims rather than serve as investment vehicles for policyholders. Therefore, the requirement for a separate account aligns with the objectives and characteristics of variable products.