Final answer:
Dollar cost averaging allows variable contract owners to invest a fixed amount of money at regular intervals regardless of market fluctuations.
Step-by-step explanation:
Dollar cost averaging (DCA) is an investment strategy where you invest a fixed dollar amount at regular intervals, regardless of market conditions. For variable contract owners, this means consistently purchasing units or shares of the contract, whether the market is up or down. When prices are low, the fixed amount buys more units, and when prices are high, it buys fewer units. Over time, this strategy can potentially lower the average cost per unit of the investment. It helps smooth out market volatility and reduces the impact of market timing. By sticking to a regular investment schedule, variable contract owners benefit from the potential of accumulating more units when prices are lower, which could lead to better long-term returns.
In short, dollar cost averaging enables variable contract owners to invest consistently over time, mitigating the effects of market fluctuations on their investment.