A separate account allows an investor to choose an investment category according to his individual risk tolerance, and desire for performance.
Separate accounts in the U.S. markets are often characterized as either managed or non-managed.
A managed separate account is synonymous to a mutual fund in the sense that the investments of the separate account are actively managed (such as stocks, bonds or other debt instruments, loans, derivative instruments, etc.).
A non-managed separate account is one that invests more "passively" in that it typically owns shares of other managed pools of investments such as mutual fund shares.
This arrangement is sometimes more efficient and cost-effective rather than the insurance company maintaining many separate accounts with similar baskets of securities.