102 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF AEGON N.V.  NOTE 2.19 A. LIFE INSURANCE CONTRACTS C. EMBEDDED DERIVATIVES AND PARTICIPATION  FEATURES Guaranteed minimum benefi ts B. LIFE INSURANCE CONTRACTS FOR ACCOUNT OF  POLICYHOLDERS Life insurance contracts are insurance contracts with  guaranteed life-contingent benefits. The measurement of the  liability for life insurance contracts varies depending on the  nature of the product.  Some products, such as traditional life insurance products in  continental Europe and products in the United States, for which  account terms are fixed and guaranteed, are measured using  the net premium method. The liability is determined as the sum  of the discounted value of the expected benefits and future  administration expenses directly related to the contract, less  the discounted value of the expected theoretical premiums that  would be required to meet the future cash outflows based on  the valuation assumptions used. The liability is either based on  current assumptions or calculated using the assumptions  established at the time the contract was issued, in which case  a margin for risk and adverse deviation is generally included.  A separate reserve for longevity may be established and  included in the measurement of the liability. Furthermore,  the liability for life insurance comprises reserves for unearned  premiums and for claims outstanding, which includes an  estimate of the incurred claims that have not yet been reported  to the Group. Other products with account terms that are not fixed or  guaranteed are generally measured at the policyholder’s  account balance. Depending on local accounting principles,  the liability may include amounts for future services on  contracts where the policy administration charges are higher  in the initial years than in subsequent years. In establishing  the liability, guaranteed minimum benefits issued to the  policyholder are measured as described in note 2.19 c or,  if bifurcated from the host contract, as described in note 2.10. One insurance product in the United States is carried at fair value  through profit or loss as it contains an embedded derivative that  could not be reliably bifurcated. The fair value of the contract is  measured using market consistent valuation techniques. Life insurance contracts under which the policyholder bears the risks associated with the underlying investments are classified  as insurance contracts for account of policyholders.  The liability for the insurance contracts for account of  policyholders is measured at the policyholder account balance.  Contracts with unit-denominated payments are measured at  current unit values, which reflect the fair values of the assets  of the fund. If applicable, the liability representing the nominal  value of the policyholder unit account is amortized over the  term of the contract so that interest on actuarial funding is at  an expected rate of return. Life insurance contracts typically include derivative-like terms  and conditions. With the exception of policyholder options to  surrender the contract at a fixed amount, contractual features  that are not closely related to the insurance contract and that  do not themselves meet the definition of insurance contracts  are accounted for as derivatives. If the embedded derivative  cannot be reliably bifurcated, the entire insurance contract is  carried at fair value through profit or loss. Other terms and conditions, such as participation features  and expected lapse rates are considered when establishing  the insurance liabilities. Where the Group has discretion over  the amount or timing of the bonuses distributed resulting  from participation features, a liability is recognized equal to  the amount that is available at the balance sheet date for future  distribution to policyholders. The Group issues life insurance contracts, which, do not expose  the Group to interest risk as the account terms are not fixed or  guaranteed or because the return on the investments held is  passed on to the policyholder. Certain of these contracts,  however, may contain guaranteed minimum benefits. An  additional liability for life insurance is established for guaranteed  minimum benefits that are not bifurcated. Bifurcated  guaranteed minimum benefits are classified as derivatives. In the United States, the additional liability for guaranteed  minimum benefits that are not bifurcated is determined each  period by estimating the expected value of benefits in excess  of the projected account balance and recognizing the excess  over the accumulation period based on total expected  assessments. The estimates are reviewed regularly and any  resulting adjustment to the additional liability is recognized  in the income statement. The benefits used in calculating the  liabilities are based on the average benefits payable over a  range of stochastic scenarios. Where applicable, the calculation  of the liability incorporates a percentage of the potential  annuitizations that may be elected by the contract holder. In the Netherlands, an additional liability is established for  guaranteed minimum benefits that are not bifurcated on group  pension plans and on traditional insurance contracts with profit  sharing based on an external interest index. These guarantees  are measured at fair value.