Notes to the consolidated financial statements of Aegon N.V.  Note 2 152 Some investment contracts have participation features whereby the policyholder has the right to receive potentially significant  additional benefits which are based on the performance of a specified pool of investment contracts, specific investments held by  the Group or on the issuer’s net income. If the Group has discretion over the amount or timing of the distribution of the returns to  policyholders, the investment contract liability is measured based on the accounting principles that apply to insurance contracts with  similar features. Some unitized investment contracts provide policyholders with the option to switch between funds with and without discretionary  participation features. The entire contract is accounted for as an investment contract with discretionary participation features if there is  evidence of actual switching resulting in discretionary participation benefits that are a significant part of the total contractual benefits. At inception, investment contracts without discretionary features are carried at amortized cost. Investment contracts without discretionary participation features are carried at amortized cost based on the expected cash flows and  using the effective interest rate method. The expected future cash flows are re-estimated at each reporting date and the carrying  amount of the financial liability is recalculated as the present value of estimated future cash flows using the financial liability’s original  effective interest rate. Any adjustment is immediately recognized in the income statement. The consolidated financial statements provide information on the fair value of all financial liabilities, including those carried at  amortized cost. As these contracts are not quoted in active markets, their value is determined by using valuation techniques, such as  discounted cash flow methods and stochastic modeling. For investment contracts that can be cancelled by the policyholder, the fair  value cannot be less than the surrender value. Investment contracts for account of policyholders are investment contracts for which the actual return on investments allocated to  the contract is passed on to the policyholder. Also included are participations held by third parties in consolidated investment funds  that meet the definition of a financial liability. Investment contracts for account of policyholders are designated at fair value through profit or loss. Contracts with unit-denominated  payments are measured at current unit values, which reflect the fair values of the assets of the fund.  For unit-linked contracts without discretionary participation features and subject to actuarial funding, the Group recognizes a liability  at the funded amount of the units. The difference between the gross value of the units and the funded value is treated as an initial fee  paid by the policyholder for future asset management services and is deferred. It is subsequently amortized over the life of the contract  or a shorter period, if appropriate. A provision is recognized for present legal or constructive obligations arising from past events, when it is probable that it will result in  an outflow of economic benefits and the amount can be reliably estimated. The amount recognized as a provision is the best estimate of the expenditure required to settle the present obligation at the balance  sheet date, considering all its inherent risks and uncertainties, as well as the time value of money. The unwinding of the effect of  discounting is recorded in the income statement as an interest expense. With the exception of insurance contracts and investment contracts with discretionary participation features for which potential future  losses are already considered in establishing the liability, a provision is recognized for onerous contracts in which the unavoidable costs  of meeting the resulting obligations exceed the expected future economic benefits. The unavoidable costs under a contract reflect  the least net cost of exiting from the contract, which is the lower of the cost of fulfilling it and any compensation or penalties arising  from failure to fulfill it. Annual Report 2013 Onerous contracts 2.21 Provisions c. Investment contracts for account of policyholders b. Investment contracts without discretionary participation features a. Investment contracts with discretionary participation features