Examples of embedded derivatives which are not required to be separated A derivative embedded in an insurance contract is considered to be closely related to the host insurance contract if the embedded derivative and the host insurance contract are so interdependent that an entity cannot measure the embedded derivative separately. In this situation, an entity would not separate the embedded derivative. IAS 39 also regards a unit–linking feature embedded in either an insurance contract or financial instrument as being closely related to the host contract if the unit–denominated payments are measured at current unit values that reflect the fair values of the assets of the fund. This allows unit–linked liabilities to.