What role can stable value play in my savings and investment strategy?
Stable value is usually offered by a plan sponsor in a defined contribution plan as a low-risk investment that focuses on capital preservation and liquidity, while providing steady, positive returns to a plan’s participants.
What are some other aspects of guaranteed insurance accounts that a plan sponsor should consider?
Consider asset ownership, single guarantors, disclosure requirements, fees/spread, and exit terms.
What are the strengths of guaranteed insurance accounts?
In addition to providing an attractive solution to plans and participants seeking stability, liquidity, and yield, guaranteed insurance accounts provide the following benefits:
What risks does the insurer bear for providing the guarantees?
By declaring a rate that can never fall below the guaranteed minimum interest rate in advance, the insurance company assumes certain risks.
How does an insurer take on these risks?
Transferring risk from policyholders to the insurance company is at the very heart of what insurance companies do every day.
What are the differences between general accounts and separate accounts?
Guaranteed insurance accounts can be structured in two ways: general accounts or separate accounts.
How can a plan get comfortable with a single guarantor behind a guaranteed insurance account?
Aside from the fact that any claims related to guaranteed insurance accounts are pari-passu with policyholders and ahead of general creditors, insurance companies are highly regulated with rigorous risk management and oversight processes.
What is a stable value guaranteed insurance account?
Guaranteed insurance accounts are stable value funds that are offered to defined contribution plans such as 401(k), 401(a), 457, 403(b) and some 529 tuition assistance plans, generally managed entirely and guaranteed directly by a single insurance company.
What Makes Stable Value Attractive
Plan sponsors have a unique opportunity to offer a stable value product which is specifically designed to meet the needs of their plan participants and can only be offered inside a tax qualified plan.