Ordinary Withdrawals
See book value withdrawals.
Risk Charge
The cost embedded in every stable value investment contract to cover the risks assumed by the issuer. Typically the charge is based on the risks associated with the specific plan and/or assets involved.
Surrender Charge
Any payment required for terminating an investment contract, typically a guaranteed investment contract, prior to its scheduled maturity date.
Amortization
With respect to a bond, a payment schedule which will gradually discharge a debt in equal installments consisting of principal and interest. With respect to separate account GICs or synthetic GICs, the process of recognizing realized and unrealized market value gains and losses into the book value over a specified period of time via the crediting rate.
Buy and Hold
A stable value investment strategy that refers to a portfolio of assets that are typically purchased and then held to maturity. In this buy and hold strategy, the investment contract associated with such assets typically terminates at the maturity of the assets. (Compare to constant duration and maturing.)
Credit Risk
The risk that an investment will default, i.e., the borrower or guarantor (the bond or investment contract issuer) will not pay principal and interest as scheduled. (See also impaired securities.)
ERISA
See the Employee Retirement Income Security Act of 1974, as amended.
Guaranteed Insurance Account (GIA)
See life insurance directly sold.
Market Value Adjustments
The adjustment to an investment contract’s market value due to employer-initiated events, impaired securities, or market value events. Alternatively, for some GICs, the adjustment (sometimes known as a surrender charge or surrender value adjustment) to a GIC’s market value due to termination prior to the stated maturity date.