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.[i] The guaranteed insurance account generally represents the entire stable value investment option.
Guaranteed insurance accounts are provided via a group annuity contract or a funding agreement that can be issued from either the general account or a separate account of the insurer. The underlying assets are typically managed by the insurance company or an affiliated manager.
In all cases, guaranteed insurance accounts are backed by the full financial strength and credit of the issuing insurance company.
[i] Insurance companies offer several product variations for stable value. These products include:
- Non-participating fixed term traditional GICs issued by the general account.
- Open maturity general or separate account guaranteed products with a fixed rate for a period of time.
- Contracts with or without minimum floor guarantees that are in excess of zero percent.
- Fee-based synthetic wrap contracts or wraps that are issued by an insurance company separate account. These are held as an investment within the stable value fund along with other wraps/GICs procured from other issuers.
