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General Accounts vs. Separate Accounts – Beyond the Basics of Stable Value Funds

We’re taking a closer look at stable value funds. The benefits of these funds include low risk, preservation of principal and accumulated interest, and liquidity for participants. With a guaranteed rate of return, stable value funds can meet the needs of those who want an investment return with added security.

What you may not be familiar with are the differences between two kinds of stable value funds — general account and separate account.

In a general account structure, a single insurance company guarantees the fund’s principal and accumulated interest based on the strength of the entire company. The insurer manages the fund’s investment portfolio within its general account.

In a separate account structure, assets are held in an account separate from the general account of the insurer or bank. If the separate account’s assets turn out to be insufficient, however, the insurer may use general account funds as a backup.


Here's what a general account fund typically offers:Compared with a general account fund, here's what a separate account fund typically offers:
  • Generally higher crediting rates than separate account investments
  • Management by one party, which can result in lower fees
  • A guaranteed rate of return regardless of how the underlying assets perform
  • A conservative investment option and demonstrated safe track record
  • Generally lower crediting rates than general account investments
  • Potentially higher fees from professional money managers
  • Rate of return may be fixed, indexed, reset periodically or based on the performance of the segregated assets
  • A conservative investment option and demonstrated safe track record
  • Protection, security and risk tied to the underlying investments in the fund
  • Less flexibility for fund managers when choosing underlying investments


If you decide to include stable value funds in a retirement plan lineup, take time to weigh the differences between general accounts and separate accounts. Your clients will appreciate your effort.


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