Understanding stable value options

You’re looking for investments that offer stability, liquidity, yield, and principal protection. Understand the differences among your stable value options.

Stable value options can be significantly different

While most stable value options seek to preserve capital and provide competitive returns, there are significant differences among the most common stable value options — guaranteed insurance accounts (i.e., Lincoln Stable Value) and collective investment trusts. An important part of the stable value selection process is understanding these differences and working with stable value providers who have experience and success managing stable value assets through varying market conditions. Watch this video to learn more!

  
COMPARISON of LINCOLN STABLE VALUE (a guaranteed insurance account) VS. TYPICAL COLLECTIVE INVESTMENT TRUST

 

Lincoln Stable Value Account1

Typical collective investment trust

Objective

To provide safety of principal, liquidity and a stable rate of return

To provide safety of principal, liquidity and a stable rate of return

Structure

Insurance company general account or separate account offered through a group annuity contract (depending on plan sponsor’s election)

Bank collective trust

Guarantees

Insurance company bears the risks of any underlying asset default and market fluctuations in the value of securities held

Provided by a combination of third-party insurance and bank providers

Crediting rate known in advance

Yes. The interest rate is declared in advance.

No. The rate of return fluctuates daily.

Crediting rate guarantee

Yes. The rate is guaranteed for a six-month period.

No. The rate of return fluctuates daily.

Guaranteed minimum interest rate

Yes. The crediting rate will never fall below a contractual guaranteed minimum interest rate of 1% in most states.2

No. There is typically no guaranteed minimum interest rate for the collective investment trust in aggregate.

Book value participant withdrawals for qualifying events and transfers

These are guaranteed to be paid at book value (full principal and interest) with industry-standard equity wash and similar provisions to protect remaining participants.

The return of principal isn’t guaranteed under certain conditions.

Transfers to competing funds allowed

Yes. Transfers are subject to the industry-standard equity wash restriction to protect remaining participants.

Yes. Transfers are subject to the industry-standard equity wash restriction to protect remaining participants.

Wrap capacity

Wrap capacity is ample and is provided by The Lincoln National Life Insurance Company or Lincoln Life & Annuity Company of New York. The group annuity contract and associated guarantees are issued directly to the plan or trust.

Wrap capacity is dependent on external insurance companies and banks to provide guarantees. Book value contracts issued to fund and terms not disclosed to a plan.

Underlying investments

High-quality, well-diversified portfolio of fixed income instruments, primarily intermediate-term public bonds, private placement bonds, and commercial mortgages with a duration of three to seven years

Fixed income instruments, primarily intermediate-term public bonds, insurance company GIC contracts, synthetic GIC contracts, and cash with a duration of two to four years

Plan level termination

Book value payout can be immediate or over time, depending upon the plan's election. The Stable Value Account remains fully benefit-responsive upon contract termination, and discontinuance fees do not apply.

Book value cash-outs may be delayed up to 12 months.

Fees

None. The rate is net of fees with no additional expenses.

Fees are typically stated as an expense ratio and vary by fund.

1Stable Value Account features for contracts issued after October 1, 2014.

2Principal and interest are guaranteed by The Lincoln National Life Insurance Company or the Lincoln Life & Annuity Company of New York.


 

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To find out how Lincoln Stable Value solutions can help you support positive retirement outcomes, call our Sales Desk at 855-533-2170.

The Lincoln Stable Value Account is a fixed annuity issued by The Lincoln National Life Insurance Company, Fort Wayne, IN. The Lincoln National Life Insurance Company does not solicit business in the state of New York, nor is it authorized to do so.


For contracts issued in New York, the Lincoln Stable Value Account is a fixed annuity issued by Lincoln Life & Annuity Company of New York, Syracuse, NY.