Which of the following statements about fully insured Section 412(e)(3) plans is correct?

A fully insured Section 412(e)(3) plan is indeed classified as a type of defined benefit plan. This means that the plan provides a predetermined benefit at retirement, which is usually based on factors such as salary history and duration of employment. One of the distinguishing features of a fully insured plan is that it must utilize insurance contracts to provide the benefits, which is a hallmark of its operation.

In addition, since the plan's benefits are guaranteed through the insurance contracts, it does not require ongoing actuarial certifications, which streamline the administrative process. Furthermore, while fully insured plans may offer more predictable costs for employers, they can still be beneficial for companies of varying financial situations, including those who might struggle with premium payments. However, the correct statement emphasizes the classification of the plan rather than the operational aspects.