Syndicated Financial Columnist, Host of the weekly talk show Steve Savant's Money, the Name of the Game, Scottsdale Arizona
Tax deferred annuities are only as safe as the financial strength of the annuity company who issued the contract. There are several rating services that monitor life and annuity companies, some with monthly watch lists. They measure financial strength, which can also be an indication of claims paying ability.
Syndicated Financial Columnist, Host of the weekly talk show Steve Savant's Money, the Name of the Game, Scottsdale Arizona
Tax deferred and immediate annuities are only as safe as the contract provisions state. And the contract is only as good as the financial strength of the company that issues the policy. The financial strength of the company is based, in part, on its portfolio holdings. Several rating services monitor the financial strength and claims paying ability of insurance companies.
Annuities fall under the category of life insurance, and each state regulates its own life insurance companies. States also each have a Life and Health Guaranty Association which can help back up contracts if life insurance companies fail. Fortunately, life insurance companies almost always sell to another company if they get into financial trouble, and contract guarantees are backed up by the new company. Historically, insurance companies have fared much better than banks.
If a worst case scenario would occur and customers are left hanging in a company insolvency, these Life and Health Guaranty Associations would cover according to their state guidelines. This is generally the guaranteed portion of an annuity, up to a certain dollar amount. You can use this website to read more about the protections offered by your state: https://www.nolhga.com/
Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
An annuity as backed by an issuing company. Most annuities are back by insurance companies. Insurance companies are regulated by your state insurance commissioner and the state insurance commissioner in the state where the company is domiciled. These commissioners are charged with protecting the consumers in their state and they have plans to make sure that every promise is kept by the insurance companies that they admit to operate in their state.
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If a worst case scenario would occur and customers are left hanging in a company insolvency, these Life and Health Guaranty Associations would cover according to their state guidelines. This is generally the guaranteed portion of an annuity, up to a certain dollar amount. You can use this website to read more about the protections offered by your state: https://www.nolhga.com/