Fixed Annuity Rates and Quotes
How safe are Fixed Annuities
The principal and interest in a fixed contract is backed by the financial strength of the life insurance carrier offering the product. Insurance companies are rated according to their financial strength and given a grade, such as AAA or AA. Most carriers have several ratings provided by each of the major rating agencies, such as Moody’s, Fitch, and Standard and Poor’s. Stable carriers obviously receive higher ratings, while smaller, less established companies are assigned lower grades. We do have restrictions on the annuities we offer, we will not offer and annuity from a company that is rated BBB or lower.
But state laws require that all fixed annuity carriers maintain a cash reserve that is at least equivalent to the total value of all outstanding fixed annuity contracts, regardless of what they are rated. This provides a safety net for all fixed annuity holders that can be counted on in times of financial turmoil similar to 2008. Reinsurance companies usually step in and cover customer losses whenever an annuity carrier becomes insolvent. Although fixed annuities are not FDIC Insured your chances of losing the money in one of these contracts are so low that this possibility can be ignored for all practical investment purposes.