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Annuity News

Don't Overlook Annuities in Your Retirement Planning
05/20/2010

Don't Overlook Annuities in Your Retirement Planning
There was a time, which many of us remember well, when you could pick investments by throwing darts at the daily stock pages and make [ ... ]


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 Fixed Annuity Advantages
05/18/2010

Advantages of Fixed Annuities Advantages of fixed annuities are endless.  Fixed annuities are referred to by many different names:  tax-deferred annuities, CD-type annuities, traditio [ ... ]


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How Safe are Fixed Annuities PDF Print E-mail
Although Annuities are not FDIC Insured there are still many layers of protection and insurance to safeguard your money.  Just as we do not worry about our car insurance paying a claim or our homeowners insurance paying out when our house burns down there is no reason to worry about Insurance companies paying you back your money from a fixed annuity.  Let's first examine the similarities between a CD that you would purchase at a bank and a fixed annuity that you would purchase through Annuity Rate Shopper.

A CD that is issued by the bank is backed by the issuing bank.  Should the bank fail or become unable to repay you your money the Federal government will step in and use money from the FDIC to make  you whole (up to certain dollar amounts).  FDIC is "Insurance" from the federal government.  Being that it is insurance every participating bank must pay a premium to be a part of it.  It is that money that is designed to make people sleep well at night knowing that their money will be there in the morning.

A Fixed annuity on the other hand is issued by an insurance company.  In California for example, should the insurance company fail to repay you what they owe, the California Insurance Guarantee Association (CIGA)  is there to back up the insurance company and provide the same piece of mind as the FDIC.  The CIGA is set up by the state of California where all insurance companies that do business in the state are forced to pay a premium each year to the CIGA.

I often remind people that we pay insurance premiums every month for just about everything we owe; our health, our lives, our homes, our cars, our boats, our tools and even our pets.  What is interesting to me is people don't worry about getting repaid if their house burns down, they don't worry about their insurance company not being able to come up with the money to pay a claim if they get into an accident.  And why should they?  They are paying insurance premiums every month and for that they expect to get repaid and they should.

Purchasing a fixed annuity is no different.  CD's are offered by banks and Annuities are offered by insurance companies.  To be honest sometimes I question who is more financially stable, the federal government with huge budget deficits or an insurance company that turns a profit year in and year out. 

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