Annuity guarantees are promises made by the issuing insurance company, so they are only as strong as that company's financial strength — its claims-paying ability. Annuities are not bank deposits and are not FDIC insured; instead, guarantees rest on the insurer's ability to pay.
Independent rating agencies (such as AM Best, S&P, and Moody's) publish financial-strength ratings that help gauge an insurer's claims-paying ability. Choosing highly rated carriers is one way to manage this risk.
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Before recommending a contract, an independent insurance professional reviews the issuing carrier's financial-strength ratings to assess its claims-paying ability.
This definition is for general educational purposes only and is not financial, tax, or legal advice. Tim Hartle is an independent insurance professional. Annuity guarantees are subject to the claims-paying ability of the issuing insurance company and are not FDIC insured. Rules and product features vary by situation and by state. Please consult a qualified advisor about your own circumstances.