How Secure Is Your Fixed Annuity Principal?

Investing in a fixed annuity is a way that you can provide yourself with a regular payment during your retirement years. Here are a few things to consider about how secure your investment is when purchasing a fixed annuity.

Insurance Product

When you invest in a fixed annuity, you are purchasing a product from an insurance company. Because of this, it will not be treated as a traditional investment. The money that you invest is not going to be guaranteed by the FDIC as it would if you put the money into a CD or bank account.

Guaranty Fund

Whenever you are looking at different fixed annuity providers, you need to see if they are included in a state guaranty fund. Insurance companies that are admitted in the state in which you live will typically be members of a guaranty fund. This means that if the insurance company goes bankrupt, the state will step in and pay back the investors in the annuities from that company.

Company Ratings

Every insurance company is going to have financial strength ratings associated with it. Whenever you are going to invest in an annuity, you need to make sure that you check out the financial ratings of the insurance company first.

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