I'm thinking about buying a fixed annuity, but I'm worried that the company might go under at some point and I'll lose my investment. What protections do I have? --J.S., Portland, Ore.
Don't worry. Only a handful of small insurers that sell annuities have gone broke in recent years, and all companies licensed to sell annuities in a state must be members of the state's guaranty association, which protects consumers in case the insurer becomes insolvent. If an insurer starts to have financial trouble, the insurance regulator in its home state works with the guaranty association to find another company to take over its business. The transition can be seamless if the regulator steps in early.
If regulators can't find another insurer, the guaranty association coverage kicks in. All states cover at least $250,000 in annuity benefits, and 12 states and the District of Columbia have limits of $300,000 or more. You should split your annuity investments between two or more insurers if that will keep you below the limits. (For state links, go to www.nolhga.com.) For extra protection, look for a company with a financial strength rating of B+ or higher from A.M. Best. You can search insurers at www.ambest.com/consumers.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
-
Stock Market Today: Stocks Rally Despite Rising Geopolitical TensionThe main indexes were mixed on Tuesday but closed well off their lows after an early flight to safety.
-
What's at Stake for Alphabet as DOJ Eyes Google's ChromeAlphabet is higher Tuesday even as antitrust officials at the DOJ support forcing Google to sell its popular web browser. Here's what you need to know.
-
Medicare or Medicare Advantage: Which Is Right for You?From overall costs to availability of care, here's what to know about the differences between traditional Medicare and Medicare Advantage plans.
-
What Does Medicare Not Cover? Seven Things You Should KnowHealthy Living on a Budget Medicare Part A and Part B leave gaps in your healthcare coverage. But Medicare Advantage has problems, too.
-
Is a Medicare Advantage Plan Right for You?Medicare Advantage plans can provide additional benefits beneficiaries can't get through original Medicare for no or a low monthly premium. But there are downsides to this insurance too.
-
Medicare Advantage 2024 Plans Dip in RatingsMedicare Advantage and Medicare Part D plans lose 'star' on the CMS performance score card.
-
Considering a Medicare Advantage Plan? Be Wary of PromisesThese private insurance alternatives to Medicare are growing in popularity at the same time they’re under scrutiny for their sales tactics and coverage.
-
Medicare Open Enrollment Has Begun — Here's What You Need to KnowMedicare open enrollment is underway. Here's what you need to get done.
-
4 (Imperfect) Ways Retirees Can Pay for Dental Carehealth insurance Since Medicare doesn't provide dental benefits, seniors must consider other options to cover this need.
-
Get Free Over-the-Counter COVID Tests Through MedicareMedicare Beneficiaries can get up to eight tests a month through both original Medicare and Advantage plans.
