Are Annuities Safe?

What Makes Annuities Safe?

Annuities are issued by insurance companies and backed by their financial strength. Insurers must hold reserves and meet strict capital requirements set by state regulators. Many fixed and indexed annuities also offer principal protection, meaning you cannot lose money due to market downturns.

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Layers of Protection

• Insurance carrier reserves — Each contract is backed by the issuing insurer.
• State regulation — Insurers must meet capital and solvency rules.
• State guaranty associations — Provide an additional safety net up to certain limits.
• Contract guarantees — Many annuities lock in principal and minimum interest.

Where Risk Still Exists

Variable annuities can lose value because they invest in market subaccounts. And while insurance carriers rarely fail, choosing a financially strong company — typically rated A or higher by major rating agencies — adds meaningful peace of mind.