• Question
  • Annuity Risk in Today's Financial Climate

    Asked on 9/19/2008

    My wife and I each own a fixed annuity which together amount to $150,000. In today's financial climate is any of this capital at risk?

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  • Categories: How to Choose, Annuities

Answers

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  • This depends entirely on the financial health of the companies you are invested with. Even though their stock prices rode the roller-coaster over the last few months, many mutual insurance companies that offer annuities remain in a very healthy position, and can be great places for safe investing. Annuities often get a bum rap, but right now, safety is paramount. Do some homework, educate yourself on the credit quality of the company your policy is with. Resist the temptation- or salesmanship- to churn the annuity to another company until you do some homework- this costs you liquidity, and just earns fees for agents. But annuities overall are very good places to be now.
    Nathaniel, Editor of http://www.annuitystraighttalk.com

  • Login to rate this answer:   Answered on 2/3/2009
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  • Well, there is no way to definitively answer your question.

    Any insurance product is only as good as the company that stands behind it and makes those guarantees. You probably need to speak directly with your provider.

    If you haven't already, it may also be advisable to speak with a Certified Financial Planner. A holistic financial planner should look at your overall risk profile, your overall retirement needs and your overall asset and income structure. A good planner should also help you purchase financial products from only the most highly rated providers and -- depending on your overall asset structure, they may help you diversify your funds to multiple companies which might decrease your exposure to risk.

    NewRetirement can connect you with a prescreened planner who should be able to strengthen your overall retirement plan. Continue here, if you are interested:
    https://www.newretirement.com/Services/Professional_Financial_Advisors_Advice.aspx

  • Login to rate this answer:   Answered on 9/19/2008
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  • Bad news is that capital is always at risk. It doesn't matter what investment you have. If its in a fixed annuity, this is comparable to a CD and the money is relatively safe, but its at risk of being out paced by the rate of return from inflation.

    A fixed annuity also is only as safe as the company it is with. If its a financially strong company, you should be fine but plenty of insurance companies are not strong financially. Similar to FDIC insurance for bank deposits, each state has an insurance guaranty fund that backs up investments in insurance companies. But each state has a different limit. It may also be a good idea to annuitize an annuity if you are over 59.5 and want to receive the payments from the annuity.

    Depending on the rate of return, your payment will vary. Calculate it here. https://iqcalculators.com/calculator/annuity-payment-calculator/

  • Login to rate this answer:   Answered on 9/21/2017
**All above answers are provided as general information only. No warranty is made regarding the fitness or accuracy of the information provided in this answer. You should seek advice from a licensed CPA, attorney or CERTIFIED FINANCIAL PLANNER™ as to your unique financial situation.