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Are insurance company annuities safe?
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Answer . I can answer from a claims perspective. I have settled many claims with minor children using annuities. For example a 10 year old child is hurt in a car accident,… and the injury is evaluated in the 15k range. An annuitie is set up for the child to start receiving the money when they turn eighteen. Doesn't have to be eighteen. Whatever is the best for the situation. I have set up annuities to pay the child from college age, twice a year (tuition time) for four years, or a lump sum when they are 18 or 21. Whatever is best for the child and their family. Of course the annunity makes money in the mean while. And they had to be court approved for the minor.
I have insurance with State Farm and pay by monthly deduction since that fits my cash flow best. Every month I get a call from Safe Auto telling me that my coverage has la…psed. I consider this harassment but cannot find any way to contact Safe Auto to sak them to cease and desist. If I can't talk to a real person I have doubts that this is a 'real' company. They certainly will not be my insurer.
Annuities are purchased from insurance companies. The insurance company take the money and invests it to try to make more money for the investor. They pay the buyer back in i…nstallments.
"Safe" is a relative term. No financial vehicle is entirely safe because there are a number of risks to your money, inflation risk, market risk, credit risk, etc. An exc…ellent discussion of the types of risks and ways to manage them is at http://en.wikipedia.org/wiki/Financial_risk_management But to answer your question, I believe that during a depression annuities are the safest vehicle relative to all others, for a number of reasons. Annuity companies are required (by most states) to hold reserves nearly ten times that of banks. Most have a minimum rate, to protect against inflation risk, making them superior to cash under the mattress. Most have favorable liquidity option which, paired with the higher reserving requirements, helps reduce liquidity risk, that is, the risk that you won't be able to get at your money when you need it.
Generally, when an insurance company goes bankrupt, the guarantees that are being offered on the contract are gone. For instance, if you have a death benefit, or a income guar…antee, those will usually be lost. As for the money you've invested in the variable annuity, if your money is invested in the sub-accounts (the various investments that are usually managed by mutual fund management whose names you will usually recognize), that money is still being managed by those companies, and is separate from the now bankrupt insurance company. That is the long way of saying, your money in the sub accounts is safe. However, if you have money in the fixed interest account, that is usually held by the insurance company, and that money may be in jeopardy.
"In the U.S. an annuity contract is created when an insured party, usually an individual, pays a life insurance company a single premium that will later be distributed back to… the insured party over time. Annuity contracts traditionally provide a guaranteed distribution of income over time, until the death of the person or persons named in the contract or until a final date, whichever comes first"
My experience with them has been a nightmare. I signed up for an annuity with a 5% guaranteed growth per year no matter what the market did. However if the market did be…tter than 5% I would reap the benefits. I would not be able to do anything with this money for 7 years. For instance, if you use $200,000 as your initial investment. If the market does bad your annuity value would be $210,000. Pay attention here as you have the option to take a lump sum or an annuity. Taking the lump sum would be the actual cash value. A bad market, say 10% loss and the lump sum value would be $180,000. Everything was fine the first year-bad market but annuity value did increase. Then the market tanked. I received a phone call from my bank telling me I needed to sign some papers which would actually increase my payout, the entire time being reassured everything else was the same. What Transamerica did was switch my policy. They 're-evaluated' my investment at the present value. In other words the dumped the guaranteed growth, knowing how bad the market dropped and knowing they had a losing policy on their hands. The bank has apologized stating they still don't see where in the papers these changes would take place. Transamerica has stead fastly refused to admit any wrong doing and refuses to correct anything. There is much more detail involved but the bottom line is a loss of about $45,000. Needless to say I would not deal with this company, they have some very deceptive practices. DO NOT TRUST THEM.
Western National Life Insurance Company (NASDAQ: NWLI) was upgraded recently to an "A" (excellent) rating from "A-" by A.M. Best Company based on a conservative investme…nt portfolio. WNLIC holds "A-" (strong), "A1" (good) and "A+" (strong) ratings from Fitch, Moody's and S&P (respectively). Despite AIG ownership, history and recent reports suggest that your annuity is quite safe with WNLIC and that you should not worry about the organization's ability to pay.
Usually it is backed by the financial strength of the issuing insuance company. Answer 2 But more usually government bonds are bought to cover the payments to be made by th…e insurer. This guarantees (as far as one can guarantee anything) that the annuity payments are safe. The financial strength of the insurer is a very vague measurement - who'd have thought that an insurer like AIG (massive financial strength?) would go under.
Life insurance protects one's beneficiaries against financial loss as a result of the purchaser's dying too soon, while annuities protect purchasers against financial loss as …a result of living longer than their funds do.
Before purchasing health insurance through a private provider online, be sure to check their credentialse with the Better Business Bureau. Even if all information is still saf…e and secure online, you may end up paying higher premium packages through a private insurance provider.
Forethought Financial Group will soon offer ForeCare which is an annuity with a LTC rider with all the benefits available under the Pension Protection Act of 2006.
not safe at all. if AIG folds or goes under, you wake up one morning and the company is closed lie ENRON, and WorldCom. then you lose all your money.
Depending on your license you may be able to sell fixed annuities. Variable annuities require Series-7 license however
If you have an agent I would contact them for this information. If not you can contract the company directly and they can provide whatever you need. You may even be able to do…wnload and print the documents online if they have this available.