This question can always be answered one way : yes! However, you may be interested in learning exactly why this is. Investors do deserve objective analysis and concrete facts that go beyond the assurances of a salesman. Most people don't trust the industry of finance because of the rampant dishonesty that is thrown around.
Annuities differ from bank deposits because of the FDIC insurance that banks carry. Many people see that simply as a government guarantee against loss, which it is. However, what does FDIC insurance tell you about the banks it insures?
This type of insurance makes all banks equal in terms of covering the assets you keep with them. However, this does not make every institution the same or equal. Certain institutions may be stronger than others, while some others might be unstable. The truth is no matter what the financial health of the bank accepting the deposit, all the FDIC does is create an image of safety.
Bottom line is the insurance is needed by some of the banks, and not by others. Adequate reserves and superior risk management policies eliminate the need for loss insurance. Recently, an increasing quantity of financial institutions have attempted risks based on the guarantees inherent in the FDIC's policies. As a result, the FDIC is facing shrinking reserves and possible insolvency.
I think you'll agree that it is highly likely that annuities are more safe than bank deposits.
How are insurance companies different? The insurance industry doesn't have the FDIC safety net and is fully responsible for the guarantees offered. These guarantees necessitate that your insurance company employs exceedingly conservative measures when addressing strategies for asset management. The insurance companies which are the most stable maintain reserves many time higher than what they require to function.
In addition, assets within an insurer's general account are backed by a guaranty fund in each state. In most states the coverage amount equals the $100,000 that the FDIC provides. This is another reason why 'annuities' and 'safe' are often mentioned in the same sentence.
The issuing company's financial stability grants these annuities their safety. The person who owns the contract to a variable annuity can claim ownership of these funds because of the account's securities. Another choice is fixed annuities, which are held in the general account of the company. In the case of company insolvency, the general account assets would be first released to policy owners in accordance with the guarantees in the contract.
It's not unheard of for state regulations to tie up the money of investors for long time periods as a company was being investigated. These situations occurred due to an unique set of circumstances, and should just be a reminder to do adequate research of both products and companies before making a decision.
It's relatively simple to locate up to date news regarding the troubles that the insurance industry is facing. Money invested with those companies is still safe but if you're not convinced, then disregard those organizations and keep looking. Look into the major Mutual Insurance sector as the place for unmatched safety and a superior track record. These represent businesses with a very long history and a solid foundation.
If you need to compare insurance companies to banks, there's a simple analysis. Just consider an insurance company to be like a dependable, solvent, and consistently profitable bank. You can feel secure about annuities being safe. Not a bad guarantee coming from some of the most solid and consistent companies in today's financial industry!
Author Resource:
Don't you want to learn more about Retirement Income Calculators. James Hadley wants to show you more about the Retirement Income Calculator at AnnuityStraightTalk.com
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