|
Annuities may be appealing to some due to the many ways of verifying their relative safety in terms of investment as opposed to the risk associated with the stock market or other types of investments that do not guarantee a locked in annual return. Read on to find out more about the types of protection offered with annuity plans, as well as the risk associated with government backed financial products. Protection With Annuities Fixed Variable Annuities are held accountable to strict state regulations and accounting methods. The vast majority of insurance providers are publicly traded and therefore subjected to state regulations and accounting methods for publicly traded companies, too. Because of this, insurance providers are watched over closely and legally must maintain a monetary reserve to protect their clients. Insurance providers are also supposed to participate in a SIGA (or state insurance guarantee association), which promises clients guarantees on minimums in their annuity and life insurance plans. Most financial institutions and insurance providers are often rated by third party rating companies. If you keep track of a company via these ratings, you should be able to see if there are any problems the company is developing before they come to any serious financial problem, giving you plenty of time to re-diversify your investments if that is the case. There are many other safeguards for annuity programs. Here is a list of some of the things to be on the lookout for when selecting an annuity provider. The company's history in general and whether or not they have met obligations in the past. The rating of the company itself by third party/independent rating companies. Legal reserve requirements. Insurers that have global resources. Regulation by the state. Authority of the state to force receivership. The ability to move money from an account if an insurer runs into financial trouble. State Insurance Guarantee Association (or SIGA) – companies agree to pay out minimums to their clients, guaranteed. General Accepted Accounting Practices (or GAAP) – these are additional requirements publicly owned insurers should have. Risks with Government Backed Financial Products, etc While government backed CD's, savings bonds, and money markets are still considered quite safe to invest in, although these grow very slowly and typically do not keep pace with inflation. Life Insurance and Fixed Annuities Insurance institutions offering annuities and life insurance plans are generally highly regulated and offer numerous points of protection. These, combined with careful moniitoring of their ratings with various third party ratings agencies, as well as the added benefit of a higher ROI make for a generally qualified plan for retirement. The Securities Market and Diversified Investment Lastly, there are diversified investments in the securities market. Balancing your portfolio is the name of the game, but it may become difficult to remain stable in a fluctuating market, especially if your investments end up working out in a less than satisfactory manner. This isn't generally the best or safest strategy to ensure income for your retirement. More info on Annuity Rates
Related Articles -
annuity rates, compare annuity rates,
| 
