Joe Marullo Insurance & Retirement Services
16818 Doverwood Way
Houston, Texas 77058
How safe is your fixed indexed annuity?
Should you trust an insurance company and an annuity with your important retirement funds? What happens if an insurance company were to fail? These and other questions are vitally important, and the answers may surprise you.
Why even ask these questions? In the past, investors trusted the third party, now after the financial meltdown beginning in 2008, questions must be asked.
The simple fact remains that retirees and retiring Baby Boomers today are looking for a way to guarantee that their money is safe and that they will have enough income to last as long as they live. Income is the more important decision, far more important than having enough money.
"Income is King with the Baby Boomers."
So is the money safe in an annuity? Baby Boomers are very concerned about safety for one simple reason.
"They Don't Have Time to Make It Again!"
Other than social security and earned pensions, most retirement investments are not guaranteed and are subject to variations of account values — volatility. How can they be assured their retirement accounts will last as long as needed?
Their worries are justified, and the number one concern for retiring Baby Boomers is simple: safety — Is my money safe? The safety of annuities is like a safety net, a safety net to cover any possible occurrence. So, how does this safety work? How are annuities guaranteed?
Insurance Company Assets: The safety of an Annuity is based on the company's financial strength and claims-paying ability, which issues the annuity. Annuities are regulated by each state Department of Insurance (DOI). The DOI regulates audits, sets reserves of the insurance companies. This assures the annuity purchaser of the solvency of the insurance company.
These highly regulated companies are also subject to strict capital reserve requirements, which result in reserve level requirements. These capital requirements can be higher than the capital reserve requirements for banks regulated by the FDIC.
Because of the high regulations required by each state's Department of Insurance, the insurance companies must invest in dependable, safe, and suitable vehicles. They invest in some of the most highly-rated and conservative investments available such as highly rated corporate bonds. Besides, a high percentage of their investments are in U.S. government bonds U.S. Treasuries.
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