Safety of Annuities

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Safety of Annuities

A fixed annuity offers the investor a guarantee of the safety of his or her principal, as well as a guaranteed rate of return on all funds placed in the insurance company’s general account. Only fixed annuity and life insurance premiums can be placed into the general account. This money is then reinvested very conservatively to ensure that the insurance company earns a modest return, while guaranteeing the safety of the monies invested. These general account funds can be used only to pay fixed annuity distributions and life insurance death benefits. By law, this money cannot be commingled with any other funds, even if those other funds are owned and controlled by the insurance company. Guarantees are based on the claims-paying ability of the issuing insurance company.