1. 1000 POINTS
    Tyler MaddoxPRO
    Retirement Specialist, Cambridge Financial Group, Greenville, SC
    I assume that you mean failed as in "did not pay what it guaranteed".

    Annuities are backed by the claims paying ability of the Insurance company that issued the policy. This is why it is very important to consider the financial rating of the company you use.

    Since 2008, there have only been 3 "B" rated insurance companies that have failed.
    There have been more C, D, & E rated companies that have failed, but not many. And most of the ones that did were D rated or worse.

    Since 2008 there have been no B+ or better companies that have failed.(Actually its longer than that, but the records I currently have access to only go back that far. But I am not personally aware of any insurance companies that were A rated at time of failure)
    This is why most agents recommend using a B+, or better yet, an A rated company.


    It is also important to point out that just because an insurance company fails, does not mean the annuity fails to pay.
    Insurance companies are highly regulated. And the states all have a safety net type system set up to help secure the guarantees made by failing insurance companies. Visit http://www.nolhga.com/policyholderinfo/main.cfm for more info on what happens in the event of an insolvency.

    But it is important to remember that whatever safety net might exist. It is no substitute for a solid financial rating. There are way too many well rated companies to use a poorly rated one.
    Answered on September 19, 2013
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