It is crucial to choose insurance companies wisely when purchasing annuities. Your annuity is only as sound as the insurance company that is backing it up. Sometimes it can be beneficial to split your money into annuities at different insurance companies for even more security. Kathy Kristoff of the LA Times further explained in “Check out what’s backing your life insurance policy”.
Variable annuities are usually managed by separate investment companies, so in the event of an insurance company failure, your investment would be returned to you. With fixed annuities, guarantees come on a state level. All state funds are different, but $100,000 of a fixed annuity’s current value is often covered.
You shouldn’t have to worry about any of that if you choose a sound insurance company though. An expert can help you with this choice; you can also do some research on your own. A.M. Best, Moody’s, and Standard & Poor’s are companies that issue ratings to all insurance companies. The better the ratings, the better the insurance company. There are also many websites that list the ratings, including this one.