Annuity Rates - Dont Sacrifice for Safety

Finding high annuity rates is the most important issue for most investors in when shopping for a fixed or immediate annuity. For others, safety of the principal is paramount. Therefore, the actual ratings that are given to a particular annuity company is an important factor in determining which annuity company to select. Just like many economic opportunities, the better the safety rating, the lower your rate will be on the contract, and vice-versa. But there is not always an exact correlation between an individuals company's safety rating and annuity rates offered. It's useful to look at other variables.

In an effort to protect investors money deposited with insurance companies, individual states have established state guaranty laws. Although the legal guidelines differ by state, these kind of laws typically dictate that will annuity deposits are covered for up to $100,000 per annuitant. Note that these laws protecting annuity holders investments should not be thought of as guarantees as they are always subject to funds being available. Therefore, it would not be wise to go with a company offering the highest annuity rates because you believe your investment is guaranteed; it is not. Rather, the state guarantee laws exist for the scenario of one insurance company having an inability to meet its obligations and being able to provide for its customers. The guarantee laws are not designed to project the investors if multiple companies fail simultaneously during a bad economy.

Curiously, you may not have heard about guaranty laws from your insurance agent or broker as they are not permitted to mention the guarantee laws as an inducement to have you purchase an annuity or life insurance contract. However, in the event you ask your agent regarding it, he or she has a fiduciary duty to spell out it to you.

As to evaluations of insurance companies, five independent organizations - A.M. BEST, Fitch, Moody's, Standard & Poor's, and Weiss - rate the fiscal strength of annuity companies. Each has its rating scale, its own standards, its own parameters regarding rating companies. Generally, you want to select insurance companies that have ratings within the top three categories of all of the rating organizations. we recommend you select your annuity company first by its safety rating and then by its annuity rates.

Whether you are seeking increased annuity rates from or greater basic safety in your annuity rates investments, you may be capable of getting both with some research.