A relative have a lifetime annuity from an insurance company. Is the annuity not dangerous?
The annuity is 20 plus years old, from a large insurance company. Are adjectives payments safe? Are they secured by cash reserves?
Answers:
As we hold seen all too okay, no company can be considered "safe" in this environment. Yes, insurance companies are required to hold cash reserves, but these reserves can conversion value in a doomed to failure environment. However, there are a number of safeguard for insurance companies.
First, every state has a "pool" of money that will pay if an insurance company go under. The limit can be $100,000 or superior, depending on the state.
Second, and I think most importantly, other insurance companies do not want to see one of their own fail. They will largely buy out the policies and honor them. Why? Publicity. If insurance companies were not to honor their policies, why would anyone ever buy an annuity/life insurance policy again?
I'd say your relative can soundly count on this annuity to continue to pay.
Not necessarily. You other need to watch the insurance ratings of your company. Keep contained by mind that many of those ratings companies are under intense scrutiny for not doing their job these past few years. AIG is one such insurance company that I would be worried about. I be an investor with them a long time but also left long back the recent findings about their unethical practices. No company is 100% locked.
Related Questions:
Answers:
As we hold seen all too okay, no company can be considered "safe" in this environment. Yes, insurance companies are required to hold cash reserves, but these reserves can conversion value in a doomed to failure environment. However, there are a number of safeguard for insurance companies.
First, every state has a "pool" of money that will pay if an insurance company go under. The limit can be $100,000 or superior, depending on the state.
Second, and I think most importantly, other insurance companies do not want to see one of their own fail. They will largely buy out the policies and honor them. Why? Publicity. If insurance companies were not to honor their policies, why would anyone ever buy an annuity/life insurance policy again?
I'd say your relative can soundly count on this annuity to continue to pay.
Not necessarily. You other need to watch the insurance ratings of your company. Keep contained by mind that many of those ratings companies are under intense scrutiny for not doing their job these past few years. AIG is one such insurance company that I would be worried about. I be an investor with them a long time but also left long back the recent findings about their unethical practices. No company is 100% locked.
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