Top Fixed Annuity Companies by Ratings

Are you the type of person who thinks about the future or stays in the present day? Are you beginning to think more and more about retirement? If you are in retirement, and considering the purchase of an annuity, it is important to consider some “what ifs.” One of these “what ifs” is the strength of an insurance company. There are hundreds of insurance companies in the marketplace. Evaluating them carefully before doing business with them is a prudent thing to do.

When an insurance company is declared insolvent, thousands of policyholders suddenly find themselves with some challenges. In addition to the potential loss of their premium dollars, they may be forced to purchase replacement coverage from other carriers, sometimes at higher rates. If savings are held by the insurer or scheduled pay outs are in process at the time of failure, those funds can be frozen and the guaranteed payments called into question.

That's why it is so important to periodically monitor the financial condition of each company with whom you have an insurance relationship.

There are a number of different rating agencies. Some of them are Weiss, Standard & Poor’s, A.M. Best, Moody’s, and Fitch.

In today’s challenging economic environment, it might be wise for you to ask for the financial strength ratings of a company you are considering purchasing an annuity with. Carefully evaluate their strength. It may be wise to focus on companies that receive A ratings. While an “A” rating is not a guarantee that the company won’t have financial troubles, it is likely a good indicator of the overall strength of the company.

Another important thing to know about insurance companies and purchasing an annuity is the State Guaranty Association. Each state has different rules and guidelines. It would be worth doing some homework on your individual state’s Guaranty Association before purchasing an annuity.

As we’ve stressed on this website, there is a lot that goes into purchasing an annuity. Making sure the rates and terms of the annuity contract is important, in addition to carefully evaluating the insurance company you are considering purchasing the annuity from.

Annuities are best suited for long term investors.  Any withdrawal prior to age 59 ½ is subject to a 10% tax penalty as well as regular income tax.  Annuities often also have a surrender schedule, meaning that withdrawals may be subject to a penalty by the insurance company if not left in for a predetermined amount of time.  Any guarantees on principal invested is based upon the claims paying ability of the underlying insurance company.