Annuity Company Failures: How Many Have Fallen?

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

What Happens to Annuities if Insurance Companies Fail?

When an insurance company fails, the state steps in to help protect policyholders. Each state has a guaranty association that provides some coverage if an insurance company becomes insolvent. The coverage varies by state but is typically around $100,000 per policy. So, if you have an annuity with a death benefit of $200,000 and the company goes under, the guaranty association would pay out $100,000 to your beneficiaries.

While this may sound like good news, there are some drawbacks.

  • First of all, the payout may not be immediate. It can take months or even years for the money to come through.
  • Additionally, the interest rate on your annuity will be lower after the company’s failure since the state will take over the contract.
  • Finally, there is no guarantee that the guaranty association will be able to cover all of the policyholders if multiple companies fail simultaneously.

In recent years, there have been some annuity company failures. Some of the most notable include American Chambers Life Insurance Company, Bankers Life Insurance Company, and Colorado Bankers Life Insurance Company. While these companies were not large enough to trigger a state guaranty fund payout, they still left many policyholders without the death benefits they were counting on.

If you are thinking about purchasing an annuity, it is essential to do your research beforehand. Ensure you understand the risks and choose a reputable company with a solid financial rating. You can also talk to a financial advisor to get more information about annuities and whether they are right for you.

Annuity Company Failure

How Many Annuity Companies Have Failed in Recent Years?

3-5 annuity company failures have occurred within the last ten years. Some are in receivership, and others are in rehabilitation. All of these companies are small to medium-sized.  

American Chambers Life Insurance Company (2000)

In March of 2000, the company went into receivership. In May of the same year, it was declared insolvent and liquidated. The state life and health insurance guaranty associations helped transfer some of the company’s policies to other insurers. The remainder of the business was serviced on behalf of the associations.

Bankers Life Insurance Company (2019)

Bankers Life Insurance Company, domiciled in North Carolina, sold annuity products and some life insurance. It is now in rehabilitation. This was done by the Superior Court of Wake County, North Carolina, on June 27, 2019.

Colorado Bankers Life Insurance Company (2019)

Colorado Bankers Life Insurance Company is a company that sells annuity contracts and some life insurance policies. It was placed in rehabilitation by the Superior Court of Wake County, North Carolina, on June 27, 2019. This company is part of the Global Bankers Insurance Group and a larger group known as Global Growth (formerly Eli Global).

Time Insurance Company (2020)

Wisconsin Insurance Commissioner Mark Afable petitioned the Circuit Court of Dane County, Wisconsin, requesting that Time Insurance Company be rehabilitated. This would mean that the company would get help to become stable again.

How Many Annuity Companies Have Failed

Next Steps

Annuities can be a great way to secure your financial future, but it’s important to research beforehand and choose a reputable company with a solid financial rating. You can also talk to a financial advisor to get more information about annuities and ratings and whether they are right for you. Contact us today for a free quote on an annuity that will fit your needs.

We look forward to hearing from you soon!

Annuity Company Failures

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Frequently Asked Questions

Has an annuity company ever failed?

Unfortunately, when annuity companies collapse, policyholders can face devastating losses.

What happens if an annuity company fails?

Although an unlikely outcome, a third-party would first attempt to locate another insurer to take over the liabilities if your annuity provider becomes insolvent. If no other providers are available, you need not worry, as all annuities will be protected by the Financial Services Compensation Scheme (FSCS).

Has anyone lost money in an annuity?

The answer is yes; annuities can be a haven in unsteady markets and a reliable option for those retiring soon. However, under certain circumstances, they may not yield the expected results. But rest assured that if you seek an income stream during retirement, annuities offer guaranteed returns, so you don’t have to worry about volatile market conditions!

Are annuities 100% guaranteed?

Fixed-indexed annuities provide a secure haven for hard-earned cash, with 100% principal protection during market downturns. Alternatively, an income annuity gives you guaranteed payment streams over a specified period or throughout life–effectively turning your savings into retirement income.

What happens to my annuity if the insurance company fails?

If an insurance company fails, the annuity policyholders are typically protected by state guaranty associations. These associations provide coverage up to a certain limit, which varies by state. In the event of a company’s failure, the guaranty association will step in to ensure that policyholders receive their annuity benefits. However, it’s important to check with your state’s specific regulations to understand the coverage limits and protections available.

Are annuities guaranteed?

Fixed and fixed-indexed annuities offer guaranteed returns, making them a more stable option. However, variable annuities do not guarantee returns, and their performance is tied to the underlying investments, which can fluctuate. In the event that the issuing insurance company fails, the State Guaranty Association (SGA) provides a safety net, but coverage limits can vary by state.

*Disclosure: Some of the links in this guide may be affiliate links. I may receive a commission at no cost if you purchase a policy. It helps us keep the lights on!

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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