The FDIC (Federal Deposit Insurance Corporation) is an independent agency of the United States government that protects depositors against loss in case of financial institution failure. One question you may be asking yourself is if annuities are insured by the FDIC. They are not, but there are other ways to protect your assets and make sure they stay safe should something happen to your company or bank.
Are Annuities Insured By The FDIC?
Annuities are not FDIC-insured, but they do offer comparable safeguards for your money. The claims-paying capability of the insurance company guarantees an annuity.
Insurance companies are members of each state’s insurance guarantee association, which ensures that policyholders are protected if their company goes bankrupt and fails to fulfill its obligations to customers. Each state’s insurance guarantee association protects consumers in the unlikely event that their insurance provider fails and defaults on its duties to clients (limits vary by state).
CDs and Annuities At a Glance
| Feature | Fixed Annuity | CD |
|---|---|---|
| Who Offers | Insurance Company | Banks |
| Premium Amounts | $2,500 to $1 Million | $500 – No Maximum |
| Terms | 2 Years to 20 Years | 3 Months to 7 Years |
| Guaranteed Interest Rates | Up to 3.25% | Up to 1.25% |
| Triple Compounding | Yes | No |
| Principal Protection | Yes | Yes |
| Can Lose Money? | No | No |
| Liquid After Term | 100% | 100% |
| How Are Gains Taxed? | Tax-Deferred | Taxed Annually |
| Annual Liquidity | Up to 10% Annually | No Liquidity |
| Who Protects My Money? | Insurance Company/SGA | FDIC |
| Accepts IRA | Yes | No |
| Accepts 401(k) | Yes | No |
| Death Benefit | Lump-Sum | Lump-Sum |