Fixed annuities are popular investment vehicles because they offer the peace-of-mind many investors crave with their retirement savings. But, for some people, it’s not enough to know that their money is safe; they want to know exactly how and where it’s invested. Some may even be considering getting out of fixed annuities altogether if they don’t like what they see in the fine print. Read on below to find out more about where premiums from fixed annuities are invested!
where are premiums from fixed annuities invested?
Insurers must comply with state rules designed to guarantee that they only invest in high-quality assets to avoid bankruptcies. Life insurance firms may put money into companies that are reasonably stable in value. Municipal bonds, corporate bonds, real estate mortgages, and even policy loans are all examples of safe investments.
Guaranty Associations
The purpose of a state guaranty association is to safeguard policyholders, annuitants, claimants, and creditors of insolvent or financially distressed insurance companies by providing money for claims and other policy benefits.
Associations are made up of insurance companies that have been authorized to do business in a certain state. Fraternal organizations and nonprofit organizations are not included in the association membership exceptions.
In addition, the association’s operating expenses are reimbursed by the remainder of the insurers. If an insurer goes bankrupt, each member insurer is charged extra fees to compensate for the insolvency.