[Aces4]

Originally Posted by golden

Dear Aces4:

Annuities are NOT FDIC insured. They are insured by the state in which the insurance company is domiciled. In the few instances that I am aware of, the assets of the insurance company that folded were purchased by another insurance company so there was no losses to policyholders. This has allowed the insurance company to say that no one has lost money in an annuity. I would caution, however, that if we have a total collapse in our economy, there is not enough money in any state's insurance fund to cover the losses of multiple insurance companies. Ditto, FDIC.

Generally, there are two types of annuities--fixed in variable. With variable, which are basically tax-deferred mutual funds, you direct where your assets are invested and it is segregated from the insurance company's assets. In fixed annuities, the insurance takes your money and co-mingles it with everyone else's $ and makes the investments for you. If those investments go sour and the company folds, see the first paragraph.

Underfunding is not an issue, in my opinion.

Thank you for that succinct explanation. The difference between the federal government and the state insuring money is that one can print the money to cover the losses. History has proven that to be true.